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Athabasca Basin and beyond

April 19th, 2014

Uranium news from Saskatchewan and elsewhere for April 12 to 18, 2014

by Greg Klein

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Fission Uranium releases second batch of winter assays from Patterson Lake South

With its first set of Patterson Lake South assays since February 19 and only the second since winter drilling began in mid-January, Fission Uranium TSXV:FCU reported 12 holes on April 14. Nine showed high grades and all came from zone R780E, the third of five zones along a 2.24-kilometre west-east potential strike that remains open at both ends. Among the best assays were:

Hole PLS14-125

  • 0.46% uranium oxide (U3O8) over 56.5 metres, starting at 119.5 metres in downhole depth
  • (including 1.91% over 6 metres)
  • (and including 1.71% over 2.5 metres)

  • 0.21% over 12 metres, starting at 225.5 metres

Hole PLS14-126

  • 1.3% over 8.5 metres, starting at 152.5 metres
  • (including 4.44% over 1 metre)

  • 2.41% over 5.5 metres, starting at 178 metres
  • (including 4.66% over 2 metres)

  • 0.96% over 5 metres, starting at 230 metres

Hole PLS14-128

  • 0.46% over 6 metres, starting at 167.5 metres

  • 6.74% over 4 metres, starting at 216.5 metres
  • (including 13.04% over 2 metres)

Hole PLS14-130

  • 0.47% over 17 metres, starting at 84.5 metres
  • (including 1.57% over 3.5 metres)

  • 3% over 4 metres, starting at 142.5 metres
  • (including 11.1% over 1 metre)

Hole PLS14-131

  • 0.22% over 22.5 metres, starting at 168.5 metres

  • 0.3% over 30.5 metres, starting at 199.5 metres
  • (including 0.93% over 3.5 metres)

  • 0.34% over 21.5 metres, starting at 234.5 metres

Hole PLS14-132

  • 0.4% over 12.5 metres, starting at 72 metres
  • (including 3.28% over 1 metre)

  • 0.72% over 46 metres, starting at 134.5 metres
  • (including 2.41% over 10.5 metres)

  • 1.54% over 5.5 metres, starting at 216 metres
  • (including 2.74% over 3 metres)

  • 4.03% over 8 metres, starting at 226.5 metres
  • (including 8.48% over 3.5 metres)

Hole PLS14-133

  • 0.9% over 13.5 metres, starting at 167 metres
  • (including 8.37% over 1 metre)

  • 0.48% over 21.5 metres, starting at 184 metres
  • (including 1.03% over 5 metres)

Hole PLS14-136

  • 0.92% over 41 metres, starting at 119 metres
  • (including 2.59% over 8 metres)
  • (and including 3.69% over 2.5 metres)

True widths were unavailable.

The previous week Fission Uranium stated 70 holes had been completed out of a planned 100 winter holes totalling approximately 30,000 metres. About 85 holes, using four rigs, will concentrate on delineation. A fifth rig explores outside the main mineralized trend. The 31,039-hectare project’s winter budget comes to $12 million, including geophysics. No target date has been announced for the project’s highly anticipated maiden resource.

Macusani Yellowcake, Azincourt sign LOI to consolidate Peruvian properties

Uranium news from Saskatchewan and elsewhere for April 12 to 18, 2014

Azincourt’s Macusani project, on Peru’s Macusani plateau
and surrounded by Macusani Yellowcake, borders a Fission 3.0
property also called Macusani.

Under a letter of intent announced April 17, Macusani Yellowcake TSXV:YEL would swallow up additional properties held by Azincourt Uranium TSXV:AAZ but surrounded by Macusani in southeastern Peru. The deal would give Azincourt 68.35 million Macusani shares, representing about 30% of the company following the transaction. Macusani would then control over 949 square kilometres hosting “one of the largest undeveloped uranium projects in the world,” the two companies stated.

Macusani’s current package, on Peru’s Macusani plateau, hosts four low-grade deposits that offer low-cost mining potential, according to a December preliminary economic assessment. August resource estimates total 321,000 pounds U3O8 measured, 31.15 million pounds indicated and 30.08 million pounds inferred.

Azincourt completed the acquisition of its two Peruvian assets in January, before contracting technical studies on them. An historic, non-43-101 resource released in 2011 for Azincourt’s 4,900-hectare, now confusingly named Macusani project showed 5.69 million pounds measured, 12.52 million pounds indicated and 17.42 million pounds inferred. The company’s 9,600-hectare Muñani project has undergone airborne geophysics and ground work but has yet to be drilled. Prior to Azincourt’s acquisition, the two projects had lain dormant for two years following Fukushima.

On closing the deal Macusani anticipates a new PEA that would “easily” incorporate the new properties into its existing mine plan.

The consolidated turf would then surround some 51 square kilometres held by Fission 3.0 TSXV:FUU. The Fission Energy spinco collaborates with Azincourt on their PLS-adjacent PLN joint venture.

Definitive agreement advances Denison’s acquisition of Enexco

Denison Mines TSX:DML moved closer to its planned acquisition of International Enexco TSXV:IEC with a definitive agreement announced April 14. Terms of the all-share deal remain unchanged from the LOI reported last month.

In early April Denison reported radiometric results from the Wheeler River JV’s newly discovered Gryphon zone. More radiometric results followed the next day from Enexco’s Mann Lake JV.

Forum announces initial drill results from Clearwater

Spring break-up brought an early end to the Clearwater project’s first drill program, but Forum Uranium TSXV:FDC identified “five major structural trends with reactivated graphitic shear zones [and] alteration,” according to an April 17 statement. Core from two holes showed “locally elevated radioactivity” up to 300 counts per second.

Nine holes totalling 2,310 metres tested widely spaced targets “including a number of gravity lows, radon anomalies and EM conductors both on strike and running parallel” to the PLS trend, the company added. Forum expects to have more detailed results by early June.

The program focused on the 9,910-hectare project’s northern claim, which borders the southwest of PLS and is slated for summer follow-up work. Clearwater’s southern claim, with conductive trends, radiometric anomalies and significant values for uranium in lake sediment, has yet to be drilled.

In late March the company resumed drilling at its Northwest Athabasca project, a JV with NexGen Energy TSXV:NXE, Cameco Corp TSX:CCO and AREVA Resources Canada. Forum holds other properties in Nunavut and the northeastern Athabasca Basin.

Fission 3.0, Brades report initial radiometric and VTEM results from Clearwater West

Fission 3.0 and Brades Resource TSXV:BRA reported initial interpretations of two airborne surveys over their Clearwater West project on April 15. A radiometric survey using patent-pending equipment and methodology found a cluster of anomalies on the eastern 10 kilometres of the property where historic data shows EM conductors, the partners stated. Ground prospecting will follow up this summer.

A VTEM survey suggests the property’s east side hosts EM conductors that might continue from the PLS property bordering to the north. More detailed evaluation will follow.

The project’s $700,000 first-year program will also include ground geophysics and geochemical surveys including radon measurements. Fission 3.0 acts as operator on the 11,835-hectare property. Brades holds a three-year option to earn 50%.

Western Athabasca Syndicate to expand Swoosh drill program

The four-company Western Athabasca Syndicate reported preliminary drill results from its Preston property on April 15. Five holes totalling 986 metres tested the Swoosh target, a six-kilometre corridor identified by gravity, magnetic and EM surveys, and coinciding with surficial geochemical anomalies, the alliance stated. The group consists of Skyharbour Resources TSXV:SYH, Athabasca Nuclear TSXV:ASC, Noka Resources TSXV:NX and Lucky Strike Resources TSXV:LKY.

All five holes hit a hydrothermally altered and reactivated structural zone. A downhole probe found elevated radioactivity in three holes, including one interval of 802 cps over 1.95 metres (not true width) starting at 186.68 metres in downhole depth. Four holes reached depths between 200 and 275 metres. A fifth was abandoned due to poor conditions. More detailed evaluation is expected in May.

Backed by an expanded budget, drilling will continue at Swoosh until late April. The following month the syndicate will test two other targets, CHA and Fin. Athabasca Nuclear acts as operator on the 246,643-hectare property.

On April 14 Ryan Kalt formally became Athabasca Nuclear’s CEO, having already held the position on an interim basis. Kalt has been prominent in acquiring Basin properties, including Preston, and as a director shifted the company to uranium exploration. With a 21.25% stake, he’s also the company’s largest shareholder. On April 15 Athabasca Nuclear announced an advance notice bylaw.

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Athabasca Basin and beyond

April 6th, 2014

Uranium news from Saskatchewan and elsewhere for March 29 to April 4, 2014

by Greg Klein

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Fission Uranium stretches strike with new zone at Patterson Lake South, closes $28.75-million financing

Step-out drilling has added a new zone to Fission Uranium’s (TSXV:FCU) Patterson Lake South, shortly after infill drilling had merged other zones. Announced March 31, zone R1620E lies 465 metres east of R1155E, extending the project’s potential strike from 1.78 kilometres to 2.24 kilometres.

The results come from a hand-held scintillometer that measures gamma radiation from drill core in counts per second. Scintillometer readings are no substitute for assays, which are pending.

Uranium news from Saskatchewan and elsewhere for March 29 to April 4, 2014

The road to Patterson Lake South, where Fission has four
of its five rigs trying to merge zones into one big deposit.

Six new holes all showed mineralization, with the new zone’s inaugural hole, PLS14-196, revealing a 30-metre interval ranging between 300 cps and 6,100 cps starting at 99 metres in downhole depth. The maximum that the scintillometer can measure is 9,999 cps. Drilling on PLS14-196 continues.

Among other holes, PLS14-190, south of zone R1155E, “suggests that further step-outs to the south may be prospective,” the company stated.

Starting from the west, zone R600W has both a 30-metre east-west strike and a 30-metre north-south lateral width. About 510 metres east, discovery zone R00E has a strike of approximately 165 metres and a lateral width up to about 45 metres. Another 135 metres east sits R780E, with about 855 metres in strike and up to about 95 metres in lateral width.

Neighbouring 75 metres east, R1155E so far has just three mineralized holes. Fission Uranium declared the new zone, 465 metres east again, on the basis of a single hole over conductor PL-3C, “the suspected 1.3-kilometre-long strike extension of the mineralized PL-3B conductor” at an interpreted cross-fault, the company added.

So far 63 of a planned 100 holes totalling 30,000 metres have been sunk. The winter budget comes to $12 million but on April 1 the company announced its most recent private placement closed with gross proceeds of $28.75 million.

Three days later Fission Uranium granted insiders 6.5 million options at $1.65 for five years.

NexGen’s best-ever hole extends strike at Rook 1’s Arrow zone

NexGen Energy TSXV:NXE ended its Rook 1 winter drill program with a “massive” step-out showing the project’s best hole yet. Results for three holes released March 31 lengthen the strike to about 215 metres, open to the southwest.

The winter campaign comprised 17 holes totalling 7,442 metres, but it wasn’t until late February that the Arrow discovery diverted attention to this new zone of the PLS-adjacent project. A second hole in early March contributed to the company’s optimism. In all, seven of eight Arrow holes so far have found significant mineralization.

The results come from a hand-held spectrometer that measures drill core for radiation in counts per second. As is the case with Fission Uranium’s scintillometer readings, the results are no substitute for assays, which NexGen expects to see in about six weeks.

NexGen reports radiometric readings differently than Fission Uranium, providing a more detailed breakdown of small intercepts.

The step-out, hole RK-14-30, found a composite 47.2 metres (not true widths) of anomalous intercepts at least 0.05 metres wide measuring over 500 cps. A total of 8.3 metres surpassed the spectrometer’s maximum possible reading of 9,999 cps. Mineralization began at 84.15 metres in downhole depth, with the deepest intercept stopping at 701.45 metres.

RK-14-29 also revealed many small intercepts, with the first starting at 50.6 metres in downhole depth and the last ending at 569 metres.

RK-14-28 intercepts started at 87 metres in downhole depth, with the last ending at 549 metres.

Having closed an $11.5-million bought deal the previous week, NexGen now has about $15 million to spend. Spring breakup work will include detailed petrography and petrophysics before drilling resumes in the summer.

Denison drills 17.3% eU3O8 over 4.2 metres at new Wheeler River zone

Denison Mines TSX:DML reported a second hole on April 2 that supports last month’s discovery of the Gryphon zone at the Wheeler River JV. WR-560 was drilled 40 metres along the up-dip extension of the first hole, revealing one especially high-grade interval. The results come from a downhole probe that measures radiation in uranium oxide-equivalent (eU3O8). Although the probe is more accurate than a scintillometer or spectrometer, its readings are no substitute for assays. Nevertheless they show:

  • 0.1% eU3O8 over 1.3 metres, starting at 653.5 metres in downhole depth

  • 0.1% over 4.1 metres, starting at 676.2 metres

  • 17.3% over 4.2 metres, starting at 757.9 metres

  • 0.3% over 2.6 metres, starting at 770.7 metres

True widths are estimated at about 75%. Denison interprets these results “to be a new lens in the footwall, about 50 metres northwest of the high-grade intersection in WR-556,” Gryphon’s discovery hole. Mineralization lies approximately 200 metres beneath the unconformity and remains open in both strike directions and at depth, the company stated.

With spring break-up underway, drilling is expected to resume in early June, largely focusing on the new find. Gryphon is three kilometres northwest of the project’s Phoenix deposit, which produced a batch of drill results in February.

Denison holds a 60% interest in Wheeler and acts as operator. Cameco Corp TSX:CCO holds 30% and JCU (Canada) Exploration the rest.

Declan picks up six Alberta and Saskatchewan properties

Calling it a “six-pack” of new properties, Declan Resources TSXV:LAN announced a package of Alberta and Saskatchewan acquisitions in and around the Basin on April 1. Totalling roughly 101,000 hectares, the properties include Maurice Creek in Alberta, immediately northwest of the Northwest Athabasca project, a JV involving Cameco, Forum Uranium TSXV:FDC and NexGen that hosts the historic Maurice Bay deposit.

Two other Alberta properties, Maybelle North and Richardson River, “cover potential northerly extensions to the structure which is host to a significant uranium deposit at Dragon Lake along the Maybelle River shear zone,” Declan stated.

The other properties are Archer Lake and Jackfish Creek, also in Alberta, and Thorburn Lake in Saskatchewan.

The optioner gets $25,000 and 2.5 million shares on TSXV approval, another $125,000 within a year and a 3% gross overriding royalty with a 1% buyback clause for $1 million. To keep the properties in good standing Declan must spend $225,000 by April 17.

Declan also announced changes to its board, which now consists of David Miller, Wayne Tisdale, Michelle Gahagan, Hikmet Akin, Gordon King, Jamie Newall and Craig McLean.

Declan’s flagship is Gibbon’s Creek, a joint venture with Lakeland Resources TSXV:LK.

International Enexco reports new radiometric results from Mann Lake

The latest hole from its Mann Lake JV suggests the project has at least 300 metres of mineralized trend within the footwall of the western conductor target, International Enexco TSXV:IEC stated April 3. The results come from a downhole radiometric probe and are no substitute for assays.

Sunk 150 metres north of the project’s best interval so far, hole MN-065 showed:

  • an average 3.67% eU3O8 over 1.2 metres, starting at 689.8 metres in downhole depth

  • (including an average 6.51% over 0.7 metres)

  • (which includes an average 11.02% over 0.3 metres)

True widths weren’t available.

So far eight holes have tested about 1.8 kilometres of the target, which the company says remains prospective for its entire 3.1-kilometre length. Enexco anticipates follow-up drilling next winter along the conductor and on other areas. The southeastern Basin project is operated by JV partner Cameco, which holds 52.5%, leaving Enexco with 30% and AREVA Resources Canada 17.5%.

But how long Enexco will be involved depends on the outcome of Denison’s most recent acquisition activities. The two companies signed a letter of intent last month for an all-share deal that would give Denison all of Enexco’s Basin properties while spinning out the others. The companies currently JV on another southeastern Basin property, Bachman Lake.

Uracan/UEX drill results suggest prospective target at Black Lake

Black Lake partners Uracan Resources TSXV:URC and UEX Corp TSX:UEX reported the first six holes from their northern Basin JV on April 2, with one mineralized hole suggesting a new target. BL-148 showed:

  • 0.13% U3O8 over 0.5 metres, starting at 275 metres in downhole depth

  • 0.04% over 0.5 metres, starting at 299.5 metres

  • 0.12% over 1 metre, starting at 317 metres

True widths weren’t provided. The three intervals occur up to 19 metres below a footwall unconformity between the basement and sandstones, representing a mineralization style that “has not been encountered previously in this area of the property and represents a new prospective target,” the companies stated.

Next in line is a ground DC resistivity survey to precede further drilling and field work. Uracan may earn 60% of the 30,381-hectare project from UEX, which holds an 89.99% interest. AREVA Resources Canada holds the remaining 10.01%. UEX acts as operator.

Previous Black Lake drilling has found intervals as high as 0.69% over 4.4 metres, starting at 310 metres in downhole depth, 0.79% over 2.82 metres, starting at 310 metres, and 0.67% over 3 metres, starting at 274 metres.

The property borders Gibbon’s Creek, where JV partners Lakeland and Declan have reported boulder samples grading up to 4.28% and some of the Basin’s highest-ever radon readings.

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Athabasca Basin and beyond

March 15th, 2014

Uranium news from Saskatchewan and elsewhere for March 8 to 14, 2014

by Greg Klein

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Innovation overcomes epic struggle to put Cameco’s Cigar Lake into production

 

 

With an ore grade 100 times the world average, Cameco Corp TSX:CCO overcame tremendous challenges to put Cigar Lake into production. Indeed the project’s first ore shipment on March 13 suggests that high grade is the mother of invention.

Among other tribulations, flooding in 2006 and 2008 stalled the eastern Athabasca Basin mine, which dates back to a 1981 discovery and began construction in 2005. Last year’s planned start-up hit another delay with leaks from tanks built to hold the run-of-mine slurry. Around the same time the McClean Lake mill faced delays of its own with modifications to the leaching circuit.

Cameco devised innovative techniques of bulk freezing and jet boring to extract the deposit lying 410 to 450 metres below surface, “where water-saturated Athabasca sandstone meets the underlying basement rocks.”

Uranium news from Saskatchewan and elsewhere for March 8 to 14, 2014

The jet boring tunnel at Cigar Lake, which Cameco calls “among
the most technically challenging mining projects in the world.”

To prevent flooding, the company freezes the ore and surrounding rock “by circulating a brine solution through freeze holes drilled from both surface and underground.”

To extract the ore, Cameco developed a method of high-pressure water jet boring “after many years of test mining” that keeps operators safely distant from the enormously high-grade deposit.

The company’s targeting 18 million pounds a year at full production, making it the world’s largest high-grade uranium mine after the Cameco/AREVA (70%/30%) McArthur River operation. But even 33 years after Cigar Lake’s discovery, the company anticipates further difficulties: “As we ramp up production, there may be some technical challenges which could affect our production plans.”

As of December 31, Cigar Lake capital expenditures came to $2.6 billion. Over 600 people will staff the mine.

Milling will take place at McClean Lake, 70 kilometres northeast. Operator AREVA Resources Canada says the plant “is expected to produce 770 to 1,100 tonnes of uranium concentrate from Cigar Lake ore in 2014. Its annual production rate will ramp up to 8,100 tonnes as early as 2018.”

Cigar Lake shows proven and probable reserves averaging 18.3% for 216.7 million pounds U3O8. Measured and indicated resources average 2.27% for 2.2 million pounds. The inferred resource averages 12.01% for 98.9 million pounds.

Cigar Lake is a joint venture of Cameco (50.025%), AREVA (37.1%), Idemitsu Canada Resources (7.875%) and TEPCO Resources (5%).

The McClean Lake JV consists of AREVA (70% ), Denison Mines TSX:DML (22.5%) and OURD Canada (7.5%).

Read more about Cigar Lake here and here.

Fission Uranium reports Patterson Lake South’s second-best radiometric results, $25-million bought deal

Patterson Lake South’s momentum continued on March 10 as Fission Uranium TSXV:FCU released its third batch of radiometric readings in five days—this time boasting one hole with “the second strongest off-scale results recorded at PLS to date, placing it amongst the best holes drilled in the Athabasca Basin.” The four new holes also continue the winter program’s 100% hit rate and further encourage the company’s quest to connect the six zones along a 1.78-kilometre potential strike.

Fission Uranium reports Patterson Lake South’s second-best radiometric results

Fission uses a hand-held scintillometer to measure
radiation from drill core prior to receiving lab assays.

The most recent star hole is PLS14-164, whose intervals showed a total of 30.08 metres of off-scale readings at 9,999 counts per second, the maximum amount of gamma radiation that the hand-held scintillometer can measure. The readings, taken from drill core, are no substitute for assays, which will follow.

Another hole showed a composite 2.1 metres of off-scale radioactivity. Of the four holes, the mineralized intercept closest to surface started at 56 metres, while the deepest stopped at 380.5 metres.

Oddly enough, Fission Uranium’s March 10 release says one of the new holes “has narrowed the distance between zones R390E and R585E to approximately 60 metres.” That’s the same distance between the same zones reported by the company on March 7.

Already 40 holes have been completed in the $12-million winter campaign that began in mid-January. The company plans about 85 or 90 holes totalling around 30,000 metres on the ice-bound lake before spring. While one rig explores outside the mineralized area, Fission Uranium hopes its four other drills will fill the gaps between the project’s six zones.

Just before the March 10 closing bell Fission Uranium announced a $25-million bought deal. A syndicate of underwriters led by Dundee Securities agreed to buy 15.65 million warrants, exercisable for one share each, at $1.60. The company expects to close the private placement by April 1. The underwriters may buy an additional 15%.

Fission Uranium surpassed its 52-week high March 10, opening three cents above its previous close, reaching $1.71 and then settling on $1.67 when trading was halted at the company’s request minutes before the $25-million announcement.

Trading resumed the following day. The company closed March 14 on $1.59. With 330.12 million shares outstanding, Fission Uranium had a market cap of $524.89 million.

NexGen repeats success with second hole at Rook 1’s new area

NexGen repeats success with second hole at Rook 1’s new area

Core from RK-14-27 shows pitchblende within
brecciated shear at 253.8 metres in downhole depth.

With radiometric results from a second hole on Rook 1’s Arrow prospect, NexGen Energy TSXV:NXE repeated last month’s success. On March 13 the company released dozens of tiny intervals ranging from 0.05 to 0.45 metres that showed “significant” readings over 500 counts per second. One intercept of 15.05 metres (not true width) showed almost continuous significant results.

The measurements, which are no substitute for assays, were obtained by scanning drill core with a hand-held radiation detector.

Significant intervals for RK-14-27 started at 224.45 metres in downhole depth and ended at 435.9 metres. Drilling stopped at 576 metres. About a dozen small intervals hit the device’s maximum possible reading of 10,000 cps. Arrow’s mineralization now extends at least 32 metres down dip across two holes, NexGen stated.

Three other holes failed to find significant radiation but “analysis of structures in these holes meant that hole 27 was successfully planned to intersect the interpreted mineralized zones both along strike and down dip.” The company plans to sink RK-14-29 40 metres southwest along strike. Now in progress, RK-14-28 is testing a gravity low roughly 200 metres west of RK-14-27.

The company has two drills working the Arrow area, now the focus of the PLS-adjacent Rook 1 project. A third rig will join by summer.

On March 10 NexGen stated it filed a preliminary short form prospectus regarding the previously announced $10-million bought deal, which the company expects to close on or about March 26.

Fission 3.0 stakes 42,000 additional hectares in and around the Basin

Three acquisitions and one property expansion add nearly 42,000 hectares to Fission 3.0’s (TSXV:FUU) portfolio. Announced March 13, the newly staked properties indicate “there remain many under-explored areas of the Athabasca Basin,” according to COO and chief geologist Ross McElroy.

Not all the new turf actually lies within the Basin. But neither does PLS. The 20,826-hectare Perron Lake property is about 20 kilometres north of the Basin and has benefited from regional lake sediment sampling that showed strong uranium anomalies.

The 9,168-hectare Cree Bay property sits within the northeastern Basin, where historic airborne geophysics suggest potential for hydrothermal and structure-related deposits.

Within the southeastern Basin, the 4,354-hectare Grey Island property is located about 70 kilometres from Key Lake, the world’s largest high-grade uranium mill.

Manitou Falls enlarges by 7,589 hectares to a total of 10,529 hectares. The northeastern Basin property was originally staked last May when the spinco was just a gleam in Fission Uranium’s eye. Historic data shows six radiometric anomalies and multiple basement electromagnetic conductors.

Fission 3.0’s portfolio now numbers nine Saskatchewan and Alberta properties in and around the Basin and one in Peru’s Macusani uranium district.

Purepoint finds new zone at Hook Lake JV

March 10 news from Purepoint Uranium TSXV:PTU heralded a new zone of mineralization at its Hook Lake joint venture five kilometres northeast of PLS. Although two of four holes failed to find mineralization, the other two prompted the company to move its second rig to the new Spitfire zone.

The single interval released from hole HK14-09 showed:

  • 0.32% uranium oxide (U3O8) over 6.2 metres, starting at 208.9 metres in downhole depth
  • (including 1.1% over 0.5 metres)

Thirty metres northwest, HK14-11 showed:

  • 0.11% over 2 metres, starting at 197.9 metres

  • 0.05% over 3 metres, starting at 201.9 metres

  • 0.57% over 0.9 metres, starting at 210.6 metres

True widths weren’t provided. These holes were drilled at a -70 degree dip.

All four holes targeted the 2.9-kilometre D2 electromagnetic conductor, which features “a large magnetic low, possibly indicative of hydrothermal alteration,” said VP of exploration Scott Frostad. “Now that the D2 conductor has been shown to be associated with uranium mineralization, we will increase our drilling efforts towards the northeast where geophysics suggests there is a more structurally complex setting.”

Purepoint stated D2 comprises part of the Patterson Lake conductive corridor, the same conductive trend targeted by Fission at PLS.

Purepoint holds a 21% interest in the 28,683-hectare project and acts as operator for partners Cameco (39.5%) and AREVA Resources Canada (39.5%). The work is part of a $2.5-million, 5,000-metre campaign that began in late January.

In early February Rio Tinto NYE:RIO began drilling Purepoint’s Red Willow project as part of Rio’s 51% earn-in.

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Purepoint Uranium finds new zone at Hook Lake JV

March 10th, 2014

This story has been moved here.

Opportunities in opulence

March 7th, 2014

From Canada to Antwerp, diamond explorers, miners and traders serve a thriving market

by Greg Klein

For giant miners and junior explorers alike, diamonds upheld their market lustre in 2013 and show further encouragement this year. So it wasn’t quite an industry-wide shock when one record-shattering sale fell through. A group of investors fronted by New York diamond cutter Isaac Wolf defaulted on last November’s $83.2-million bid for the Pink Star, Sotheby’s revealed late last month. Now the auctioneer’s out the $60 million guaranteed to the anonymous seller. But the company retains the stone, to which it attributes an “inventory” value of $72 million. Meanwhile, undeterred by the caprice of the super-rich, efforts continue to find, mine and market opulence for the affluent.

This month Rio Tinto NYE:RIO heads to Antwerp and Israel for the company’s first rough diamond tender of 2014. Rio says this offer of 124 lots “showcases a unique combination of white and fancy-coloured rough diamonds” from its mines in Australia, the Northwest Territories and Zimbabwe. Among notable stones from the NWT’s Diavik, Rio’s peddling a 70-carat white diamond, several purple diamonds and some “fancy and intense” yellow diamonds.

From Canada to Antwerp, diamond explorers, miners and traders serve a thriving market

Kennady Diamonds has infill drilling underway
at its Northwest Territories diamond project.

Once pulled out of the ground, about 80% of the world’s diamonds go to Antwerp, the undisputed capital of global trade since the 15th century. The city handles about $11.2 billion worth of rough stones annually, out of a global total of $14.2 billion, according to the Antwerp World Diamond Centre. Vying for a piece of the action are some 1,850 local companies crowded into their own fabled district with “Flemish, Orthodox Jewish and Indian diamantaires working alongside manufacturers, rough and polished dealers, buyers and services providers from almost every country in which diamonds are mined, processed, bought and sold.”

The centre characterized last January as an “excellent 2014 kick-off” in which the value of exports jumped 27.7% and imports 21% over the same month last year. Exports showed “an all-around increase, principally to the usual consumer markets India, the United Arab Emirates and Hong Kong.”

Polished diamonds picked up too. January exports improved 9.69% and imports 13.79% in value over the same month in 2013.

Although the stones’ esthetic vagaries complicate matters, diamond prices remained relatively stable last year, avoiding the declines seen in precious metals. Giants did well, with Rio reporting a 15% increase in diamond revenue over 2012. De Beers proclaimed 2013 “a strong year of growth” for its Forevermark diamond brand, “driven predominantly by continued consumer demand in core markets, China, U.S., India and Japan.” Many Canadian-listed juniors and mid-tiers rose well above the malaise suffered by their counterparts in other commodities.

Among activity within Canada, Kennady Diamonds TSXV:KDI continues working towards a maiden resource for its eponymous project in the NWT. Infill drilling began last week, according to a March 6 statement, part of a plan to better define the Kelvin kimberlite body prior to a mini-bulk sample of 25 to 30 tonnes. Last year a 4.3-tonne sample from Kelvin showed 5.38 carats per tonne with the three largest diamonds comprising “a 2.48-carat off-white transparent octahedral, 1.06-carat off-white broken aggregate and a 0.9-carat off-white transparent irregular,” Kennady stated.

The March 6 update also reported an amended exploration agreement with the Lutsel K’e Dene First Nation and receipt of a five-year land use permit and seven-year water licence.

The same day Shore Gold TSX:SGF announced a “target for further exploration” for its central Saskatchewan properties. A TFFE uses exploration data to disclose potential quantity and grade that might not be realized in an eventual resource estimate. On that basis, Shore’s TFFE for seven kimberlites “is estimated to include between 983 million and 1.17 billion tonnes of kimberlite containing between 52 and 90 million carats.”

The seven kimberlites spread over two properties, Shore’s wholly-owned Star-Orion South project and the adjacent Fort à la Corne, a joint venture shared 67%/33% between Shore and Newmont Mining Corp of Canada TSX:NMC.

A 2011 feasibility study showed a probable reserve for the Star and Orion South deposits:

  • Star: 165.89 million tonnes averaging 12.3 carats per hundred tonnes for 20.386 million carats of diamonds

  • Orion South: 113.09 million tonnes averaging 12.4 cpht for 13.994 million carats

  • Total: 278.98 million tonnes averaging 12.3 cpht for 34.38 million carats

The two deposits also have inferred resources totalling 9.1 million carats.

In other Canadian diamond activity, North Arrow Minerals TSXV:NAR closed a $5-million private placement late last month to fund three projects, two of them 80% options with Stornoway Diamond TSX:SWY. The Qilalugaq property in Nunavut is slated for a 1,500-tonne bulk sample and an Antwerp valuation next summer. Pikoo, a Saskatchewan project heralded for its diamond discovery in November, is expected to undergo till sampling this year to seek out additional kimberlites.

On the earlier-stage Redemption project in the NWT, North Arrow holds a 55% option with Arctic Star Exploration TSXV:ADD. This year’s plans include till sampling and geophysics at the 11,493-hectare project, 32 kilometres from the Ekati mine and 47 from the Diavik mine.

Dominion Diamond TSX:DDC looms large in the region, holding an 80% interest in Ekati, 58.8% of the mine’s Buffer zone and 40% of Diavik. Chuck Fipke and Stewart Blusson, two pioneers of Canadian diamond exploration, each hold 10% of Ekati, while Rio holds 60% of Diavik. Dominion ranks fourth worldwide for diamond production by value.

An Antwerp report that came through in late February evaluated a 1,013.5-carat parcel of commercial-size stones for Peregrine Diamonds TSX:PGD. Taken from the CH-6 kimberlite pipe in Nunavut, the gems were priced at an average of $213 per carat for a total of $215,605. Peregrine has a resource scheduled for CH-6 by the end of Q2.

The valuation was conducted by WWW International Diamond Consultants, a company that’s familiar with Canadian projects and currently evaluating diamonds for Gahcho Kué in the NWT. JV partners De Beers (51%) and Mountain Province Diamonds TSX:MPV (49%) plan to use the data in a feasibility update scheduled for release by the end of March. Gahcho Kué’s expected to become Canada’s next diamond mine.

Read more about diamond mining and exploration in Canada here and here.

Zimtu Capital analyst Derek Hamill says all roads lead to the Athabasca Basin

March 6th, 2014

by Tom Armistead | March 6, 2014 | Reprinted by permission of The Energy Report

To the World Nuclear Association, 2% uranium ore is high grade. At 14%, 16% and even 20% uranium, the grades in the Athabasca Basin are astounding analysts and investors around the world. Derek Hamill, Zimtu Capital Corp.’s new head of research, tells The Energy Report about where the investment dollars are moving in the Athabasca Basin, and what areas and companies are worth watching going forward.

Zimtu Capital analyst Derek Hamill says all roads lead to the Athabasca Basin

Derek Hamill, head of research for Zimtu Capital.

The Energy Report: Derek, thank you for joining us. Why is the Athabasca Basin generally described as the most prolific uranium source in the world?

Derek Hamill: There are a few factors that make the Athabasca Basin region of Saskatchewan and Alberta the best place to look for, and mine, uranium. Grade is the number-one factor. The average grades for a few of the bigger deposits in the Basin are above 15% U3O8, whereas the world average is far below 2% U3O8. The next important factor is that Saskatchewan is a great place to build a mine, and has been since the 1950s. There is all the necessary infrastructure (roads, power, mills) in most of the region. The western region of the Basin, including Fission Uranium Corp.’s (FCU:TSX.V) Patterson Lake South (PLS) project, does not have existing power or operating mills. But given how this deposit and potentially others are developing, it’s just a matter of time.

TER: What are the shortcomings of the Athabasca Basin compared to other uranium-producing basins?

DH: Infrastructure is a major factor that influences the economics of a potential mine. In the last few decades, the exploration in the western section of the Athabasca Basin has been markedly quiet compared to the east, where Cigar Lake, McArthur River and other mines and mills are located. The PLS area is relatively remote compared to the eastern section of the Basin. Additional exploration in the region will likely prove up another deposit, so over time the western side will build comparable infrastructure. However, there will need to be material investment to develop the necessary infrastructure in the western areas of the Basin.

Another shortcoming of some deposits in the western region is the depth. The Cigar Lake mine illustrates this point quite well. The deposit is located between 410–450 meters (410–450m) below the surface, far too deep for cheaper open-pit mining, and the entire deposit needs to be frozen in order to prevent flooding. In 2006, a breach of this freezing technology caused significant delays. The project had an original start-up date of 2007, and is now expected to be producing by the end of Q2/14. Keep in mind though that many deposits in the Basin, including the PLS project, are at conventional open-pit mining depths.

Fission Uranium Corp. has brought renewed optimism for exploration in the southwestern areas of the Basin.—Derek Hamill

TER: I have seen high praise lavished on Fission’s PLS deposit. What’s the reason for that?

DH: As mentioned, most of the past exploration and all the production in the Basin comes from the eastern side of the Basin. PLS has brought renewed optimism for exploration in the southwestern areas of the Basin that surround the discovery. Additionally, PLS is close to the surface, meaning open-pit mining of fairly high-grade uranium is an option.

TER: Is there another deposit in the basin that comes close to PLS?

DH: Right now in production is McArthur River, and Cigar Lake should start producing this year. Both are operated by Cameco Corp. (CCO:TSX; CCJ:NYSE). Average grades for both are listed as 14–16%. Once Cigar starts, McArthur and Cigar will be the two largest high-grade uranium mines in the world.

Cameco is by far the largest producer in the Basin, followed by AREVA SA (AREVA:EPA). Denison Mines Corp. (DML:TSX; DNN:NYSE.MKT) holds an interest in the McLean Lake mill and in several near-term producing deposits. Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK), which purchased the Roughrider deposit in 2012 from junior Hathor Exploration for $654 million ($654M), appears to be advancing its deposit fairly aggressively. UEX Corp. (UEX:TSX) is also a candidate for near-term production with its Shea Creek and Hidden Bay projects.

UEX Corp. is also a candidate for near-term production.—Derek Hamill

TER: How does grade affect price?

DH: The major uranium producers, such as Cameco, AREVA and Denison, generally negotiate the price of uranium on long-term contracts. These companies also process all the ore in the three mills situated in the eastern region of the Athabasca Basin. It is not like other commodities, where the final product is sold on a fluid or open market. The producers generally control the mining and milling of the ore into a product called yellowcake, which is about 70% uranium. At this point, the yellowcake is either further refined in Canada or shipped directly to customers in the U.S. or overseas.

Cameco’s estimated cash costs at Cigar Lake could be somewhere around $18/pound ($18/lb) or less. High-grade ore can help control operating costs. Many uranium analysts believe that a long-term price of $60/lb U3O8 is needed to properly incentivize investment and maintain production for close to one-third of the world’s high cost production. I believe the fact that Paladin Energy Ltd. (PDN:TSX; PDN:ASX) is placing operations at its Kayelekera mine in Malawi on care and maintenance (after continued operating losses) illustrates the material difference in cost structures that exist for producers outside the Basin.

There are also some external factors. Saskatchewan is a politically friendly, stable environment, with an established regulatory and tax environment. There’s technical expertise in the area as well. Grade is only one factor in the mining and milling economics of a deposit. The less material that you have to physically mine, truck and process, the more lucrative your operation.

TER: You have reported the average compound annual growth rate of several forecasts of electricity generating capacity from 2010 to 2025 as 2.6% for nuclear and 6.3% for non-hydro renewables. That’s a higher growth rate for renewables than for nuclear. Why is nuclear a better target for investment?

DH: Nuclear is not necessarily better; there’s actually tremendous room for both. Nuclear reactors can supply consistent electricity generation, night and day, over a long operating life, 40–60 years. The fuel costs represent 10–15% of the total cost of running a nuclear reactor. Even during the uranium price spike in 2007, operating costs for a nuclear reactor in the U.S. did not increase. That’s an attractive property. Of course, nuclear can help reduce CO2 and SO2 emissions, which also makes the technology attractive in places like China, where air quality is an issue.

Energy Consumption: Nuclear Vs. Wind and Solar

Zimtu Capital analyst Derek Hamill says all roads lead to the Athabasca Basin

(Source: BP Statistical Review 2013)

The biggest knock against nuclear energy has been the enormous capital costs of building reactors. Westinghouse Electric Co. is designing the AP1000, focused on simplifying the process—passive safety systems, fewer moving parts, etc. Hopefully, this kind of innovation can help control capital costs.

In China, nuclear power is growing at a 10-year compound annual growth of about 14.5%, but it still represents only ~2% of the country’s electricity production, so there is tremendous potential for nuclear power as well as renewables.

Nuclear Reactors Worldwide

Zimtu Capital analyst Derek Hamill says all roads lead to the Athabasca Basin

(Source: IAEA|PRIS, WNA)

TER: Most analysts are expecting the price of uranium eventually to rise from its current low. How will a higher fuel price affect the growth rate of nuclear power generation?

DH: I doubt it will. As I said, fuel costs are only 10–15% of the nuclear reactor. The demand from nuclear electricity generation going forward will have a strong influence on uranium pricing, but the price of uranium shouldn’t have a huge influence on the decision whether to build nuclear reactors.

I know there’s been a lot of talk of a nuclear renaissance, but it’s complicated. The West, outside of France, hasn’t shown much of a commitment to nuclear energy. In fact, last year the U.S. prematurely closed four reactors. It doesn’t seem like there is much support for the industry. China appears committed, but will take a few years for the country to really become the uranium market mover. In the current environment, I don’t see uranium prices materially increasing. Again, that’s why the Athabasca Basin is an important region.

TER: Are Canadian uranium producers seeing any benefit from the termination of the Non-Resident Ownership Policy?

DH: Not in particular. I wouldn’t be surprised to see some Chinese utilities invest in the Basin, but I don’t see them becoming mine or mill operators. It would make more sense to partner with a company like Cameco.

TER: Is anyone visibly benefiting from the policy change?

DH: Companies out of Asia have expressed fairly robust interest in investing in the Athabasca Basin’s uranium exploration. This has more to do with long-term growth in commercial nuclear generating capacity in Asia than with any Canadian policy change.

TER: You have a half-dozen uranium companies in the basin under coverage. What are some of their strengths and weakness?

DH: Zimtu Capital Corp. (ZC:TSX.V) has equity exposure to several uranium exploration companies, including, most recently, Lakeland Resources Inc. (LK:TSX.V). The major strength we at Zimtu look for as a project generator are the people actively involved in a project.

Lakeland Resources is a great case in point. The company has a strong technical team with a clearly defined business strategy, and has added some serious uranium expertise to the advisory board.—Derek Hamill

Lakeland Resources is a great case in point. The company has a strong technical team with a clearly defined business strategy, and has added some serious uranium expertise to the advisory board. Lakeland has a large land package, much of which has historic data. Lakeland’s focus has been to enhance this historical data with modern at-surface geological and geophysical techniques before partnering the individual projects for drilling. In this way, the company is able to diversify some of the exploration risk by working on multiple targets at the same time. The large land package also allows Lakeland the freedom to act as a property vendor. If there is a weakness in this strategy, it is that by partnering, Lakeland sacrifices some of the upside in the event of a discovery.

NexGen Energy Ltd. (NXE:TSX.V) has benefited from its location near PLS, so it’s an attractive area play. NexGen has also proven to be able to raise capital during tough market conditions. Zimtu is a shareholder of the company.

Skyharbour Resources Ltd. (SYH:TSX.V) is part of a syndicate, the Western Athabasca Basin Syndicate, that shares in the costs of exploration. We don’t have any direct exposure to Skyharbour or the syndicate, but it is a different business model that, if done correctly, makes sense. Of course, efficient cooperation among four equal partners may take some work.

I’m not a geologist. My background is in finance, so I like to look at many different strategies and promote diversification.

TER: You have highlighted a lot of difficult variables in assessing the uranium space. Do you have some parting advice for people who would like to take a look at it?

DH: For investment in nuclear, in terms of mining and exploration, it’s a pretty simple strategy. You already know the major producers, such as Cameco and AREVA in Canada. In the U.S., there are a few smaller low-cost operations. So if you are a cautious investor, your money will probably be best with current producers. Next you have the near-term producers of which there are only a handful. Then there are the junior miners in Canada. Those that are in the Athabasca Basin hold a lottery ticket to a monster deposit. Hathor Exploration is an excellent example of a company that in 2006 had a market cap of about $6M, discovered the world-class Roughrider deposit in 2008, and was bought by Rio Tinto in 2012 for $654M. You need to look for a junior with a good portfolio of projects and the right people in order to make a discovery. I would caution people looking at uranium exploration companies to try to diversify. The Athabasca Basin is a low-cost producer. So if the uranium price remains under distress, the Basin should attract both domestic and foreign exploration dollars.

TER: Thank you, Derek.

DH: Thanks, Tom.

Derek Hamill completed his Master of Financial Analysis and Professional Accounting at La Trobe University, a leading Australian academic institution, and holds a bachelor’s degree in economics from the University of Calgary. Between degrees, Hamill worked for several years as an investment executive for ScotiaMcLeod, a leading Canadian wealth-management firm. As the newly established head of research for Zimtu Capital, Hamill provides long-term outlooks for various commodities and updates on key internal portfolio holdings. He has access to an impressive array of experienced and knowledgeable industry professionals who are associated with the Zimtu family. Zimtu’s circle of industry contacts includes all aspects of the mineral exploration and development process, from first acquisition of mineral claims to the cutting of the ribbon at mine opening.

Read what other experts are saying about:
Fission Uranium Corp.
UEX Corp.

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DISCLOSURE:
1) Tom Armistead conducted this interview for The Energy Report and provides services to The Energy Report as an independent contractor. He or his family owns shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Energy Report: Fission Uranium Corp., UEX Corp. and Zimtu Capital Corp. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Derek Hamill: I or my family own shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: Zimtu Capital has a financial relationship with both Lakeland Resources and NexGen Energy. To my knowledge we have no relationship with Skyharbour. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

Reprinted by permission of The Energy Report

Disclaimer: Zimtu Capital Corp and Lakeland Resources Inc are clients of OnPage Media Corp, the publisher of ResourceClips.com. The principals of OnPage Media may hold shares in those companies.

East dominated M&A in 2013, expect overall uptick this year—PwC report

February 26th, 2014

by Ana Komnenic | February 26, 2014 | Reprinted by permission of MINING.com

East dominated M&A in 2013, expect overall uptick this year—PwC report

 

The bad news first: 2013 was the worst year for mergers and acquisitions in recent history, with the volume of deals dropping 33% to the lowest level since 2005.

Now for the good news: According to PricewaterhouseCoopers’ latest Global Mining Deals report, the mining industry can expect an uptick in M&A throughout 2014.

Though these deals will be “smarter, more conservative,” 2014 will be characterized by joint ventures, mid-tier buyers and more mergers or sales from juniors, PwC predicts. The gold price drop will also make buying gold assets more appealing—especially in Canada.

“You aren’t going to see the big dollars in riskier jurisdictions,” PwC wrote, quoting Brett Mattison of Gold Fields NYE:GFI.

As evidence of a strong start to the year, PwC points to Goldcorp’s TSX:G hostile takeover bid for Osisko TSX:OSK—though Osisko has called the offer “opportunistic” and some say Goldcorp is trying to take advantage of a weak gold market.

“The turnaround won’t mirror the surge in movement we saw back in 2011, but expect deal making to resurface in most parts of the world this year as both an opportunity and in some cases a necessity for companies across the sector,” PwC global mining leader John Gravelle said in a statement.

“Companies have been cleaning up their balance sheets and putting off decisions, waiting for the right time to act—that timing is near.”

Overall, PwC expects deal activity to increase this year—reaping “long-term gain” from “short-term pain.”

While it’s well known that M&A dropped off in a big way last year, PwC revealed something new in its latest report: The Eastern world dominated M&A activity last year. In fact, “the East accounted for nearly half of the deals by value in 2013, or about 45%, while the West represented about 36%,” PwC wrote.

East dominated M&A in 2013, expect overall uptick this year—PwC report

“Looking ahead, many Western-based majors are still going to wait for commodity prices to stabilize, concentrating on cash costs, rationalizing their assets and trying to divest assets as a way to pay down debt and fund existing operations,” Gravelle said.

The rich and powerful from Russia and Kazakhstan in particular bought up assets while major mining companies such as Rio Tinto NYE:RIO and Barrick TSX:ABX were selling.

The biggest deal of 2013 was in Russia, where Gavril Yushvaev and Zelimkhan Mutsoev purchased nearly half of Polyus Gold from billionaire Mikhail Prokhorov.

Reprinted by permission of MINING.com

Japan reinforces nuclear commitment, M&A speculation resumes

February 25th, 2014

by Greg Klein | February 25, 2014

Japan has strengthened its commitment to nuclear energy in a draft policy document released February 25, the Financial Times reports. While Shinzo Abe’s pro-nuclear efforts have so far focused on the short term, the document indicates a more far-reaching strategy, according to the FT: “The energy plan, expected to be approved by Mr. Abe’s cabinet by the end of March, could open the door to a nuclear revival, possibly even including the construction of reactors.”

The paper cautions, however, that the plan to recommission some existing plants “still faces hurdles and any restarts must be approved by safety regulators and local governments.”

While polls show a majority of Japanese oppose nuclear energy, a February 23 local government election saw a pro-nuclear candidate defeat rivals who campaigned against a proposal to build a reactor in the region, the FT states.

Abe’s predecessor Naoto Kan opposed nuclear energy but with only limited backing from his own cabinet. Business groups support nuclear power for its relatively low cost. Even so, Japanese industry minister Toshimitsu Motegi “sought to play down the degree of change in energy policy, noting that the energy plan still committed the country to ‘reducing its reliance on nuclear power as much as possible,’” the FT points out.

The paper adds that Japanese re-starts could affect global liquefied natural gas markets. Japan’s post-Fukushima imports pushed up LNG prices in Asia and Europe. “Any moderation in Japanese demand could take some of the heat out of the global LNG market.”

We’ve only been about one year into this project and we’d hate to have a situation where we sell and the best drill hole comes afterwards.—Fission Uranium CEO
Dev Randhawa, as quoted by Bloomberg

Meanwhile anticipated Japanese restarts have renewed interest in mergers and acquisitions, Bloomberg reported on February 21. “The rebound in uranium demand may fuel takeovers as buyers try to get ahead of rising prices,” according to a Bank of Nova Scotia statement quoted by the news agency.

“Now is a great time for cherry-picking good assets,” Cantor Fitzgerald analyst Rob Chang told Bloomberg. “We think 2014 is going to be really the kick-off year for the uranium space. The timeframe for cheap acquisitions may be running out.”

Denison Mines TSX:DML and Fission Uranium TSXV:FCU figure prominently in analysts’ speculation. Denison holds interests in exploration and development projects as well as the Athabasca Basin’s McClean Lake mill, one of the world’s largest uranium processing facilities. Fission Uranium’s sole asset is Patterson Lake South, an early-stage sensation that has yet to produce a resource estimate.

David Sadowski, an analyst at Raymond James, told Bloomberg, “If you’re Rio Tinto [NYE:RIO], you just bought a bunch of pounds in the Athabasca Basin and you’ve got nowhere to process those pounds. Why not buy Denison right now?”

The news agency cited Cameco Corp TSX:CCO as another possible suitor.

Fission Uranium chairman/CEO Dev Randhawa told Bloomberg his company has signed three non-disclosure agreements, one with a Chinese interest.

His own company recently acquired joint venture partner Alpha Minerals, presumably to make PLS a more attractive takeover target. Even so, Randhawa said an acquisition of Fission Uranium might be premature. “We’ve only been about one year into this project and we’d hate to have a situation where we sell and the best drill hole comes afterwards,” Bloomberg quoted him. “Our investors don’t want us selling with uranium at $35 a pound, but at the same time we don’t control the people who are buyers.”

See a roundup of last week’s uranium news.

Athabasca Basin and beyond

February 22nd, 2014

Uranium news from Saskatchewan and elsewhere for February 15 to 21, 2014

by Greg Klein

Next Page 1 | 2

New “zone” at Rook 1 rocks NexGen stock

Judging by share performance, radiometric readings from NexGen Energy’s TSXV:NXE Rook 1 project far outshone next-door neighbour Fission Uranium’s TSXV:FCU Patterson Lake South last week—even though PLS assays showed its best hole yet. Possibly a bit premature, NexGen claimed the first hole in Rook 1’s Arrow area constitutes “a totally new zone of uranium mineralization.” Then again, the company also refers to intercepts as “zones.”

NexGen’s February 19 announcement said scintillometer readings showed a number of significant radioactive intervals in a hole that’s still being drilled. By “significant,” the company means at least five centimetres above 500 counts per second from a hand-held device that measures gamma ray particles in cps.

Uranium news from Saskatchewan and elsewhere for February 15 to 21, 2014

NexGen’s first hole in the Arrow area of Rook 1 stole attention
from Patterson Lake South and catapulted the company’s stock.

Results so far show well over a dozen “significant” intervals ranging from 0.05 metres to 1.65 metres in width. They occurred between downhole depths of 207.8 metres and 319.1 metres.

Radiometric readings are no substitute for assays, which are pending.

The company’s now revising its original 6,000-metre program “to substantially expand the program at Arrow and the other 11 western-located Rook 1 target areas,” according to CEO Leigh Curyer.

Last summer’s drilling found three mineralized holes roughly four kilometres southwest of Arrow, closer to the PLS boundary.

NexGen’s stock soared. Having previously closed on a 52-week low of $0.225, it shot up to a 52-week high of $0.65 in two days, before closing February 21 on $0.53.

Another best hole to date from Fission Uranium’s Patterson Lake South

Although upstaged by NexGen’s same-day announcement, Fission Uranium once again outperformed previous results by reporting its “strongest mineralized hole to date” from PLS on February 19.

The celeb du jour is hole PLS14-129 on zone R585E, the fourth of seven zones along a southwest-northeast potential strike of 1.78 kilometres. The zone itself has a defined strike of 30 metres and a lateral width of about 10 metres.

Of eight intervals reported, the best results show:

  • 13.66% uranium oxide (U3O8) over 38 metres, starting at 56 metres in downhole depth
  • (including 38.49% over 10.5 metres)

  • 11.19% over 31.5 metres, starting at 108.5 metres
  • (including 27.57% over 12 metres)

  • 6.82% over 11.5 metres, starting at 145.5 metres
  • (including 20.28% over 2.5 metres)

  • 3.37% over 12.5 metres, starting at 160 metres
  • (including 9.57% over 4 metres)

True widths weren’t available. Drilling was vertical.

“Nothing less than phenomenal,” was president/COO and chief geologist Ross McElroy’s immodest appraisal. The grade-times-thickness value nearly doubled that of the previous best hole, which dates back to September on the neighbouring R390E zone.

Last week Fission Uranium released a batch of radiometric readings for seven holes from four zones. The $12-million campaign, which includes ground geophysics as well as 90 holes totalling 30,000 metres, continues.

Anthem reports initial drill results from Hatchet Lake JV with Denison

Anthem Resources TSXV:AYN released preliminary drill results from Hatchet Lake, a joint venture with Denison Mines TSX:DML, on February 20. The 10-hole, 2,025-metre program on the Athabasca Basin’s eastern edge found no significant mineralization but a downhole radiometric probe intersected anomalous radioactivity in four holes.

The campaign also found prospective features “including strong fracturing, de-silicification (sanding) and clay and hematite alteration in the sandstone, and weak to strong chlorite and clay alteration, graphitic fault zones and sulphide mineralization in the basement,” Anthem stated. Assays are still to come.

Anthem’s cash position prevented a contribution to Hatchet’s $750,000 budget and the $300,000 IP survey on the Murphy Lake property, also part of the JV. As a result, Anthem’s interest dropped from 50% to about 41%. Denison acts as project operator.

Forum to acquire northeastern Basin property from Anthem

The same day as the Hatchet Lake news, Anthem and Forum Uranium TSXV:FDC announced an agreement to move a Basin property from the former to the latter. Forum will get the 14,205-hectare Fir Island claims on the Basin’s northeastern margin for 300,000 shares and a 1.5% NSR, of which Anthem may buy two-thirds for $1 million.

With little or no sandstone cover and road access within two kilometres, the property lies directly on a major structure, the Black Lake Shear Zone, and adjacent to the former Nisto mine, Forum stated. Previous geophysical and geochemical surveys identified several shallow drill targets which Forum plans to refine through ground gravity work.

Two weeks earlier the company announced it would buy two sets of claims from Agnico Eagle Mines TSX:AEM to consolidate Forum’s North Thelon project in Nunavut.

This month Forum plans to begin drilling 12 to 15 holes totalling 3,000 metres at its 9,910-hectare PLS-adjacent Clearwater project. The company’s eastside Basin 40%/60% Henday JV has $150,000 worth of summer magnetic and electromagnetic surveys planned by project operator Rio Tinto NYE:RIO.

Next Page 1 | 2

Potash in perspective

February 21st, 2014

The long-term outlook and an advanced-stage project bring Asian interest to Western Potash

by Greg Klein

The long-term outlook and an advanced-stage project bring Asian interest to Western Potash

As the world’s population grows, arable land shrinks, causing greater demand for fertilizer.

 

It’s an opportunity best characterized as “a marathon, not a sprint.” That’s how Western Potash TSX:WPX VP of corporate development John Costigan refers to his company’s Milestone project. The high-grade potash solution mine proposed for southern Saskatchewan achieved full feasibility in December 2012 and final environmental approval last April. Then came tumultuous times, with what Costigan calls the “Russian-Belarusian debacle” that took down the commodity’s price. Now, with solid Asian investment and indications of a market revival, the advanced-stage project might be seen as an early-stage opportunity emerging anew.

Understandably, enthusiasm for potash plunged with the price following Uralkali’s breakup with cartel partner Belaruskali last summer. Late last year, however, JP Morgan pronounced a more optimistic outlook for 2014. By January analysts were saying prices might have bottomed in the Chinese contracts signed by Uralkali and Canpotex, the marketing arm of PotashCorp TSX:POT, Agrium TSX:AGU and Mosaic NYE:MOS.

More recent news suggests funding’s picking up. On February 18 Verde Potash TSX:NPK reported significant progress in its application for US$105 million in loans, grants and investment from the Brazilian government for the company’s Cerrado Verde project. Six days earlier came news that fertilizer giant ICL was buying a $25-million stake in Allana Potash TSX:AAA, with potential up to $84 million, along with an offtake agreement for the company’s Danakhil project in Ethiopia. Last June Western got a $31.98-million cash injection from a Chinese joint venture.

The attraction was the full-feas, fully permitted Milestone. The operation calls for solution mining, in which water is pumped into underground caverns and then retrieved as potash-rich brine. A relatively simple but highly effective technique, solution mining would allow Western to build the greenfield operation in about 40 months.

The long-term outlook and an advanced-stage project bring Asian interest to Western Potash

Just 60 kilometres away the same approach is being taken by the giant K+S Group. Now under construction, the Legacy project is scheduled to begin potash solution mining in 2016.

Milestone benefits from Saskatchewan’s mining-friendly policies and rich infrastructure. Two continental railways pass through the 35,400-hectare property, as do roads, power and gas lines. An agreement with the city of Regina, 30 kilometres away, provides a supply of treated waste water to extract the potash—enough water, in fact, to flush out 2.8 million tonnes per year for the mine’s projected 40-year life.

Those benefits have already attracted a $31.98-million investment from CBC (Canada) Holding Corp, a JV comprised of fertilizer producer China BlueChemical and Benewood Holdings, a subsidiary of the Hong Kong investment firm Guoxin International Investment Corp. The deal comes with a 20-year offtake agreement for the lesser of 30% of Milestone’s production or a million tonnes a year.

With a 19.9% stake in Western, CBCHC plays an active role in the strategic alliance. One China BlueChemical appointee serves on Western’s board and another acts as an observer. The alliance has struck two six-person committees, one to study Milestone’s technical, construction and procurement details and another to recommend financing strategies, meet potential financiers and evaluate proposals.

The alliance brings technical synergies. It also offers potential financial flexibility that could help the junior put together the $2.91-billion capex—a considerable sum but substantially less than K+S is spending 60 kilometres away. One possible Milestone scenario could involve Chinese investment banks which, Costigan points out, can structure finance agreements with a 3:1 debt-to-equity ratio. With one or more additional partners, Western could make the transition to a potash producer.

The company already has mining expertise, most notably with project director Richard Lock. In fact his career has been based on projects much more challenging than a southern Saskatchewan solution mine. While with Rio Tinto NYE:RIO, Lock took the Northwest Territories’ Diavik diamond mine from exploration to production. Among other accomplishments, he also acted as project director for Arizona’s Resolution project, now in pre-feasibility and potentially North America’s largest copper mine.

As for potential partners, discussions have picked up, Costigan says. “There’s renewed interest now. People think the market has settled. If we see prices rise, there’ll be even greater interest.”

The commodity’s long-term fundamentals remain strong, he says. Nothing’s stopping population growth. Meanwhile the global decline of arable land calls for ever-higher crop yields.

“Look at the growth in Chinese potash consumption—it’s definitely why our partners came in,” Costigan says. “They recognize they’re going to see big increases in their consumption. China’s ramping up their domestic supplies, they’re in Thailand, Africa, Kazakhstan. But when you look at the projects out there, there’s nothing that compares with Milestone for volume, quality, cost, location, infrastructure and political stability. There’s nothing that compares globally.”