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neighborhood of, say, 200 tons. In such case, our stockholders would not receive a return of their investment much less a reasonable profit or profit commensurate with the speculative risk of their investment.

Perhaps I need not point out that the development of much of our Nation's mineral resources, which, at times, the Government strongly encourages for defense reasons, is based on willingness of investors to take speculative risks. If they lose because the mineral is not found, that is their risk, but to lose due to an unexpected shift in AEC market policy would be doing them a grave injustice. Yours and your committee's cooperation will be most appreciated.

Very truly yours,

HEPBURN T. ARMSTRONG, President, Wyoming Uranium Corp.

[Telegram]

SAN FRANCISCO, CALIF., February 24, 1958.

JOINT COMMITTEE ON ATOMIC ENERGY,
House Office Building,

(Attention James T. Ramey, Executive Director, Washington, D. C.): Circumstances beyond my control prevent my presence before Joint Committee as industry representative in 202 hearings now under way. I am founder and president of Nation's second largest producer of uranium ore. I strongly urge a complete revision in the recently announced policy of the AEC insofar as it effects a curtailment on our domestic industry. I am conversant with and heartily endorse the views of Mr. Victor Salazar, Albuquerque, N. Mex., who is to appear as a witness before your committee. The need for resolute actions by your committee and resultant legislation by the Congress is urgent both for the preservation of our status as the leading nuclear power and as a prevention of measures directed toward the extinguishment of our infant domestic industry.

W. RODNEY DE VILLIERS,
President, Rio de Oro Uranium Mines, Inc.,

Albuquerque, N. Mex.

GREEN MOUNTAIN URANIUM CORP.,
Douglas, Ariz., February 20, 1958.

Mr. JAMES T. RAMEY,

Executive Director, Joint Committee on Atomic Energy,

United States Congress, Washington, D. C.

DEAR SIR: We are informed that hearings before your committee are being held commencing February 24, 1958, at which representatives of the uranium mining industry are to appear in connection with the impact on the industry of the recent policy of the Atomic Energy Commission to deny applications for further ore processing mills. The purpose of this letter is to place before your committee the situation which confronts Green Mountain Uranium Corp. and its stockholders as a result of this policy.

Green Mountain Uranium Corp. holds extensive uranium mining leases and claims in the Crooks Gap area in the State of Wyoming; 49 percent of the stock is owned by approximately 6,000 shareholders who were former shareholders of Wyoming Uranium Corp., predecessor in title to Green Mountain Uranium Corp. Prior to May 8, 1956, Wyoming Uranium Corp. had made substantial expenditures in the exploration for uranium ores on these properties. After that date, and up to October 1, 1957, Phelps Dodge Corp. expended in excess of $525,000 in further exploration on these properties, and paid into the Green Mountain Uranium Corp. treasury $250,000, as a result of which it acquired 51 percent of the stock of Green Mountain Uranium Corp. Parenthetically, it might be added that during about this same period Phelps Dodge Corp. also expended further amounts in excess of $525,000 in the exploration for uranium ores in the Crooks Gap area on properties other than those of Green Mountain Uranium Corp.

In June 1957 Phelps Dodge Corp. entered into negotiations with Lucky Mc Uranium Corp. involving an increase in the capacity of the Lucky Mc mill in the Crooks Gap-Gas Hills area from 750 to 1,750 tons per day, with 300 tons of this increased capacity to be used for the treatment of the ores from the Green Mountain Uranium Corp. properties. On August 2, 1957, Lucky Mc filed an application with the Atomic Energy Commission for this additional mill capacity, in which application the Green Mountain ore reserves were included in the total ore re

serves intended to be treated by the increased capacity. At about the time the Lucky Mc application was to be considered by the Atomic Energy Commission, as well as other applications for mills, the October 1957 policy of the Atomic Energy Commission was announced, and this has precluded consideration of these applications.

We are advised that Mr. J. A. Mecia, of the Lucky Mc Uranium Corp., will appear as a witness at the forthcoming hearings of your joint committee, and in view of this it is not planned that Green Mountain Uranium Corp. have present a witness unless your committee desires otherwise. However, it is desired to bring to the attention of the committee the fact that the stockholders of Green Mountain Uranium Corp. have been encouraged to invest a very substantial amount of money in exploration for uranium ore reserves in the Crooks Gap area in Wyoming, and are now being left without any outlet or market for these ores. It is believed that the proposed mill capacity of 300 tons per day contemplated in the negotiations with Lucky Mc Uranium Corp. will be adequate to permit a modest underground mining operation, and if a satisfactory contract can be negotiated with the Atomic Energy Commission for the required mill capacity and for sale of the yellow cake, it is believed that Green Mountan Uranium Corp. will be able to recover the investment of its stockholders with a fair profit. Unless such arrangements can be made, it is difficult to visualize any means whereby this may be accomplished.

We are not in position to evaluate the future demand for fissionable materials, however, we do believe that unless those who in the past have successfully developed uranium ore reserves in anticipation of the return of their investment and a profit commensurate with the speculative risk involved are given the opportunity to mine, mill and market their ore reserves, there will be little to encourage further exploration to meet demand as it materializes. Also, we would point out that unless adequate mill capacities and prices are provided for those who have already developed uranium ore reserves, then in order that they may salvage what they can fron their ventures it will be necessary for them to mine, if possible, only their highest grade tonnage, with resulting loss to the presently developed reserves. We wish to assure you of our very deep interest in the problems confronting your committee, and, if desired, we will be glad to have a representative of this corporation appear as a witness.

Yours very truly,

GREEN MOUNTAIN URANIUM CORP.,
WALTER C. LAWSON, President.

MINOR, MEE & Co.,

Santa Fe, N. Mex., February 18, 1958.

Hon. CARL T. DURHAM,

Chairman, The Joint Committee on Atomic Energy,

Washington, D. C.

DEAR SIR: The State of New Mexico and the uranium industry will be well represented in person at the public hearings commencing February 24. I would like, however, to include our opinions as investment bankers to those that have already been incorporated in your file.

Our firm was one of the underwriters in each of two important financings, i. e., Sabre Uranium Corp. and Quinta Corp. We also were an important distributor of Pinon Uranium which subsequently merged with Sabre. Approximately 1,500 of our clients own uranium stocks.

The venture capital risk taken by our clients was based upon the following:

1. The AEC announced a program of bonus payments for delivery to Government buying stations of commercial ore.

2. The contract policies already established in the United States and Canada to supply our need for an essential raw material.

When substantial reserves were indicated within the United States it became known that Eldorado Mining had given notice to the companies seeking mill contracts that they would have to meet a future deadline in the matter of proof of a commercial ore body of size to obtain a "bonus contract." As this deadline arrived, five companies including, Northspan, Stanrock, and Stanleigh, were granted sufficient extension of time to comply with the requirements of a "bonus contract."

We submit that similar treatment is due those who have successfully employed venture capital in the United States. Capital solely dependent on a

Government agency for any return, if successful, should not be frozen by an announcement that enough uranium for the period under contract has been committed. The risks taken in the interest of our national security and continental defense should be entitled to the opportunity to profit where commercial ore had been discovered prior to the October 1957 policy annoucement. Respectfully submitted.

WILLIAM R. MEE.

Chairman DURHAM. The committee is adjourned until 10 o'clock tomorrow morning in room P-38 in the Capitol, the District of Columbia Committee room.

The afternoon meeting will be held here in this room, 1334.

The committee is adjourned until tomorrow morning at 10 o'clock. (Thereupon, at 5:20 p. m., Monday, February 24, 1958, the committee recessed, to reconvene at 10 a. m., Tuesday, February 25, 1958.)

PROBLEMS OF THE URANIUM MINING AND MILLING

INDUSTRY

TUESDAY, FEBRUARY 25, 1958

CONGRESS OF THE UNITED STATES,

JOINT COMMITTEE ON ATOMIC ENERGY,

Washington, D. C.

The committee met at 10 a. m., pursuant to recess, in room P-38, the Capitol, Hon. Carl T. Durham (chairman of the committee) presiding.

Present: Representatives Durham, Price, Dempsey, Van Zandt, and Hosmer; and Senators Pastore, Jackson, and Dworshak.

Also present: James T. Ramey, executive director; David R. Toll, staff counsel; and George E. Brown, Jr., staff member, Joint Committee on Atomic Energy.

Chairman DURHAM. The committee will come to order.

This is a continuation of the hearings under section 202 of the Atomic Energy Act of 1954 "on the development, growth, and state of the atomic energy industry."

Our first witness this morning is Mr. William W. Orr, executive vice president of the Uranium Ore Producers Association.

Mr. Orr, you may proceed.

STATEMENT OF WILLIAM W. ORR, EXECUTIVE VICE PRESIDENT, URANIUM ORE PRODUCERS ASSOCIATION, GRAND JUNCTION, COLO.

Mr. ORR. Mr. Chairman, members of the committee, guests, my name is William Orr. I am executive vice president of the Uranium Ore Producers Association with headquarters in Grand Junction, Colo.

Since the inception of our organization in 1948, the ÚOPA has sought to further the interests of the independent uranium operator. In pursuit of these objectives, the UOPA has been instrumental in the past in bringing about more uniform ore-sampling procedures at mills and buying stations; in bringing the prices paid for uranium ores to the present level, as provided under circular 5, revised; in helping to resolve the conflicts between the mining interests and the holders of oil and gas leases on Federal lands, and in many other areas where the lot of the independent operator might be improved.

Members of the UOPA have, in the past, appeared many times before congressional committees in behalf of the domestic uranium industry.

I cite these examples to provide you gentlemen with a little background on our organization so that you might better understand our reasons for seeking a hearing before you at this time.

For many months the executive board of our association has been deeply concerned over the apparent trend on the part of the Raw Materials Division of the Atomic Energy Commission to put the brakes on domestic uranium production. Our group has felt that this effort was in direct violation of the assurances given by the AEC to the domestic miner that he would have an unlimited market for his ores at a guaranteed price until March 31, 1962, and, further, that he would be provided with a substantial market for his ores at least through 1966.

Though this has been the general understanding within our industry, an increasing number of cases have come to the attention of the UOPA in which this so-called guaranteed market does not exist.

In an effort to focus national attention on this matter, our organization undertook a survey of the marketing problems which confront the uranium industry early last fall.

Before that survey had been completed, Dr. Jesse Johnson, Director of the Raw Materials Division of the Atomic Energy Commission, confirmed our worst fears. In a speech before the fourth annual meeting of the Atomic Industrial Forum in New York City late last October, Dr. Johnson told the delegates, in essence, that the Commission did not intend to permit a further expansion of domestic uranium production. He said that the requirements of the Federal Government for uranium for defense purposes had been essentially satisfied. Since that time Dr. Johnson and other AEC officials have made it abundantly clear that the Atomic Energy Commission does not intend to enter into any additional milling contracts. This being a highly effective way to hold production at its present level.

Now, this action, I submit to you, is not only in violation of the promises and assurances given our industry by the Atomic Energy Commission, but it is also a grave threat to the continued health and well-being of this important segment of our economy.

I shall not burden you gentlemen here with past statements and promises made by the officials of the Commission. Rather, I should like to submit these for the committee in written form and to use my limited time here to cite a few examples of the effect which this cutback has already had upon the industry.

The fact that a serious market shortage exists throughout the uranium industry became clearly evident during the course of the UOPA survey which I mentioned a moment ago. The roots of this shortage lie first in the Commission's refusal to consider any additional milling contracts, save those already in negotiation, and, second, in the inadequate percentage which present contracts require for the processing of custom ore, that is, that ore which is mined by the independent operator not having milling facilities of his own. State by State here are a few examples of the situation which our group found to exist.

By all means, gentlemen, this is not the complete list, but only the substantial ones.

Colorado: Along the front range of the Rocky Mountains many mines are faced with severe cutbacks or complete shutdowns inasmuch as there is no nearby mill.

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