Friday 9th December 2016

Resource Clips


Uranium’s global perspective

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“If they don’t contract their uranium years in advance, they’re going to find everybody else has purchased their uranium. If you look at China, Guangdong [Nuclear Power Group] for example, they’ve bought Extract Resources, which has one of the world’s largest deposits, Husab in Namibia. When the Chinese utilities take that deposit, it’s off limits to everybody else. We’re seeing the same thing with ARMZ. The Russians are taking everything. They certainly know about security of supply. I think that’s why they bought Mantra, they’re buying Uranium One [TSX:UUU]. Uranium One might be delivering to U.S. contracts today, but I pretty much guarantee that future contracts will be going into Russia or the clients of ARMZ. ARMZ is going to be building reactors and then selling uranium to those countries that have Russian reactors.”

Closer to home, “uranium is very well established in Saskatchewan. Everybody knows what they have to do to get things in place, plus there’s three mills active. They’re all in the east side but there have been mills on the west side and the north.”

That’s the key. This is an area play because these are area-type deposits. They tend to occur in clusters. The chances that Fission and Alpha are the only ones that have uranium on their property is probably relatively low.—David Talbot, vice-president and senior analyst for uranium and iron ore with Dundee Capital Markets

Already considered a mining-friendly jurisdiction, “if anything Saskatchewan wants to become more competitive on the world stage. They’d love to get rid of that federal policy stating that uranium mines have to be owned 51% by Canadian companies. Right now mining takeovers are limited to any major that’s Canadian, which is essentially Cameco [TSX:CCO]. Maybe Denison [TSX:DML], if you stretch it. But Denison’s not going to purchase itself.”

As for the Athabasca Basin, “it’s only surpassed by Kazakhstan,” Talbot says. “But Kazakhstan doesn’t have the grades and is fairly well picked over. There’s an idea that they’ll be able to increase production by say 25%. But costs are going to go up. A lot of the deposits to the south are harder to mine. They’re deeper, there’s calcium, they’re finer-grained. Ultimately it means more capital and more operating costs. Whereas in the Athabasca these things are harder to find, but the grades are absolutely exceptional. We’ve seen at least three deposits or areas discovered here in the last four years—Hathor’s Roughrider, which is now Rio Tinto [RIO], Denison discovered Wheeler River, the world’s third-highest-grade deposit and, more recently, we’ve had Alpha [TSXV:AMW] and Fission’s [TSXV:FCU] Patterson Lake South discovery.

“These things generate a lot of excitement. These are very high grades and you can’t get that kind of excitement in Kazakhstan, especially from North American markets.”

But could all that PLS activity simply be a game of closeology? “It certainly is the flavour of the day,” Talbot responds. “Does that make PLS any less appealing? No. That’s the key. This is an area play because these are area-type deposits. They tend to occur in clusters. The chances that Fission and Alpha are the only ones that have uranium on their property is probably relatively low.”

As a result they’ve diverted attention from other parts of the Basin, “except maybe for Denison’s Wheeler River or maybe Denison’s J zone that they just purchased from Fission. But there’s no new discovery there that’s got everybody’s attention.” Even the Canadian subsidiary of international giant AREVA has moved into the PLS area “after AREVA’s geologists have driven over the property for 25 years.”

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