Vanadium a key component of U.S. mining strategy - Denison

The shift of Chinese steel manufacturers to higher-quality steel products means good news for vanadium miners, says Denison Mines CEO Ron Hochstein.

Author: Dorothy Kosich
Posted: Wednesday , 02 Mar 2011

RENO, NV -

Denison Mines CEO Ron Hochstein says vanadium is a key component of the company's U.S. strategy as China makes a shift to more manufacturing of high strength, low-alloy quality type steels.
In a presentation to the BMO Capital Markets 20th Annual Global Metals & Mining Conference in Florida, Hochstein noted that Chinese government is encouraging China steel manufacturers to utilize more vanadium in order to lower the number of steel mills in the country, as well as helping to reduce pollution generated by steel manufacturers.
Hochstein estimated that 61,000 tonnes of vanadium are required to satisfy the current global market. The U.S. Geological Survey estimates that 56,000 metric tonnes of vanadium were mined in 2010. World resources of vanadium are estimated at 63 million tons.
Metallurgical use of vanadium, primarily as an alloying agent for iron and steel account for about 97% of U.S. vanadium consumption in 2009, said the USGS. There is currently no acceptable substitute for vanadium in aerospace titanium alloys.
Denison (TSX: DML, NYSE Amex: DNN) is now qualified to supply vanadium to the only U.S. producer of titanium alloys, Hochstein said.
Meanwhile, Hochstein also discussed Denison's agreement with White Canyon Urainum at a total consideration of Cdn$56.6 million, which was made public on February 22. White Canyon (TSX-V: WU) is a Perth-based company with U.S. operations based in Moab, Utah and holdings which include six projects, covering 15,500 acres in the Red Canyon district of Southern Utah.
White Canyon has been mining uranium from its Daneros Uranium Mine since December 2009. The uranium is processed at Denison's nearby White Mesa Mill. Hochstein suggested that due to undercapitalization, White Canyon's U.S. properties have not yet been adequately explored.
Denison has three U.S. uranium mines in operation, Beaver, Pandora, and Arizona 1. Meanwhile White Mesa offers an ore-buying program for independent miners who mine uranium and vanadium. White Mesa's estimated production this year is 1.2 million pounds of uranium and 2.2 million pounds of vanadium.
Denison's 2011 sales forecast calls for 1.3 million pounds of uranium sales and 2.8 million pounds of vanadium sales. Mining revenue is expected to be $118 million.
The company is aiming for sustainable uranium production of 10 million pounds annually by 2020 through a portfolio of U.S., Canadian and international projects. In his presentation, Hochstein told analysts and institutional investors at the BMO conference that the company's pipeline of diverse projects reducing political, geographic and permitting risks for Denison.
Denison intends to spend $28.8 million in exploration and development spending this year.