Thursday 27th October 2016

Resource Clips

Arrow hits uranium bullseye

But NexGen Energy’s already pushing for an H2 resource update

by Greg Klein

But NexGen Energy’s already pushing for an H2 resource update

Fast-paced progress has distinguished NexGen’s
Rook 1 project since the Arrow discovery.

A maiden resource showing the Athabasca Basin’s largest undeveloped uranium deposit comes barely two years after NexGen Energy TSXV:NXE discovered the Arrow zone on its Rook 1 property. And CEO Leigh Curyer anticipates more good news as soon as this winter’s assays arrive. Hence an update’s anticipated later this year and a further milestone—possibly going straight to pre-feasibility—seems likely for 2017. With an inferred 201.9 million pounds U3O8, a grade 26 times the global average and $31 million to spend, this company’s not wasting any time.

Although considerably deeper and so far limited to the inferred category, Arrow outnumbers Fission Uranium’s (TSX:FCU) neighbouring Patterson Lake South for tonnage, grade and pounds.

With a 0.25% cutoff, NexGen provided separate numbers for four stacked shear structures, one of them bursting with a stupendous high-grade area.

  • A1 shear: 380,000 tonnes averaging 0.5% for 4.2 million pounds U3O8
  • A2: 1.48 million tonnes averaging 0.85% for 27.6 million pounds
  • A2 high grade: 410,000 tonnes averaging 13.26% for 120.5 million pounds
  • A3: 1.13 million tonnes averaging 1.9% for 47.3 million pounds
  • A4: 80,000 tonnes averaging 1.35% for 2.3 million pounds

  • Total: 3.48 million tonnes averaging 2.63% for 201.9 million pounds

The report bases its numbers on 59,796 metres completed by last October, in which 80 of 82 holes hit mineralization. Currently 645 metres in strike, the resource has a lateral width of 235 metres. It begins 100 metres below surface, just below the unconformity, and extends 820 metres vertically. The deposit remains open in all directions.

The 0.25% cutoff compares to a global average mine grade of 0.1% and, as Curyer emphasized in his March 3 conference call, remains “incredibly robust under any measure of analysis.” Even at a 10% cutoff, Arrow would have 101.3 million pounds, according to data provided.

By comparison, Fission’s September 2015 PLS update used a 0.2% open pit cutoff and 0.25% underground cutoff, showing:

  • indicated: 2.01 million tonnes averaging 1.83% for 81.11 million pounds U3O8

  • inferred: 785,000 tonnes averaging 1.57% for 27.16 million pounds

The first and most advanced of the discoveries, PLS reached its preliminary economic assessment last September. But Curyer boasts of having the southwestern Basin’s “most dominant land position … covering all nine uranium-bearing conductive corridors in the region.” Running through Arrow are nine kilometres of the Patterson corridor, which also hosts Rook 1’s Bow discovery, 3.7 kilometres northeast along strike of Arrow, and Fission’s PLS. Some other companies working the corridor include Cameco Corp TSX:CCO, ALX Uranium TSXV:AL and a joint venture of Cameco, AREVA Resources Canada and Purepoint Uranium TSXV:PTU, which discovered the Spitfire zone.

But NexGen Energy’s already pushing for an H2 resource update

NexGen claims “some of the best drill intercepts
on a grade/thickness basis ever publicly recorded.”

Like PLS, Arrow sits within basement rock, where development would presumably avoid any Cigar Lake-type adventures. But Arrow’s “uniquely 100% land-based,” Curyer points out.

Although obviously proud of this achievement, Curyer repeatedly emphasized there’s more to come. Preliminary results from the 30,000-metre winter program show some of Arrow’s highest radioactivity and have already added another 25 metres in strike.

The resource is “effectively going to be out of date as soon as those assays are returned,” he enthuses. “It’s blown that high-grade domain wide open and that’s why we’re already expecting to do an updated resource in the latter half of 2016.”

The property’s currently under attack by six rigs. Three focus on delineation, two others seek possible Arrow extensions to the northeast and southwest, while another searches for separate zones along the northeast-southwest corridor.

Apart from the “unprecedented speed” of just two years to build the Basin’s third-largest deposit (after the McArthur River and Cigar Lake operations), NexGen said the resource “truly sets one for the record books in terms of cost of discovery”—about 13 cents a pound U3O8.

“Throughout history there have been a discrete number of Tier 1 discoveries across the various commodities worldwide which have occurred during downturns or flat commodity price environments,” Curyer said. “These discoveries have demonstrated significant value creation and kick-started a sustained quality of investment environment for the entire resources sector.” Rook 1, he maintains, holds “potential to join that exclusive club.”

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