The Daneros uranium deposit can be classified as Phanerozoic Sandstone; Tabular/Peneconcordant; Basal-channel Type in the classification scheme of Dahlkamp (1993). The Shinarump Member of the Chinle is the only host rock horizon with this type of deposit on the property. The property is not known to hold any potential for any other type of deposit.

The uranium deposit at the Daneros Mine, like nearly all others in the White Canyon district, is in the lower part of the Shinarump, especially where it has scoured into the Moenkopi. The lithology, facies, sedimentary structures, and locations within the channel deposits all were important in controlling the migration of fluids and localization of the deposits. Coarser-grained rock is more favorable than finegrained sand or silt units. Most of the uranium mineralization is overlying impermeable siltstones of the Moenkopi or local siltstone lenses internal of the Shinarump. The lateral edges of channels where they are bounded by mudstones are also favorable locations for mineralization. Sandstones and conglomerates bounded on the top by siltstones or clay layers are also favorable. Intersections of channels and meanders have been found to be favored locations. The most favorable sites are in the coarser sandstone/conglomerates adjacent to finer sediments that contain vegetal matter. The uranium was transported into the area in oxidized groundwaters. The permeability differences related to the grain size of the various facies confined, concentrated, and slowed the flow of the oxidized waters. The accumulations of carbonaceous material created local reducing environments. These reducing conditions caused the dissolved uranium minerals to precipitate.

Uraninite (pitchblende) is by far the dominant primary uranium mineral in the Shinarump deposits. It occurs as distinct grains, fine grained coatings on and pore-fillings between detrital quartz grains, partial replacement of feldspar grains, and as replacement in carbonized wood and other remains of organic matter. Metallic sulfide minerals are often abundant. Where secondary oxidation has occurred, minor amounts of uranyl carbonates, sulfates, and phosphates are found. The source of the uranium is not well established. Overlying shaley units of the Chinle contain clays derived from volcanic ash that is uraniferous. The source area of the arkosic sediments was also a uranium-rich province.

The Daneros mine operated from 2009 until October 2012 when the mine was placed on standby. The Daneros deposit is accessed from the surface through a 450-foot long decline at a gradient of -15%. During this time period random room and pillar mining was employed, as was typical for the deposits in the local region. Mining utilized rubber tired loaders and small trucks to transport mineralized material to the surface, where it was loaded into over-the-road trucks, covered by a secure tarpaulin and transported to the WMM.

The Shinarump deposits are usually thinner than the mining height needed for personnel and equipment access; therefore, the mineralized material was mined by a split-shooting method. The split-shooting mining method involves assessing each face as the stopes advance by the mine geologist, engineer, mine foreman, or experienced lead-miner. Because the grades and thickness of the typical Shinarump uranium deposits are highly variable, they are usually unpredictable from one round to the next. (A round is a complete mining cycle of drillblast-muck-ground support, if needed to be ready to drill again; a normal round advances a face about 6 feet.). Typically, the thickness of the mineralized material was less than the height needed to advance the stope. As the stope face was being drilled, the blast holes were probed with a Geiger Counter probe in order to estimate the U3O8 grade. The uranium mineralization is usually dark gray to black. The mineralization sometimes rolls, pinches or swells, or follows cross-beds within the sandstone. Therefore, the miners also used drill cutting color as a criterion to help guide blast hole direction and spacing. This irregular habit of the deposit can result in holes collared in mineralized material ending in waste, or, conversely, holes collared in waste will penetrate mineralized material much of their length. Based on the results of the assessment of the blast holes drilled in the face, the round will be loaded and shot in two or more stages. Depending on the location and thickness of the mineralized material in the face (there may be multiple mineralized layers); the miner will attempt to blast either only mineralized material or only waste rock. They will muck it out as clean as possible, then shoot the remaining rock and muck it cleanly. The amount of waste rock shot before or after the mineralized material typically resulted in stope heights of eight-to-nine feet.

During this time period the mine also employed an underground long hole exploration drilling program, reaching out as much as 400 feet ahead of and adjacent to the workings, as guided by the mine geologist.

The Daneros Mine portal area is accessed by a gravel-covered side road off Radium King Road (a countymaintained gravel road). The mine facilities consist of a modular trailer for the mine office, two reinforced mine portals, a generator building, and an equipment storage and maintenance building. The underground mine is accessed by a decline down to the mineralized zones. Two ventilation shafts daylight on the topographic bench above the mine. The bench above the mine, where past drilling also had been conducted, is accessed by a dirt road connecting to the mine access road south of the mine portal area.

All power at Daneros is produced via generator; there is currently no line power to the site. Water is supplied by an on-site water well.

The milling operation involves grinding the ore into a fine slurry and then leaching it with sulfuric acid to separate the metals from the remaining rock. Uranium and vanadium are then recovered from solution in separate solvent extraction processes. The uranium is precipitated as a U3O8 concentrate, “yellow cake”, which is dried and sealed in 55-gallon steel drums for transport off-site.

The White Mesa Mill owned by EFI is located six miles south of Blanding, Utah, 65 road miles from the Daneros Mine. Its construction by Energy Fuels Nuclear Inc. was based on the anticipated reopening of many small low-grade mines on the Colorado Plateau, and the mill was designed to treat 2,000 tons of ore per day. The mill has operated at rates in excess of the 2,000 tons per day design rate.

Run-of-mine ore is reduced to minus 28 mesh in a six-foot by 18-ft. diameter semiautogenous grinding (SAG) mill. Leaching of the ore is accomplished in two stages: a pre-leach and a hot ........