The U.S. Department of Energy’s record-keeping arm issued very encouraging data this week, which should give a boost to many of the companies developing their uranium properties in the United States. Front-runners, with the more solid outlook, include Strathmore Minerals (TSX: STM; Other OTC: STHJF), UR-Energy (TSX: URE), Uranerz Energy (OTC BB: URNZ) and Energy Metals (TSX: EMC). The U.S. government’s uranium annual report should also help bolster the aspirations of the more speculative uranium explorers and developers we have previously written about, including Kilgore Minerals (TSX: KAU), Max Resources (TSX: MAX; OTC BB: MXROF), and Northwestern Minerals Ventures (TSX: NWT; OTC BB: NWTF), which also plan to explore their U.S. uranium-mineralized assets.

The Energy Information Administration (EIA) released its Annual Domestic Uranium Production Report on Monday, showing the U.S. uranium production industry’s turnaround continued through 2005. Drilling, mining, concentrate production, employment and expenditures all increased over 2003 and 2004. U.S. uranium mine production was the highest since the year 2000, but remains below the period of 1995-1999. Sustained growth in this sector appears likely based upon the soaring spot uranium price, which has increased more than 500 percent since then.

U.S. uranium mined produced an estimated 3 million pounds of uranium oxide (U3O8), 24 percent more than in 2004. Estimated U.S. uranium concentrate (yellowcake) production in 2005 was 2.7 million pounds U3O8, 18 percent more than 2004. Domestic production mills and in-situ recovery facilities shipped an estimated 2.7 million pounds of uranium concentrate, this past year.

In 2005, employment in the uranium industry increased by 52 percent, over the previous year. Drilling for uranium, production, land and other expenditures jumped by 54 percent, in 2005 compared to 2004. Companies spent an estimated $16.4 million in 2005, the most since 1997 – 1998. Surface drilling as measured in millions of feet was 1.7 million feet, the most since 1999. Employment in person-years was estimated at 638, the largest employment figure since 1999, but far below the four-digit employment numbers of 1995 – 1998. The greatest employment percentage increase came from Arizona, Utah and Washington State, but the largest employment number in person-years came from Colorado and Texas. Wyoming, New Mexico, and Nebraska showed modest increases in employment numbers.

Exploration activity was also up. The number of drill holes exploring for uranium, in 2005, grew by 47 percent over 2004. Land expenses nearly doubles since 2003. These were expenditures for land acquisitions, geological research, geochemical, geophysical surveys, and costs incurred by field personnel in the course of exploration, reclamation and restoration work (plus overhead and administrative costs associated with supervising and supporting field activities).

The largest percentage and dollar increase came from production expenditures, which include mining, milling, uranium processing and running the facilities. The estimated expenditure more than doubled in 2005, compared to the previous year. This jump in expenses confirms that uranium exploration, development and production companies are preparing for a banner year in 2006 and beyond.

While production was modest compared to the world’s powerhouse producers, such as Athabasca and Australia, the EIA report reminded us of the production capacity of the various U.S. facilities. While U.S. utilities require between 50 and 60 million pounds of uranium to fuel reactors, the domestic uranium industry is producing but a fraction of what is needed. Total “existing” production capacity from permitted In Situ uranium recovery stands at 8.8 million pounds annually. U.S. utilities need to begin looking beyond next year’s annual report. The time is now to foster and encourage the small domestic uranium industry before everyone but the United States has available uranium supplies to power their nuclear fleets.

An interesting EIA report, issued last Thursday, confirms what we’ve been writing about. For 2006, U.S. utilities have contracted for more than 60 million pounds of uranium to fuel the country’s nuclear fleet. Looking forward to 2007, they have only contracted for 45 million pounds. By 2008, the contracted number dives below 30 million pounds. For the period of 2009 – 2010, U.S. utilities have contracted for about 10 million pounds per year, averaged over those two years. That is far below the minimum uranium requirements necessary to fuel the country’s nuclear reactors. This should again confirm that the U.S. uranium bull market has barely begun.