Game Changing Results at U308’s Berlin Flagship Project…Free Uranium?

On January 11, I interviewed Dr. Richard Spencer CEO & Director of U308 Corp. (TSX.V: UWE), a Toronto-based company focused on the exploration and expansion of uranium and associated commodities in South America (click here). Dr. Spencer confirmed that initial tests at the company’s flagship Berlin project yielded metallurgical results for the recoveries of 97% uranium, 97% phosphate and 79% vanadium, exceeding the company’s expectations and making up two-thirds of the in situ value of the mineralized rock at the site. Positive recoveries were also shown for potential by-products making up the remaining one-third of the in situ rock value for 96% yttrium, 82% neodymium, 95% zinc, 64% nickel, 54% molybdenum and 46% rhenium.

These initial results were yielded from six tests conducted on two separate composite samples. What’s exciting is that these results represent a drastic improvement from historic metallurgical test results which indicated 92% uranium and 50% vanadium.

The Berlin project is located in the middle of Colombia about 60kms away from a primary agricultural area. This means that the phosphate produced from the project already has a local market nearby. The project represents a 20,000,000lb resource and the metals will be extracted in two phases. The first phase involves an iron-rich leaching process that extracts the majority of the metals. The residue from the first extraction phase is then mixed with hydrochloric or sulphuric acid, yielding a second opportunity for extraction. This ferric leach process is a proven method for uranium extraction and has been used in mines such as Elliot Lake in northern Ontario.

This process is also well suited for the Berlin project as it generates a sufficient amount of sulphuric acid when combined with water, aiding in the neutralization of the carbonate in the ore.

So what’s the takeaway from these results? The extraction of phosphate, vanadium and some of the other elements will allow U308 to produce uranium at a very low cost. Dr. Spencer added, “the value of those extractable metals will probably pay for the mining of the uranium so we’ll be able to get the uranium out effectively for virtually no cost.” Further, based on current metal prices, the mix of commodities at Berlin is yielding a rock value of about $350/ton. Combined with U308’s expectation of low mining and processing costs, it’s looking like free uranium. The multi-commodities exposure of U308 effectively spreads investment risk and should make weary investors or those re-examining the uranium market more comfortable. U308 is currently trading at an EV/lb valuation of $0.35/lb versus a global average of $0.83/lb and I believe that the stock is currently undervalued in this market. The Berlin project is going to be a game changer for the company and I expect 2012 to be a break-out year for U308.

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