Tuesday 25th October 2016

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Posts tagged ‘Victory Nickel Inc (NI)’

Propping up the oil patch

February 8th, 2014

Juniors seek near-term cash flow as the fracking demand for sand expands

by Greg Klein

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It’s the stuff that opened up—or more literally, holds open—the unconventional oil and gas deposits that have revolutionized the energy industry. As frac sand demand continues to increase, explorers have taken on the task of finding and developing new projects. In many cases they’re Canadian companies finding Canadian sources for Canadian customers.

Hydraulic fracturing, or fracking as it’s best known, involves pumping a high-pressure mix, often about 90% water and 9.5% sand or other proppants, to create cracks or fissures in otherwise impermeable rock. Proppants prop open the fissures, allowing gas and oil recovery. The process has undergone major advancements since its 1947 introduction and, more recently, has become vital to extraction of shale oil and gas, and coal bed methane. In 2012 Industrial Minerals credited the process for 90% of U.S. wells supplying 30% of American oil and natural gas production. By March of that year, Texas-based Cadre Proppants had sold a billion pounds of sand in just six months.

Explorers hope for near-term cash flow as the fracking demand for sand expands

An aerial view of Rainmaker’s neighbour shows
the near-surface deposit of Canadian Silica Industries.

Numbers released by PacWest Consulting Partners in December foresee 8% annual growth in American land proppant demand, “from 63 billion pounds in 2013 to 75 billion pounds in 2015.” These aren’t uniform commodities but, PacWest stated, the competitors—resin-coated sand and synthetic ceramic proppants—are losing market share to lower-cost natural silica sand.

The boom affects transportation too, especially railways. In December CN TSX:CNR president/CEO Claude Mongeau stated, “Over the past five years, CN’s frac sand market has grown by nearly 300%, rising to more than 50,000 carloads in 2013.”

How much sand is that? According to U.S. Silica Holdings NYE:SLCA president/CEO Bryan Shinn, quoted by the Wall Street Journal in December, “It takes 25 railcars of sand, on average, to frack one well.”

2012 prices cited by Industrial Minerals range between $60 and $200 a tonne, depending on size and quality.

Wisconsin is widely credited with producing about 75% of American supply and a big chunk of Canada’s too. One vertically integrated Wisconsin miner, Calgary-headquartered Source Energy Services, has Q1 plans to open Canada’s largest frac sand storage and distribution facility near Grande Prairie, Alberta. Capable of unloading 100 railcars of sand in less than a day, the Wembley terminal will be one of four new facilities the company intends to open this year. That will bring its total up to 15 along a 4,800-kilometre network from northern British Columbia to southern Texas.

Canadian sources mostly consist of “private producers scattered around the Prairies,” according to Chris Healey, VP of operations for Rainmaker Mining TSXV:RMG. In January his company signed a letter of intent for the 1,471-hectare Jayjay Lake project in northern Saskatchewan and a purchase and sale agreement for two other northern Saskatchewan properties totalling 10,275 hectares. On February 5 another LOI came through for the 24,363-hectare Peace River project in northern Alberta.

“We’re not stopping there,” Healey says. He hopes to see Rainmaker “move to the next level by becoming a producer, either by developing one of our properties to production as quickly as possible or potentially buying a producer. We’re developing our company as a pure frac sand play.”

Among the attractions of the frac sand space are “the potential for market growth, which is substantial, and the ability to acquire assets near customers at reasonable costs.”

Rainmaker’s access to road and rail also has Healey encouraged. “Transportation is one of the key factors in a location, offering proximity to end users,” he says.

The cost of exploration is reasonable too, compared to other commodities. “It’s simple technology to drill into the sand,” Healey points out. “The Jayjay Lake property is an old beach from the glacial lake that covered the Prairies up to 10,000 years ago. You can dig into it with a shovel, a backhoe or a post hole auger. The Peace River property will probably be a bit harder but not particularly hard. We can still use an auger to drill test.”

Patrick Kluczny agrees. A project geologist/manager with Dahrouge Geological Consulting, he was instrumental in evaluating the Peace River project for the vendors, Zimtu Capital TSXV:ZC and its partner.

Unlike other mineral deposits, frac sand is loosely consolidated so there’s no need for core drilling. “We can use an auger drill, which means that the costs of exploration will be a lot lower,” Kluczny says. “Auger programs are on an order of magnitude cheaper than core programs. Also these deposits pretty much have to be close to surface.”

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Athabasca Basin and beyond

September 22nd, 2013

Uranium news from Saskatchewan and elsewhere for September 14 to 20, 2013

by Greg Klein

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Fission and Alpha sign acquisition agreement, Denison challenges Mega for Rockgate

Another burst of merger and acquisition activity hit the markets last week. Joint September 18 statements from Fission Uranium TSXV:FCU and Alpha Minerals TSXV:AMW announced a definitive agreement for the former’s acquisition of the latter. The proposed Mega Uranium TSX:MGA/Rockgate Capital TSX:RGT merger, however, took a surprising turn with Denison Mines’ TSX:DML unsolicited pitch for Rockgate. Denison’s September 17 announcement claimed a 38% premium over Mega’s offer, based on the previous day’s closing prices.

Uranium news from Saskatchewan and elsewhere for September 14 to 20, 2013

In addition to taking a run at Rockgate, Denison filed a revised
43-101 report for six deposits on its Mutanga property in Zambia.

The Fission/Alpha rationale is to put their 50/50 joint venture under a single owner, creating a company solely focused on Patterson Lake South and presumably a more attractive takeover target. Their other properties would go to two newly created spincos. Should Denison’s offer succeed, the company would spin out its African assets along with Rockgate’s advanced-stage Mali project. That would leave Denison focused on the Athabasca Basin.

Read more about these proposals and other uranium M&A news.

(Update: On September 24 Rockgate terminated its proposed merger with Mega. Read more.)

PLS assay backlog grows as Fission/Alpha release more scintillometer results

Step-out drilling confirmed strong mineralization in Patterson Lake South’s newest zone, Alpha and Fission stated on September 16. The JV partners released scintillometer readings for two new holes on zone R945E, the fourth of four zones along a 1.02-kilometre southwest-northeast trend.

The hand-held device measures drill core gamma rays in counts per second, up to an off-scale reading above 9,999 cps. The results are no substitute for assays, which are pending.

Hole PLS13-092 was collared roughly 10 metres north of existing holes. It reached a total downhole depth of 377 metres, striking the basement unconformity at 59 metres without encountering sandstone. Some highlights include:

  • <300 to 1,400 cps over 3 metres, starting at 157.5 metres in downhole depth

  • <300 to >9,999 cps over 16 metres, starting at 163 metres

  • <300 to 1,800 cps over 11 metres, starting at 192.5 metres

  • 460 to 2,500 cps over 2.5 metres, starting at 238 metres

PLS13-096 was collared about 15 metres grid west of PLS-084, replacing it as the zone’s most southwesterly hole. It found no sandstone, hit the basement unconformity at 56.5 metres and stopped at 365 metres. Highlights include:

  • <300 to >9,999 cps over 42.5 metres, starting at 135.5 metres in downhole depth

  • 310 to >9,999 cps over 11.5 metres, starting at 185.5 metres

  • <300 to >9,999 cps over 10.5 metres, starting at 235.5 metres

  • <300 to >9,999 cps over 14.5 metres, starting at 249 metres

True widths weren’t available. The two holes were drilled at -88 and -89 degree angles respectively, making downhole depths close to vertical.

The $6.95-million program calls for 44 holes totalling 11,000 metres, along with geophysics. These results bring the summer’s drilling to 27 holes totalling 8,488 metres. So far just one of the holes has had lab assays released. Scintillometer readings have been reported for 18 holes this summer.

Denison files combined resources for Mutanga property in Zambia

Denison has filed a new NI 43-101 report to replace two previous reports for its Mutanga property in Zambia, the company announced on September 16. The New Mutanga Report follows an Ontario Securities Commission review of a resource filed in March 2012 for the property’s Dibwe East deposit. The OSC declared that report non-compliant because it didn’t include all resource estimates and material information for the property as a whole. Denison’s new report incorporates information covered in a 2009 report on the Mutanga and Dibwe deposits, as well as the 2012 info for Dibwe East.

Of the project’s six deposits, only Mutanga shows measured, indicated and inferred categories. Mutanga Extension, Mutanga East, Mutanga West, Dibwe and Dibwe East have inferred pounds only. Combined, the estimate shows:

  • a measured resource of 1.88 million tonnes averaging 0.048% for 2 million pounds uranium oxide (U3O8)

  • an indicated resource of 8.4 million tonnes averaging 0.031% for 5.8 million pounds

  • inferred resources totalling 65.2 million tonnes averaging 0.029% for 41.4 million pounds

The 457.3-square-kilometre property is about 200 kilometres south of the capital city of Lusaka, near the Zimbabwean border.

The previous week, Denison updated two Athabasca Basin projects with a new resource for Waterbury Lake and more high-grade assays from Wheeler River.

Lakeland Resources options gold project to focus on Athabasca uranium

Now a pure play uranium explorer, Lakeland Resources TSXV:LK optioned a north-central Ontario gold property to New Dimension Resources TSXV:NDR, the companies announced September 16. New Dimension may earn a 70% interest in the Midas project by paying $100,000, spending $1.2 million and issuing 1.5 million shares. New Dimension must spend $300,000 on exploration by December 31.

We’re maintaining our focus on uranium, yet we’re not giving away what could turn out to be a valuable asset in the end. In our view there’s no downside to our shareholders, only a potential upside.—Roger Leschuk, corporate communications manager for Lakeland Resources

The 2,112-hectare road-accessible property has already seen ground magnetics, induced polarization and 16 drill holes that partially defined two gold-bearing zones, with 14 holes showing gold mineralization. Among the assays was 5.92 grams per tonne gold over 4.7 metres, starting at 45.7 metres in depth and including 8.88 g/t over 2.6 metres.

“We get to maintain an interest in a property that looks very encouraging to say the least,” Lakeland corporate communications manager Roger Leschuk tells ResourceClips.com. “The people who are picking it up are a very good group and they see this as potentially becoming their flagship property. The great part about it for Lakeland is we retain a 30% interest all the way potentially to a new discovery. We’re maintaining our focus on uranium, yet we’re not giving away what could turn out to be a valuable asset in the end. In our view there’s no downside to our shareholders, only a potential upside.”

A fall drill program is expected to begin shortly, the companies stated.

Read more about Lakeland Resources.

Forum announces fall/winter plans for its PLS-adjacent Clearwater project

In a September 17 report, Forum Uranium TSXV:FDC updated its Clearwater project, which underwent ground radiometric prospecting, lake sediment geochemical surveys and soil radon surveys in late August and early September. The radon survey found anomalous zones immediately southwest of the adjacent PLS property, the company stated. Forum now plans further prospecting of radiometric anomalies, as well as an expanded radon survey to cover areas with electromagnetic conductors on strike with the PLS conductive trend. Autumn is scheduled for ground EM surveys and early winter for ground gravity work to identify drill targets for the 9,910-hectare property in late January.

One week earlier Forum said its private placement raised $2.59 million.

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Athabasca Basin and beyond

August 4th, 2013

Uranium news from Saskatchewan and elsewhere for July 27 to August 2, 2013

by Greg Klein

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Alpha/Fission extend Patterson Lake South R390E zone by 30 metres

Just two weeks ago they were crowing about “the most abundant off-scale mineralization of any hole” at Patterson Lake South. Now Fission Uranium TSXV:FCU and 50/50 joint venture partner Alpha Minerals TSXV:AMW say they’ve surpassed that. Scintillometer readings for one of two shallow step-outs reported July 29 represent “the largest accumulation of discrete off-scale mineralized intervals in any drill hole at PLS to date.” The two holes add 30 metres of strike to R390E, the middle of three zones along an 850-metre northeast-southwest trend. Including the 15-metre extension resulting from the hole announced July 18, the campaign’s first three holes have extended the zone’s strike by 75% to 105 metres.

The scintillometer measures gamma radiation from drill core in counts per second, up to an off-scale reading over 9,999 cps. Scintillometer readings are not assays, which are still pending. A radiometric probe will also be used to measure downhole radiation.

Hole PLS13-073, 15 metres grid east of the zone’s nearest hole, showed:

  • <300 to >9,999 cps over 19.5 metres, starting at 102 metres in vertical depth
  • <300 to >9,999 cps over 11 metres, starting at 142.5 metres.

True widths weren’t available. Drilled to a depth of 248 metres, the hole encountered Devonian sandstone at 50 metres’ depth and a basement unconformity at 53 metres.

Hole PLS13-075, 15 metres grid west of the nearest hole, showed:

  • <300 to >9,999 cps over 70 metres, starting at 57.5 metres in vertical depth
  • (including 580 to >9,999 cps over 23 metres)
  • <300 to 6,800 cps over 12 metres, starting at 130 metres
  • <300 to >9,999 cps over 2.5 metres, starting at 146.5 metres
  • 400 to 1,800 cps over 2 metres, starting at 151 metres
  • 1,000 cps over 0.5 metres, starting at 157 metres
  • <300 to 3,600 cps over 2.5 metres, starting at 160 metres.
Uranium news from Saskatchewan and elsewhere

Again, true widths were unknown. The 188-metre hole struck sandstone at 47 metres and the basement unconformity at 49.3 metres. The first PLS13-075 result above included 21.65 metres of mineralization over 9,999 cps in several intervals, which the JV partners call the project’s “largest accumulation of discrete off-scale mineralized intervals” so far. They include 16.7 metres of continuous off-scale readings starting at 73.5 metres’ depth. Although Alpha and Fission anticipate that its main zone of mineralization has been found, drilling on this hole continues.

As does the $6.95-million program, comprising ground geophysics and about 44 holes totalling 11,000 metres.

Paladin cancels sale; reports $180-million impairment, $81-million placement, fatality

Paladin Energy TSX:PDN has dropped negotiations to sell a minority interest in its Langer Heinrich mine in Namibia. In one of three August 2 announcements, the company said uranium’s currently low price would drive down offers on an asset with expansion potential and a mine life of over 20 years.

Paladin also reported it expects a further non-cash impairment estimated at US$180 million before taxes, which the company attributed to its Kayelekera mine in Malawi, Niger exploration projects “and other smaller items.” Paladin suspended work in Niger following May 23 terrorist attacks.

Within minutes of reporting the suspended sale Paladin announced it was offering a private placement “to provide adequate funding for the company into the September quarter” despite low uranium prices. Later the same day Paladin announced it closed the placement at $C81 million. The money came from 125.6 million shares, representing 15% of the company’s existing issued capital, at a 30% discount to the stock’s previous ASX close.

Paladin managing director/CEO John Borshoff said the money would help “reduce debt in the mid-term.”

On July 31 the company reported a fatal accident in Kayelekera’s engineering workshop.

Read about Paladin’s last quarterly report.

Powertech forms strategic alliance with Asian uranium investor

A Vancouver-headquartered company with uranium projects in three American states announced a strategic alliance with Asia’s “only significant uranium investment and development vehicle.” On August 1 Powertech Uranium TSX:PWE reported Azarga Resources Ltd, a privately held Hong Kong-based company, agreed to a number of deals.

As of July 22 Azarga bought 24.65 million shares at $0.07 for a total of $1.72 million, giving the purchaser an initial 17.5% of Powertech. Azarga also provided Powertech with $514,350 in return for a debenture with the amount payable at 115% within 12 months or 130% within two years. Powertech may instead convert the principal into shares granted to Azarga at $0.07. Full conversion would leave Azarga with an approximate 22% interest in Powertech.

Azarga also agreed to buy a 60% chunk of Powertech’s Centennial project in Colorado for $1.5 million over two years. Should shareholders oppose the purchase, $1 million of the purchase price would be converted to a debenture on the same terms as the other. On completing the 60% purchase, the two companies would form a JV with Azarga acting as project operator.

The deal would include a put option, in which Powertech could sell its remaining 40% after January 1, 2017, for $250,000, and a call option, allowing Azarga to buy the 40% after that date for $7 million or, within 10 days of a change of control at Powertech, for $1 million.

The companies further agreed to share data and expertise, with Azarga using “its best efforts to support any equity financings” undertaken by Powertech. In a statement accompanying the announcement, Powertech president/CEO Richard Clement said Azarga’s “positioning in Asia will provide enhanced access and exposure to those markets.”

The transactions are subject to shareholder and TSX approval.

Powertech released a preliminary economic assessment for an in-situ recovery (ISR) mine at Centennial in August 2010. Following local opposition, Colorado imposed new restrictions on uranium mining the following month. Powertech lost its court challenge against the new regulations in July 2012. By that time the company had already shifted focus to its Dewey-Burdock project in South Dakota, for which it released a revised PEA in April 2012. The project is now undergoing permitting and licensing with the United States Nuclear Regulatory Commission. Powertech has two other uranium projects in Wyoming.

Azarga stated it currently has no plans to develop Centennial but will instead review the project’s exploration and development potential. Azarga also holds an 80% operating interest in “the largest-known Soviet-era resource in the Kyrgyz Republic,” as well as interests in other uranium projects in the U.S. and Turkey.

Forum begins airborne radiometrics over PLS-adjacent Clearwater project

On July 30 Forum Uranium TSXV:FDC announced airborne radiometrics had begun over its Clearwater project, adjacently southwest of Alpha/Fission’s PLS property. The survey consists of 1,463 line-kilometres at 100-metre spacing over the 99-square-kilometre property to measure surface radioactivity in outcrops or boulder trains using a proprietary system of Goldak Airborne Surveys. Forum says preliminary interpretation of its magnetic and electromagnetic survey suggests one of Clearwater’s conductors hosts the PLS discovery.

On further scrutinizing the airborne surveys, the company will begin prospecting, radon surveys and lake sediment geochemical sampling this month. Ground geophysics might also be used to identify drill targets.

In a collaborative effort, the surveys have also been covering PLS-area properties held by Aldrin Resource TSXV:ALN and the Western Athabasca Syndicate. The latter is a four-company strategic alliance consisting of Skyharbour Resources TSXV:SYH, Athabasca Nuclear TSXV:ASC, Lucky Strike Resources TSXV:LKY and Noka Resources TSXV:NX, which are jointly exploring a 275,361-hectare land package in the vicinity of the Fission/Alpha discovery. On July 23 the syndicate announced an extension of its portion of the surveys.

Earlier in July, Forum announced it extended the company’s Key Lake-area holdings in the Athabasca Basin’s southeast corner.

Ur-Energy begins Lost Creek production in Wyoming

Ur-Energy TSX:URE began mining its Lost Creek operation on August 2. The ISR project in Wyoming’s Great Divide Basin took eight years and US$95 million to develop and should, according to an April 2012 PEA, produce about 7.38 million pounds uranium oxide (U3O8) over 14 years. The 2012 numbers assumed uranium prices ranging from $55 to $80 a pound, substantially higher than the current seven-year low of $34.50. But with those numbers the PEA used an 8% discount rate to calculate a pre-tax net present value of $181 million and an 87% internal rate of return.

Ur-Energy says it holds long-term contracts with several U.S.-based utilities and will begin deliveries in Q4.

On July 30 the company reported filing its Q2 report on sedar.com.

Cameco reports Q2 results, makes company and commodity forecasts

Cameco Corp’s TSX:CCO Q2 report came out August 1, with the company reporting $421 million in revenue, 49% above the same period last year and a $99-million gross profit, up 98%. Net earnings attributable to equity holders came to $34 million or $0.09 a share. Adjusted net earnings were $61 million or $0.15 a share.

Cameco president/CEO Tim Gitzel addressed a conference call, speaking optimistically about Cigar Lake’s imminent start-up, a planned 50% production increase and future uranium prices.

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