U3O8 Corp.

Imagine putting a battery-like device in a concrete vault in the ground that could provide electricity to thousands of homes for five to eight years before being replaced. That is the vision of Richard Spencer, president and CEO of U3O8 Corp., for one of the uses of uranium in emerging mini-nuclear reactor technology to meet the growing global demand for electricity.

Calling the technology “extremely exciting,” Spencer explains that it is derived from technology used in nuclear submarines for years. The mini-reactors are compact, sealed units measuring a few meters in diameter and 4 to 5 meters high. “Basically, they are like a mega-battery,” he maintains. “From an aesthetics point of view, they are best buried underground in a concrete room like a basement.”

However, the devices – estimated to cost $35 million each and take two to three years to build – do not emit radioactivity and have no moving parts. Spencer compares the process that goes on inside the devices to the chemical reaction inside a battery and says the grade of nuclear fuel is not a security threat. “One would typically supply power for about 20,000 houses for between five to eight years,” he calculates.

Because such mini-reactors can be transported into an area by truck and grouped together for residential or commercial use, they would help to reduce the number of power lines that zigzag across the country from central power plants. When the device’s fuel is spent, it is simply replaced, and the original unit is sent back to the factory for refueling and shipment to the next location.

Shortfall by 2014
The possible use of this technology would be one of the drivers for uranium demand, which Spencer sees as exceeding supply in 2014. “There’s a significant shortfall in uranium supply forecast to start in 2014, and several companies are focused on bringing their projects on-stream around that date,” he asserts.

There will be more demand from the developing world than the industrialized West, Spencer thinks. “The critical part of the growth profile is that it’s not being driven by the Western Hemisphere anymore – the United States has just approved the construction of a couple of reactors, whereas China plans to increase electricity production from nuclear by seven times over the next 10 years,” Spencer stresses.

“There are 39 reactors in the planning stages in China at the moment and 23 under construction now,” he calculates. “Russia is building 10 at present. So China, India, Russia, South Korea and Japan are taking the lead in the nuclear buildout. That’s where the huge demand is going to come from for uranium to fuel those reactors, not so much from the Western Hemisphere.”

Nancy Chan-Palmateer, vice president of investor relations, says nuclear power generation is forecast by the World Nuclear Association to grow by 75 percent from 2007 to 2035. “This would translate into a reactor starting up every 32 days for the next five years,” she estimates. Those figures do not include demand for uranium from mini-reactors.

Go South, Young Man
It is against this backdrop of a growing, worldwide demand for uranium that U3O8 Corp. is advancing uranium discoveries in three South American countries – the Kurupung project in Guyana, the Berlin project in Colombia and the Laguna Salada project in Argentina.

“One of the reasons we like South America is the fact that for uranium, it’s the next frontier,” Chan-Palmateer maintains. “It’s a country that is where Africa was 10 years ago for uranium exploration and development.”