The Economics of Uranium Exploration in Australia

Exploration for uranium in Australia commenced only during the 1940s, but in this short period has been very successful as one third of the world's low cost uranium reserves have been discovered in Australia. Total uranium exploration expenditure in Australia up to the end of 1983 was $A(1983) 554 million; this discovered 20 potentially economic deposits and official reserves of 560 000 tonnes of uranium oxide at an average cost of $1 per kg of U 0 . An exponential 8 eserves indicates distribution of uranium r that there could be 54 undiscovered uranium deposits in Australia, each with reserves of 20 000 tonnes U308 or more, in addition to smaller deposits. Using a constant uranium price of $A(1983) 79 per kg, no deposit is economic at a grade below 0.12 per cent U 08 or with reserves of less than 3 000 tonnes. Selecting deposits with reserves of 5 000 tonnes U 0g or more as prime exploration targets, only 39 per cent of discoveries will yield a real internal rate of return (IRR) of 10 per cent or more. After committing a minimum exploration budget of $10 million to this search, an explorer has one chance between 7 and 12 of discovering a deposit that will repay the exploration investment.