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Athabasca Basin and beyond

February 22nd, 2014

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

by Greg Klein

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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.

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Romarco reports M&I 4M oz Gold at Haile, South Carolina

February 7th, 2012

Resource Clips - essential news on junior gold mining and junior silver miningRomarco Minerals Inc TSX:R announced an updated resource estimate for its Haile Gold Mine in South Carolina. The project is now estimated to have measured and indicated resources of 4.04 million ounces gold and inferred resources of 801,000 ounces. This represents a 29% increase to the company’s previous measured and indicated estimate.

President/CEO Diane Garrett commented, “Our drilling program for 2011 was a success on all fronts. We cleared the areas we needed for condemnation, converted much of our inferred to measured and indicated, made significant increases in our resources at Haile and had great success in our regional exploration away from Haile. These were our four goals for exploration for the year and our team hit a grand slam. We learned a lot about this very complex system, and it will pay off in continued exploration at Haile and in the region.”

View Company Profile

Read more about Romarco Minerals

Diane Garrett

or Dan Symons
VP Investor Relations

by Ted Niles

Underperforming? Hardly

November 22nd, 2011

Romarco Aims For a 2014 Gold Pour

By Ted Niles

To say that Romarco Minerals Inc TSX:R is making the best of a bad situation is true enough but misleading. The US Army Corps of Engineers’ July requirement of an Environmental Impact Statement on the Haile Gold Mine was a nuisance, no question, but it doesn’t affect the fundamentals. As President and CEO Diane Garrett says, “The project still stands, in my opinion, as one of the most significant and highest quality assets in the industry. We’re in a great jurisdiction, and the grade is almost twice what it is with any other open pit in North America or anywhere.”

Romarco is taking full advantage of the 12-month delay. “We’ve got a lot of guys on the team that aren’t too disappointed,” Garrett remarks. “We spent the first half of this year doing infill drilling because we thought we’d be mining at the end of the year. When we got the EIS news, we focused everything on step-out drilling. We’re spending a lot of time drilling on Horseshoe and Palomino.”

Romarco Aims For a 2014 Gold Pour

An historic producer dating back to 1837, the Haile Gold Mine is located in Lancaster County, South Carolina. Its current resource of 3.1 million ounces gold measured and indicated, 1.1 million ounces inferred—for which a February feasibility study estimated capital costs of $275 million and operating costs of $379 per ounce—does not include the Horseshoe or Palomino zones. Results from Horseshoe continue to demonstrate exceptional promise, with September 14 assays of

  • 10.5 grams per tonne gold over 32.9 metres
  • 3.4 g/t over 47.6 metres (including 12.7 g/t over 6.1 metres)
  • 6.9 g/t over 19.8 metres
  • 2 g/t over 57.9 metres (including 10.1 g/t over 6.1 metres)
  • 4.1 g/t over 26.8 metres (including 8.2 g/t over 10.7 metres)
  • 3.6 g/t over 25.9 metres

November 1 assays of the newly-discovered Palomino zone include

  • 5.5 g/t over 70.1 metres
  • 1.2 g/t over 37.5 metres
  • 2.4 g/t over 21.3 metres
  • 2.9 g/t over 15.2 metres
  • 1.6 g/t over 26 metres

“Palomino is quite spectacular, and that can add a lot of ounces very quickly,” Garrett says of the assays. They certainly must have come as some surprise to CIBC World Markets analyst Brian Quast who downgraded Romarco in July to “sector underperformer” based on his peculiar prediction that “the likelihood of positive news from the drill bit for the remainder of the year is relatively low.”

Garrett explains exactly what proving Quast wrong from the drill bit means to her company. “We’re working to develop the region and to develop the underground. We will continue stepping out and then filling in the areas between the pits in order to further define what we’re now calling the super pit. By the new year, what you’re going to see is overall resource growth. You’re going to see a new reserve out because of the infill drilling, and you’re going to see an underground study out with the resource. All the economics on that will come out just after the new year.”

Permitting is not one of the top five things I worry about on a daily basis —Diane Garrett

Romarco has lost 60% of its share value this year. Granted, the juniors as a whole have been hard hit, but Garrett believes Romarco suffered especially because South Carolina is unfamiliar with the environmental permitting of precious-metals mines. “If it were Nevada, they’d understand how the process works,” she argues. “They’re not familiar with dealing with private land, and they’re not familiar with the Corps of Engineers being the lead agency.”

Haile’s permitting schedule has yet to be set. Her hope is that “before the end of the year the contracting firm will have built the schedule. When people see that, they’ll say, ‘OK, now I know; and I can check that box.’ I think the market is feeling like there’s still plenty of time to come in and out of the stock.”

Meanwhile, Romarco continues to invest. October 19 saw the completion of a $92.6-million financing. Thirty million will be spent on drilling in 2012 (the same amount as 2011, with the same number of drill rigs, 11). Twenty million will be spent on engineering work and $15 million on permits and wetlands mitigation. “We’ll be purchasing other wetlands to replace those we’re taking,” Garrett says.

Garrett concludes, “The hit on the NPV of the project for the one-year delay is about 4%. We also feel a bit vulnerable, given what our share price is. But [while] we’ve got to do this more detailed review of the project, we’ve been given no indications by anybody that we can’t permit. We had our public scoping meeting [October 27], and no one said that they opposed the mine. So, permitting is not one of the top five things I worry about on a daily basis.” Primary investors remain confident. “Seventy percent of our shares are held in 15 institutions in North America and Europe,” Garrett points out, “and they took down the entire financing. That’s really good support.”

Provided the company stays on schedule and has the necessary permits in hand by the end of 2012, construction at Haile will begin 1Q 2013, and Romarco will pour its first bar of gold by 1Q 2014.

At press time, Romarco had 583.8 million shares trading at $0.89, for a market cap of $519.6 million.

A Bump in the Road

August 5th, 2011

Romarco Still Intends to Pour Gold in Early 2014

By Ted Niles

Diane Garrett admits that Romarco Minerals has been “beaten up a bit over the last few months.” The company’s President and CEO says there are several reasons why, most important being the US Army Corps of Engineers’ July 1 request of an Environmental Impact Statement for the South Carolina Haile Gold Mine—instead of the less stringent Environmental Assessment Romarco had hoped for. This has resulted in a 12-month permitting delay which, explains Garrett, “always tends to make the market nervous. We’ve had a couple of shareholders that have relinquished their positions, and that came on at a time when the markets were not really capable of absorbing it.”

On the other hand, Garrett adds, “Seventy to 75% of our institutional shareholders are still in; they have not reduced their positions. And we’re still given a very high value per ounce of gold vis-à-vis our peers.” She believes two other factors might also explain why Romarco’s share price remains so low in spite of an asset that analysts have long raved about. “A lot of the gold stocks have come off 20% to 30% since just after the New Year, and we’ve been hit that way. Also, I think the market anticipates that we’re going to be doing a financing—they know we need to build the project—and it’s typical of the market to put a lid on your stock until you get the financing behind you.”

Romarco Still Intends to Pour Gold in Early 2014

Market forbearance and permitting delays are, of course, not to be dismissed lightly. But it is important to note that this is the first bad news Romarco has ever had.

The company acquired Haile—located in the Carolina Slate Belt—in 2007 and announced December 2009 an already robust NI 43-101 mineral resource estimate of 1.47 million ounces gold measured, 697,000 ounces indicated and 2 million ounces inferred. After a 108,000-metre drill program in 2010, the resource was updated—as part of Haile’s February 2011 feasibility study—showing 3.1 million ounces gold measured and indicated (including 2 million ounces of proven and probable reserves) and 1.1 million ounces inferred. The feasibility study itself projected capital costs for Haile of $275 million (considered very low by industry standards), operating costs of $379 per ounce (ditto), with a reserve grade of 2.06 g/t (considered very high).

On the heels of the feasibility’s release, the Financial Post‘s Peter Koven noted, furthermore, that the study wasn’t nearly as interesting to analysts as “how much bigger the project will become, given exploration upside that is not included in the study.” He explained, “After looking at drill data from the company’s ‘potential mineral deposits’ that were not included in the feasibility, [Paradigm Capital analyst] Don Blyth wrote that they imply an additional 1.99 million to 4.35 million ounces of gold.”

It’s therefore hard to disagree with Garrett’s September 2010 statement to Resource Clips that Haile is “one of the most significant discoveries in our industry in the last 10 years.”

Of course, since the news that the Environmental Protection Agency advised the Corps of Engineers in late March not to grant Romarco a wetlands permit without further study, there has been much speculation as to what the company can do to deliver value to its shareholders over the ensuing 12 months. Its share price has, as a consequence, fallen 40%. The Globe and Mail reported July 28 that CIBC World Markets analyst Brian Quast had downgraded Romarco to “sector underperformer.” Quast said, “We believe that the likelihood of positive news from the drill bit for the remainder of the year is relatively low.” Exactly what Romarco least wanted to hear. (Curiously, Quast’s assessment came a mere three days after Romarco announced an interval, from its current exploration program, of 45.8 grams per tonne gold over 23 metres—one of the best results ever from its Horseshoe zone.)

Seventy to 75% of our institutional shareholders are still in; they have not reduced their positions. And we’re still given a very high value per ounce of gold vis-à-vis our peers. —Diane Garrett

But Romarco understood that the permitting delay was a possibility and planned accordingly. Says Garrett, “We’re drilling 172,000 metres this year, and the intent of the drill program is to increase overall reserves and resources. Haile’s still open in all directions and at depth, so we’re just going to keep drilling to make it bigger.” In other words, the company will concentrate on precisely those “potential mineral deposits” that had observers buzzing after February’s feasibility study. Ninety-two thousand metres of the program has already been completed, and Romarco’s August 4 press release specified that 50% of the remaining program will focus on Haile step-out drilling, 30% on regional exploration and 20% on infill drilling. A 43-101 underground study is expected to be completed by the end of 2011.

Horseshoe is among the more promising of the deposits not currently included in Haile’s resource, with July 25 assays including, as mentioned, 45.8 g/t gold over 23 metres. May 2 Horseshoe assays included 4.1 g/t over 13.1 metres, 1.6 g/t over 20.6 metres, 5.7 g/t over 21.9 metres and 5.5 g/t over 36.3 metres. July 21 assays of the newly designated Mustang zone included Haile’s best hole yet at 5.5 g/t gold over 117.4 metres. Garrett says of the July results, “Both sets were absolutely spectacular. Incredibly high grades, very shallow, long intercepts. Returning these kinds of assays is an indication to the market that there’s a lot of high-grade potential that exists at Haile, and after three years of drilling it hard, these holes rank in the five of the best we’ve ever drilled on the property.”

Garrett expects to have permits in hand by late 2012. “Then we would start breaking ground and construction in early 2013. That would have us pouring gold in early 2014.”

Despite the setbacks, Garrett remains confident. “The project has gone much faster than any of us would have thought four years ago,” she declares. “Coming in four years ago, if you had told me we were going to be having over a million ounces a year—that’s almost unheard of!”

She concludes, “The Haile Gold Mine has been around for about 200 years, mined off and on over that time. Technology—specifically fine-grinding technology—is what has now made this area viable for gold production. This is a large system that’s very amenable to current technologies, particularly in a high gold-price environment. And we think the work we’ve done will demonstrate that Haile is basically what Nevada was in the 1980s. It’s going to bring a lot of companies to this area. The Slate Belt is chock full of minerals, and there’s a lot of potential waiting there.”

At press time, Romarco Minerals had 503.3 million shares trading at $1.59 for a market cap of $800.2 million.