The uranium mineralization is composed of amorphous uranium oxide, sooty pitchblende, and coffinite, and is deposited in void spaces between detrital sand grains and within minor authigenic clays. The host sandstone is composed of quartz, feldspar, accessory biotite and muscovite mica, and locally occurring carbon fragments. Grain size ranges from very fine- to very coarse sand but is medium-grained over all. The sandstones are weakly to moderately cemented and friable. Pyrite and calcite are associated with the sands in the reduced facies. Hematite or limonite stain from pyrite, are common oxidation products in the oxidized facies. Montmorillonite and kaolinite clays from oxidized feldspars are also present in the oxidized facies (Uranerz NRC Application, 2010).

The mineralized zones at the Nichols Ranch Unit, Jane Dough Unit and the Hank Unit will be divided into individual production areas where injection and recovery wells will be installed. As typical with the above mentioned commercial operations, the wells will be arranged in variations of 5-spot or 7-spot patterns. In some situations, a line-drive pattern or staggered line-drive pattern may be employed. Horizontal and vertical excursion monitor wells will be installed at each well field as dictated by geologic and hydro-geologic parameters, and as approved by the Wyoming Department of Environmental Quality - Land Quality Division and the United States Nuclear Regulatory Commission. The facilities will be constructed according to acceptable engineering practices.

The Jane Dough Property is expected to be, directly connected to the Nichols Ranch Plant via pipeline.

The Nichols Ranch Unit processing plant is licensed and designed to have three major solution circuits: 1) the recovery/extraction circuit, 2) the elution circuit, and typically 3) a yellowcake slurry production circuit. The Nichols Ranch Unit processing plant is currently constructed and operated with only the first solution circuit installed. Currently, Uranerz maintains a “Processing Agreement for Uranium Concentrates” (toll resin processing agreement) with Power Resources Inc., (d/b/a Cameco Resources), a wholly owned subsidiary of Cameco Corporation. This toll resin processing agreement allows for processing of solutions for second and third solution circuit at Cameco Resources’ Smith Ranch Highland facility.

The recovery/extraction circuit includes the flow of lixiviant from the wellfield to the sand filters, or directly to the ion exchange columns and back to the wellfield. The uranium, that is liberated underground, is extracted in the ion exchange system of the process plant. The bleed from the circuit is permanently removed from the lixiviant flow to create a “cone of depression” in the wellfield’s static water level and ensure that the lixiviant is contained by the inward movement of groundwater within the designated recovery area. The bleed is disposed of by means of injection into Class I – Non Hazardous approved deep disposal wells. The volume of the concentrated bleed is approximately 0.5% to 1.5% of the circulating lixiviant flow for the Nichols Ranch Unit and projected to be 2.5% to 3.5% for the Hank Unit.

Currently, under the toll resin processing agreement with Cameco Resources, loaded ion exchange resin is removed from the ion exchange columns at the Nichols Ranch Unit processing facility, and transferred by truck transport to the Smith Ranch-Highland processing facility. While there, the ion exchange resin is eluted to remove the uranium until it is completely stripped. The barren ion exchange resin is returned to the Nichols Ranch Unit processing facility where it is reused in the ion exchange system. This process is repeated as ion exchange resin is cycled between the ion exchange system at the Nichols Ranch Unit processing facility and the elution circuit at the Smith Ranch-Highland processing facility.

Currently at the Smith Ranch-Highland processing facility, and as planned at the Nichols Ranch Unit processing facility, the elution circuit is designed to release the uranium from the loaded ion exchange resin by applying an aqueous solution of salt and sodium carbonate or sodium bicarbonate to the loaded ion exchange resin. The uranium concentration in the eluate will be built up at a controlled concentration range of between 20 to 40 grams per liter. This uranium rich eluate is ready for the de-carbonation process that occurs in the uranium precipitation circuit.

Yellowcake will be produced from the rich eluates that are recovered from the loaded ion exchange resin. The eluate from the elution circuit will be de-carbonated by lowering the pH below 2 with acid. The yellowcake product will be precipitated with hydrogen peroxide and a base such as sodium hydroxide or ammonia.

The precipitated yellowcake slurry will be transferred to a filter where excess liquid will be removed. Following a fresh water wash step that will flush the dissolved chlorides, the resulting product cake will be transferred to the yellowcake dryer which further reduces the moisture content, yielding the final dried free flowing product.

The yellowcake dryer will operate under a vacuum. The use of vacuum conditions lowers the temperature at which the yellowcake solids are dried (typically 165 F to 190 F). At these temperatures, water soluble uranium oxides and other compounds are not formed. In addition, the vacuum draws solids and water vapor toward the system’s interior preventing unwanted dust releases. This type of dryer is the same design that has been successfully used at Cameco Resource’s Smith Ranch-Highland processing facility located in the southern Powder River Basin.

The ion exchange system for the Nichols Ranch Unit is designed to accommodate flow rates up to 3,500 GPM. In order to contain the lixiviant within the designated wellfield recovery area, a small portion of the barren solution is withdrawn from the ion exchange circuit. The amount of bleed is estimated to be in the average range of 1% of the overall flow rate or equivalent to about 35 GPM.

The bleed solution is to be used to rinse and clean-up freshly eluted resin, make-up fresh eluant in the elution circuit, back wash sand filters, and wash yellowcake if necessary.