Sparton Resources
Inc. (TSX VENTURE:SRI) (the "Company")Sparton Resources Inc. (TSX VENTURE:SRI) (the "Company") reported
today that it's eight month old research program in China, conducted
jointly with ARCN, the remote sensing and research branch of the
China National Nuclear Corporation ("CNNC") has identified a major
supply of uraniferous coal ash that may develop into a significant
supply of uranium ("U") for that country's developing nuclear power
program.
Based on a comprehensive review of archived analytical data for
most of China's coal deposits the ARCN-Sparton team completed a field
sampling program of fly ash and bottom ash from a number of coal
fired power stations burning lignitic coals with anomalously high
uranium contents. The analytical data for the coal ashes tested has
resulted in the Company recently focussing on three power stations
(two operating and one under final stages of construction) located
within 20 km of each other in central Yunnan Province. These stations
all burn the same high uranium content lignitic coal from one centrally
located open pit mine. These include the Xiaolongtang, Dalongtang
and Kaiyuan stations located approximately 250 km southeast of the
Yunnan provincial capital of Kunming. To date only samples from Xiaolongtang
have been analysed, and sampling of the other operating station (Dalongtang)
is currently underway. The Kaiyuan station is in the commissioning
phase and samples will be collected when test material is available.
The local coal has a high ash content (approximately 20-30%) and
the coal uranium content varies from about 20-315 parts per million
("ppm") and averages about 65 ppm U (historical and current data).
Both the bottom ash and fly ash samples tested by Sparton returned
values varying from 123-142 ppm U. Two coal samples tested by Sparton
returned values of 20 and 105 ppm U respectively. Analyses were done
by the Beijing Central Analytical Laboratory using Induced Coupled
Plasma (ICP) methods. The initial analytical results in China were
confirmed by analyses at SGS Laboratories In Toronto, Canada and
additional check analyses are currently underway using SGS. All the
available current data are believed by Sparton's technical staff
to be reliable as they correlate well with reported values from historical
literature research information.
Due to its high radioactivity levels the waste ash from these stations
is not suitable for sale to cement users for residential applications.
Small amounts are sold with permission of the Yunnan Bureau of Environmental
Management for outdoor applications such as bridge abutments but
most is stockpiled in dry re-vegetated disposal areas. Currently
the Xiaolongtang station, which has been in operation for sixteen
years, produces 600,000 to 800,000 tonnes per year of combined fly
and bottom ash and has accessible stockpiles containing about 5 million
tonnes of recoverable ash. When a sixth burner is operating at Xiaolongtang
in 2007 the station is expected to produce about 900,000 tonnes of
ash annually (information supplied by Xiaolongtang Guodian Operating
Staff). In 2008 the local coal mine has indicated that it will increase
its allotment of feed material to Xiaolongtang from the current 9000
tonnes of coal per day up to 15-16,000 tonnes per day depending on
power requirements. This will increase the production of coal ash
significantly, effectively doubling the output of ash at Xiaolongtang
at that time.
In aggregate, until 2008, all three stations in the area are expected
to produce an average of about 1.2 million tonnes of ash annually
based on forecast schedules for power generation supplied by the
Xiaolongtang officials.
Uranium Content and Potential Value of Ash
Using available analytical data, the annual coal ash produced from
these stations, assuming an average U content of 125 ppm, contains
about 150 tonnes or 330,900 lbs of uranium or 390,000 pounds of U3O8
(yellowcake). At current world spot yellowcake prices of about $C75
per pound the gross value of the contained uranium oxide in this
material is valued at over $C29 million. At a U recovery rate of
70% (to be confirmed with planned leaching tests) the current value
of uranium oxide (273,000 pounds) in all the ash which could be processed
annually would be approximately $C20.5 million. Using similar assumptions,
the value of the 5 million tonnes of accessible ash stockpiles is
approximately $C72.38 million. Based on Sparton's analytical results
the ash also contains potentially valuable amounts of rare earths,
strontium and vanadium which may also be extractable. The potential
for recovery of these metals will also be determined in the planned
testing program.
Leach Testing Program and Technical Report
Sparton has commissioned a full independent technical report and
leaching test program for the Xiaolongtang area ash material under
the direction of Lyntek Inc. of Denver, Colorado USA. This engineering
and mineral process design company has been involved in over 30 uranium
recovery projects in 10 different countries and is a recognized leader
in uranium extraction process engineering. Senior Lyntek staff have
visited the area and are currently working on recommendations for
the leach test parameters for various types of ash from the different
active burners at the power stations.
The test program, expected to extend over several months, will involve
leach testing of various types of ash samples from all active burners
at the stations, and endeavour to establish the best process methodology
to maximize recovery of uranium and other valuable metals from this
material. At a later stage if leaching results are positive it is
expected that detailed sampling and leach testing will also be done
on the stockpile material. Scoping studies and pre-feasibility level
reports to develop a uranium recovery plant will be then be commissioned.
This work is fully supported by the management of the Xiaolongtang
station, which is owned by the China Guodian Power Corporation.
Cautionary Statement
While the available information generated to date are positive and
indicate significant potential for development of a secondary recovery
program of uranium from the Xiaolongtang area waste ash material
there is as yet insufficient data regarding actual uranium recoveries,
possible sale prices and business and operating cost structures to
accurately predict any possible economic benefit to the Company and
its partner ARCN in this program.
The purpose of the leach test program and technical report will
be to establish the technical parameters necessary to achieve reasonable
recovery rates, and will be able to predict within reasonable limits
a operating cost range for a possible industrial development to extract
uranium from the ash material.
Business issues and an operating structure for an extraction plant
going forward will be subject to negotiated agreements with the coal
ash suppliers, CNNC, the local Yunnan and Federal environmental authorities
and Sparton and its operating partners in this program.
To protect their commercial position in this pioneering enterprise,
Sparton and ARCN have registered the business of extracting uranium
from non conventional sources in China and made patent applications
for specific flow sheets to recover uranium from both coal ash and
other non conventional sources. These applications have been accepted,
indicating that there are no competing applications, and are now
under final review by the China patent authority.
Going Forward
There are compelling reasons for success in the future of the development
of a uranium extraction facility at this location as well as others
in China. Not only will these facilities function as a source of
new domestic uranium supply in China but they will serve to clean
up a potential or existing environmental hazards in the radioactive
waste ash material. Once cleaned the ash will also have some value
as a cement and concrete filler material for any applications.
Benefits to the Company are expected to accrue in the form of management
fees, and possible modest production royalties plus an equity ownership
in the operating company set up to build and operate a recovery plants.
Based on historical programs for the recovery of uranium from coals
ash in North America, Europe, and also in China the Company believes
there is a significant potential for developing a new business in
this field.
There are several other coal ash production and waste stockpile
locations currently under evaluation by Sparton and its partner in
China, and this initial detailed evaluation project at Xiaolongtang
is seen as a stepping stone to several similar programs at other
locations in the country.
Sparton's exploration and evaluation programs in China are being
carried out under the direct supervision of A. Lee Barker, P. Eng.,
P Geol., the Company's President and CEO who is a Qualified Person
under National Instrument 43-101.
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