CanAlaska Uranium (TSXV:CVV) is full of surprises.
This morning, CanAlaska announced a $12.5-million deal with Cameco (TSX:CCO), Canada’s largest uranium producer, to explore the West McArthur property near two of Cameco’s high-grade uranium deposits.
Here’s a summary of the terms:
- $725,000 cash to CanAlaska and $5 million in exploration at Grid 1 and Grid 5 within 3 years to earn 30%
- Then, $500,000 cash to CanAlaska and further $6.275 million in exploration over the following 3 years to earn a further 30% and form a joint venture with CanAlaska.
- A minimum $1-million work program is guaranteed in the first year. Permitting and planning for a 2016 drill program is underway.
West McArthur is a large — 88,536 acre — property, adjacent to Cameco’s McArthur River mine complex and new Fox Lake deposit (~68 million lbs at 7.99% U3O8) at the Read Lake property, where Cameco expects to spend $7 million exploring this year.
CanAlaska acquired a 50% interest in West McArthur from MC Resources, a subsidiary of Mitsubishi Corporation, for $600,000 and a 1% royalty in January 2016. Since 2006, MC Resources and CanAlaska have spent over $17 million exploring the property. Drilling in 2012 identified alteration zones commonly associated with uranium deposits, but exploration drilling has been postponed in each of the past two years because of market conditions.
CanAlaska president Peter Dasler comments, “There has been considerable detailed ground exploration and drilling by Cameco immediately east of our drill holes at Grid 5 on the West McArthur project. Cameco’s recent announcement of the large, high-grade Fox Lake resource demonstrates the potential for discovery of additional uranium deposits along the C10 conductor extension and other targets in the Grid 5 area. In the past there has also been co-operation between Cameco and the West McArthur JV with regard to overlapping survey areas. At this stage CanAlaska considers it prudent to utilize the expertise and funding that Cameco can provide, so that we can rapidly advance our opportunity for discovery of a new unconformity uranium deposit. We are very pleased to have been approached by Cameco, and to have concluded this significant agreement which allows multiple targets to be evaluated with minimum equity dilution to our shareholders while retaining a meaningful interest in West McArthur.”
There’s action elsewhere in CanAlaska’s portfolio. Last week, CanAlaska staked 75 kimberlite (diamond) targets in a deep and boring part of the Athabasca Basin famous for uranium deposits, not diamonds. That caught the attention of sector commentators including John Kaiser and Allan Laboucan.
Chuck Fipke’s Northern Uranium is exploring CanAlaska’s NW Manitoba project.
Lukas Lundin’s Denison Mines is currently drilling CanAlaska’s Moon South property, and CanAlaska has other projects and royalties.
CanAlaska has 22.068 million shares outstanding and last traded at 16.5 cents for an approx. $3.64 million market cap. The company had $1.2 million in cash at October 31, 2015.
This article is intended for informational purposes only and is not investment or professional advice of any kind. Small exploration stocks like CanAlaska are very risky and volatile and not suitable for most investors. As of Friday February 19th, 2016, CanAlaska is a new CEO.CA sponsor. At the time of writing, the author has no positions in any of the companies mentioned in the article, which could change without further notice. Read CanAlaska’s SEDAR profile and Annual Information Form for more information and important risk disclosures.