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Ambitiously acquisitive

September 20th, 2013

Consolidation continues throughout the uranium space

by Greg Klein

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

To hell with uranium’s low price. Another flurry of M&A activity demonstrates keen interest in projects at just about every stage. Fission Uranium’s TSXV:FCU acquisition of Alpha Minerals TSXV:AMW moved closer to completion with a definitive agreement announced September 18. The previous day, and more dramatically, Denison Mines TSX:DML suddenly barged into the proposed merger of Mega Uranium TSX:MGA and Rockgate Capital TSX:RGT. The Fission/Alpha deal, if completed, would put the Athabasca Basin’s most celebrated exploration project under one owner, thereby making it a more attractive takeover target itself. Should Denison succeed in muscling aside Mega, it would gain Rockgate’s more advanced project in Mali. In that case, Denison says, it would spin out its African assets to concentrate on the Athabasca.

Consolidation continues throughout the uranium space

Merger and acquisition activity
continues unabated among uranium companies.

For the most part the Fission/Alpha agreement confirmed details of the proposal in which the former would issue the latter 5.725 Fission shares, plus $0.0001, for each Alpha share. As a result, Fission would get sole control of Patterson Lake South, currently a 50/50 joint venture. The other assets of each company would spin out to two separate companies, each held separately by either former Fission or former Alpha shareholders.

That would make PLS a neat-and-tidy takeover target, even though it lacks a resource estimate. The JV partners haven’t even stated when a resource might be released. Project operator Fission has sunk at least 27 holes totalling 8,488 metres in the current $6.95-million campaign, but the JV has released assays for just one hole this season. For the most part the market’s been following scintillometer readings, which so far have been published for 18 summer holes.

The company coveted by Denison and Mega, on the other hand, boasts a more advanced project. Rockgate’s Falea property has a December resource update showing:

  • a measured category of 1.39 million tonnes averaging 0.14% for 4.29 million pounds uranium oxide (U3O8)

  • an indicated category of 14.28 million tonnes averaging 0.08% for 25.29 million pounds

  • an inferred category of 15.35 million tonnes averaging 0.05% for 15.69 million pounds

Pre-feasibility’s slated for January. While work was delayed by the Mali military coup and resulting unrest, those events left the project “entirely unaffected,” Rockgate has stated.

A merger with Mega would bring Down Under resources totalling 34.6 million pounds U3O8 indicated and 4.8 million pounds inferred, although the proposed sale of Mega’s Lake Maitland project to ASX-listed Toro Energy would unload 20.7 million pounds indicated and 1.6 million pounds inferred (calculated at average grades of 0.05% and 0.04% respectively). The Megagate MergeCo would start off with about $22 million cash and a $55-million market cap, the two companies state. Mega also holds significant positions in other companies, including 25.2% of NexGen Energy TSXV:NXE and 10.5% of European Uranium Resources TSXV:EUU.

But on September 17, more than three months after the merger was publicly proposed and just eight days before the shareholders’ vote, Denison stormed in with its offer. At 0.192 of a Denison share for each Rockgate share, Denison valued the proposal at about $26.7 million, representing a 38% premium over the Mega offer, based on September 16 closing prices.

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Athabasca Basin and beyond

June 15th, 2013

Uranium news from Saskatchewan and elsewhere for June 8 to 14, 2013

by Greg Klein

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Cameco’s Cigar Lake granted mining licence

With production slated for Q4, Cameco Corp TSX:CCO got the final go-ahead to mine Cigar Lake uranium on June 13. The Canadian Nuclear Safety Commission issued the mining licence following a 1990s environmental assessment, a stalled construction phase and a one-day public hearing. “The licensed facilities include underground mine workings accessed by two mine shafts, a surface load-out facility, waste management systems, a mine water management system and associated site facilities,” the CNSC stated. Cameco expects jet-boring to begin this summer.

The world’s second-largest known high-grade uranium deposit, Cigar Lake’s bounty holds:

  • proven reserves of 233,600 tonnes averaging 22.31% uranium oxide (U3O8) for 114.9 million pounds U3O8
  • probable reserves of 303,500 tonnes averaging 15.22% for 101.8 million pounds.

Those reserves give Cigar Lake a 15-year lifespan. With full production expected in 2018, it’s expected to give up 18 million pounds annually.

Cameco’s Cigar Lake granted mining licence

A Cameco crew installs freeze pipes at Cigar Lake
to protect against seeping water and leaking radiation.

The peak of construction could employ up to 500 workers, while production would require about 250 people. Jet-boring will extract the highly radioactive material using water pressure to carve underground caverns and push an ore slurry to underground grinding and thickening circuits, then to surface. The ground first must be frozen to prevent water seepage and radiation leakage. Processing will take place at the McClean Lake mill, 69 kilometres away.

Construction actually began in 2005. But the project hit delays due to flooding in 2006 and 2008. Cameco finally dewatered the workings in 2010 and restored the underground infrastructure the following year.

Located near Waterbury Lake on the Athabasca Basin’s eastern margin, Cigar Lake is a four-way joint venture in which project operator Cameco holds 50.025%, AREVA Resources Canada 37.1%, Idemitsu Canada Resources 7.875% and TEPCO Resources 5%. Another JV, the McClean Lake mill is held 70% by operator AREVA, 22.5% by Denison Mines TSX:DML and 7.5% by OURD Canada.

Pele Mountain increases Eco Ridge inferred U3O8 136%, REO 130%

Replacing a previous uranium-rare earths resource in the project’s July 2012 preliminary economic assessment, Pele Mountain Resources TSXV:GEM released a June 10 update for its Eco Ridge project in Elliot Lake, Ontario. The resource now shows:

  • an indicated category of 22.74 million tonnes averaging 0.045% U3O8 and 1,606 parts per million total rare earth oxides for 22.55 million pounds U3O8 and 80.51 million pounds REO, or 49.83 million pounds U3O8-equivalent
  • an inferred category of 36.56 million tonnes averaging 0.047% U3O8 and 1,554 ppm REO for 37.62 million pounds U3O8 and 125.25 million pounds REO, or 81.84 million pounds U3O8-equivalent.

The inferred numbers represent a 130% increase in total REO and a 136% jump in U3O8. The indicated category rose 10% in both REO and U3O8. The update shows “substantial increases in critical REO resources including neodymium, dysprosium, yttrium, terbium and europium oxides, as well as in scandium oxide resources,” the company stated.

Pele Mountain added that two higher-grade zones start at surface, which could allow higher-grade production during the first years of mining.

Working in Elliot Lake between 1956 and 1996 Rio Algom, later incorporated into BHP Billiton, and Denison produced over 300 million pounds of U3O8 and significant quantities of yttrium and heavy REO from deposits similar to that of Eco Ridge, Pele Mountain stated. The mining camp is about 160 kilometres west of Sudbury.

Aldrin increases resolution of PLS-area airborne geophysics

Aldrin Resource TSXV:ALN will add infill lines to an airborne geophysics survey already underway over the Patterson Lake South area. Announced June 12, the decision will increase resolution from 200-metre to 100-metre spacing over conductive anomalies found on the company’s 12,001-hectare Triple M property. Aldrin interprets the anomalies as linear basement conductors over three kilometres long, parallel to a magnetically defined fault.

The company holds a 70% option on Triple M, which sits nine kilometres south and 11 kilometres west of the PLS discovery. High-grade, near-surface results from the Alpha Minerals TSXV:AMW/Fission Uranium TSXV:FCU 50/50 JV excited interest in the area in and around the Basin’s southwestern rim. The helicopter-borne VTEM magnetic and electromagnetic survey already underway is a joint project that’s flying contiguous properties held by Aldrin, Athabasca Nuclear TSXV:ASC (formerly Yellowjacket Resources TSXV:YJK), Forum Uranium TSXV:FDC and Skyharbour Resources TSXV:SYH. Lucky Strike Resources TSXV:LKY and Noka Resources TSXV:NX each hold a 25% earn-in option on Skyharbour’s properties.

Aldrin stated the infill lines will help locate drill targets for early winter 2014.

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Canaco receives BCSC Hearing Notice, responds

April 26th, 2012

Resource Clips - essential news on junior gold mining and junior silver mining(Update: Effective April 9, 2013, Canaco Resources Inc began trading as Orca Gold Inc TSXV:ORG.)

Canaco Resources Inc TSXV:CAN responded to the British Columbia Securities Commission (BCSC) regarding its notice of hearing alleging that in December 2010 the President/CEO and three other directors of Canaco voted to approve the exercise price of stock options before publicly disclosing assay results from the Magambazi Claim of its Handeni Project in Tanzania. Canaco maintains that the drill results were not material and that this opinion has been validated by independent reviewers, including Micon International Ltd.

Canaco President/CEO Andrew Lee Smith commented, “The staff of the BCSC is proposing to rewrite the rules for determining materiality in a way we believe is unfair, contrary to the public interest and damaging for junior mining companies subject to BC jurisdiction. We intend to oppose that effort and defend ourselves vigorously.”

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Canaco Resources Inc
Director, Investor Relations

by Ted Niles