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Updated Nov 6, 2013 - 4:11 pm

Work for uranium mine near Grand Canyon on standby

FLAGSTAFF, Ariz. — A uranium mining company that was sinking a shaft for a
mine south of Grand Canyon National Park has put the work on hold, citing market
conditions and the expense of litigation.

Energy Fuels Resources Inc. said the operation will be on standby until
December 2014 or until a ruling is issued in a federal case challenging the U.S.
Forest Service’s decision to allow development of the Canyon Mine near Tusayan.
The company had planned to start extracting 83,000 tons of ore to produce 1.6
million pounds of processed uranium, or yellow cake, in 2015 but now will have
to re-evaluate the timeframe.

Stephen Antony, Energy Fuels president and chief executive, said the mine
remains an important aspect of the company’s medium-term plans and it will
continue to work with the Forest Service to defend the project’s approvals.

Prices for uranium have dropped to the mid-$30s per pound on the spot market,
among the lowest in the past five years. The Canyon Mine had been on standby
status before, from 1992 until work resumed earlier this year, because of
pricing.

“Obviously this is an indication that it doesn’t look good from an economic
perspective,” Sandy Bahr of the Sierra Club said Wednesday. “We obviously
think that it has never looked good from an environmental perspective. It would
be nice if they would also recognize that aspect of it and make the shutdown
permanent.”

The mine sits in a nearly 1 million-acre area that was placed off-limits to new
mining claims in January 2012. Companies with existing claims that were proven
to have sufficient quantity and quality of mineral resources could be developed.

The Havasupai Tribe and a coalition of environmental groups sued the Forest
Service in 2012 over what they claim is an outdated environmental review from
1986. The groups also argued that the Forest Service failed to consult with the
tribe on impacts the mine would have on a butte held sacred by the tribe. Energy
Fuels is an intervener in the case.

U.S. District Court Judge David Campbell in Phoenix approved an agreement
Wednesday to put the mine on standby and to stay proceedings in the case.

Earlier this year, the court denied the plaintiff’s request for a preliminary
injunction. They challenged the ruling with the 9th Circuit U.S. Court of
Appeals but agreed to hold off on pursuing it for now.

Energy Fuels acquired the Canyon Mine last year from Denison Mines Corp. The
surface work on the project, including the hoist, evaporation ponds,
environmental monitoring facilities and buildings at the site have been
completed, the company said. The shaft was about 300 feet but needed to reach
1,500 feet to access the body of uranium ore that would be shipped to a mill in
Blanding, Utah.

The company wrote in a letter to Kaibab National Forest supervisor Mike
Williams that it would give a two-week notice to resume work.

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