RE: I feel queasyhttps://www.uraniumstox.com/stocks/news.asp?newsid=115986
April 25, 2007
The Next Wave of Uranium Exploration
Symbol(s): URC
UraniumSTOX Editorial: www.uraniumstox.com
All skeptics blushed when uranium hit $113 per ounce on a 100,000 pound trade last week. “Reasonable” people didn’t think it could or would move that fast. And uranium clearly doesn’t look like it will be coming back any time soon. Canadian brokerage firm Sprott Securities, one of the main drivers of this bull market, and many other uranium experts are calling for $200+ per pound of yellowcake over the next two years. Then the price could finally settle down after some new production comes on stream to meet up with demand.
Needless to say – if you think uranium stock valuations are stupid now……wait until it trades at $200 per pound.
So, with 250+ uranium juniors now promoting their back yard as a mine how do we separate the moose pasture from the real prospective ground? I believe the next big wave will be the near surface bulk tonnage uranium explorers and developers. These types of prospects are inexpensive to explore and build tonnage. It costs a lot of money, and takes a lot of time to drill deep into the very popular Athabasca Basin. So market moving news such as drill results is less frequent.
At 1/2 lb per tonne you are now looking at $50 rock per tonne gross metal value. Open pit mining costs for a large deposit, would be at most $25 per tonne, leaving $25 per tonne profit. Find a few hundred million tonnes and economics become very strong.
So that is why I am placing my bets on Uracan Resources (URC-TSXv). Look at management here. The board includes president of Bema Gold (Ex-Bema) Clive Johnson and also Tom Garagan who was the Vice President of Exploration for Bema Gold world wide. The president is Greg Sedun, a founding director of Diamondfields (Voisey Bay), which was bought out $4.3 billion in 1996, and Adastra Mining, which was bought out in 2006 for half a billion dollars. At the current market cap of CDN$35M, Uracan has a management team in place that is virtually trading at shell value. Gordon Keep from Endeavour Financial is a director, and their group are large shareholders. Think UUU, NNO, WRM (bought by Goldcorp).
Uracan is in the midst of a 100 hole drill program on the North Shore property, which is in southeastern Quebec on the north shore of the St. Lawrence River. It is a 900 square kilometer land package that had been historically drilled by some of the majors. One old government geology report said one small area (3 km x 3 km) has 55M lbs of uranium in the ground (non 43-101 compliant) running at grades of just north of half a pound per tonne.
This 100 hole program is focused on a completely separate 7 km by 7 km area with a much stronger surface anomaly. This program only scratches a small surface on the property. Tonnage, if mineralization is consistent, could get pretty silly as this is a monster land package. There is potential for this to have billions of tonnes. The first set of drill results could be within 2-4 weeks.
Additionally – they staked a land package just south of the Athabasca Basin in Saskatchewan that has some historic drill holes that run up to several pounds per tonne over 60 feet at very shallow depths. Importantly, the basement rock of the major uranium mines in the eastern side of the Basin is called the Wollaston Domain, and this geologic feature is right at surface on Uracan’s properties.
This project is a sleeper but should get drilled in the late summer. Uracan went in and tripled their land package in December so they now have the land package that will give them size potential. Here are some historic intercepts from the Saskatchewan projects:
Selected diamond drill hole intercepts from the Pipewrench Lake Claim include:
6.6 meters of 1.0 kg U3O8, (21.8 feet of 2.3 lbs U3O8)
7.52 meters of 0.77 kg U3O8 (24.7 feet of 1.7 lbs U3O8)
.5.9 meters of 0.85 kg U3O8 (19.5 feet of 1.87 lbs U3O8)
Selected historic diamond drill hole intercepts on the Narrows Lake Claim include
18.29 meters of 0.73 kg U3O8 (60 feet of 1.6 lbs U3O8)
13.66 meters of 0.6 kg U3O8 (44.8 feet of 1.3 lbs U3O8)
11.31 meters of 0.60 kg U3O8 (37.1 feet of 1.3 lbs U3O8)
Even at US$80/lb uranium – again, it’s $113 today - these uranium values look very good. There are some great widths and grades running valuing the rock there today at $150 per tonne. Again, open pit mining costs are expensive at $25/tonne. At first blush these grades and intercepts are very intriguing.
Conclusion
I am willing to pay a $35M market cap for this management team on a shell. Here they have two legitimate exploration projects, fully cashed up with $4M and a clear business model in mind?
This team has rainmakers – they have shown they can make shareholders money and this is an excellent opportunity to get involved at a reasonable market cap in this uranium bull market. We are seeing big risk explorers drilling deep holes in the basin with triple the market caps of Uracan.
As a note the latest round of $0.60 flow-through financing became free trading last Monday and the stock continues to trade volume in the 85 cent range. To me, that is a great sign that investors were waiting for some weakness in the stock as hold period expired to accumulate their positions.
Gord Zelko, Publisher