Over the past few days we have seen a number of companies either continue to drill ‘best-to-date’ holes (Fission, NexGen) or begin their winter drill campaigns in Saskatchewan’s world-class uranium basin. Add to that, the recent takeover bid from Denison (DML:TSX) of International Enexco (IEC:TSXV) and you have one area of the exploration sector that continues to heat up. This is all in the face of a depreciating underlying commodity price as well.
Uranium spot prices have fallen from $44/lb to $35.50/lb over the past year.
Yesterday, Leigh Curyer’s NexGen (NXE:TSXV), who recently made an early-stage but significant uranium discovery near Fission’s Patterson Lake South project, announced that their joint venture (JV) in the Northwest part of the Athabasca Basin has begun drilling.
The Maurice Bay project is a JV between NexGen, Forum (FDC:TSXV) who jointly hold 64% (Cameco holds 23.5% and AREVA holds 12.5%). The group will be drilling 3,000m to test the extent of the mineralization at depth and to the east. Last year, they hit 39.5m of 0.15% U3O8 including 0.5m of 1.8% U3O8.
NexGen, who recently completed a $10 million bought deal after making their initial discovery at their Rook I project, has roughly $15 million in the bank and will continue to actively drill. They have many targets and their savvy technical team are taking a systematic approach to drill testing them. They had planned on completing a 6,000m program, but given their early success they are likely to announce an expansion. NexGen will see a third drill rig added soon which will make for even more news flow.
Up on the east side of the basin, north of International Enexco’s Mann Lake project, is Clive Johnson’s Uracan (URC:TSXV). This junior explorer is drilling a 3,000m program at their Black Lake project (they are earning 60% from UEX). The project has significant historical drill data on it, with 2007 drilling hitting a number of +1% U308 over 0.5-1m intervals.
Today, Aldrin (ALN:TSXV) announced the start of their 2014 winter drill campaign. They will be drilling a total of 4,000m in their Triple M project which is located to the north and west of Fission’s Patterson Lake South discovery. They will be testing coincident geological, structural, gravity, basement conductor, magnetic and radon anomalies.
To the southwest of Fission is the Western Athabasca Syndicate, led by Skyharbour Resources (SYH:TSXV). The group of four companies announced, last week, their plans for a 2,000m, 10-15 hole drill program on their Preston Lake project. Like the other companies drilling this year, they have completed the important ‘grunt work’ (geochem, geophysics, radon, etc) and have refined and defined their drill targets for 2014.
As more work is completed in this relatively untested area, companies not yet involved in the area such as Cameco, AREVA and Denison are likely to try to enter. Fission would be one way for a company like Cameco to get involved (via buyout) as it is the most advanced of the projects in the area (probably having 1-2 years ahead of NexGen which is the next most advanced).
If and when Cameco and other major uranium producers enter the area, this will validate the play for decades to come. The traditional Athabasca Basin which hosts the world’s largest and highest grade uranium mines, has been worked on for many decades.
On the other hand, in the west side (Patterson Lake area), there has been minimal exploration work, with significant work only being ramped up since Fission made their discovery (less than 2 years).
There are many more discoveries to be made in this new area especially given all of the exploration techniques being used and the amount of money being raised to fund the work.
Below is one of the better maps of the entire basin, showing most of the companies active there:
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