The Sunday Post - How Far We Have Come in a Month
The Sunday Post – How Far We Have Come in a Month
Well it seems it is time for another Sunday Post. My time has been limited over the last month, but with so many developments, it is better to have less frequent issues (I don’t have the time for more). I write this one from a last minute fly out to the beach in Mexico. As expected we have joined first 2 zones, then 4 now to create on giant mineralized zone appropriately named Zone R780E as it should be. As stated in previous posts this looked like it was developing into the meat of the deposit, and it has pleasantly come to fruition. Many surprises have come to light though, unexpected, and to further entice the DD and expansion of the main deposit.
There is a lot to analyse and speculate about the deposit. This story continues to surprise not to just me, but analysts, retails, and the general material exploration space. While so many exploration companies lay in total destruction, this is one of the bright spots across the industry. Precious metals had a recent giant rise in early 2014, but since had a huge drop with the price of gold recently dropping. Other material exploration companies with commodity highlights in zinc, graphite, vanadium, cobalt, palladium, nickel and few others have had some attention, but they have remained very volatile. Some investors/traders, that time things right made some money, some lost large. Some of those other materials that have the long term underlining rising price environment with unique deposits, will do well over the long term. As with this deposit and uranium, the commodity at a total bottom has all the rise outlook (exact timing unknown) and this unique deposit now without a doubt is the most exciting, growth oriented, and future profitable uranium mining resource in the entire world.
Let’s go over some the developments…
The Main Strike
First of all the joining of the 4 zones was expected for me, and a great development. Though the step outs in areas both the North to South and strike length have been a surprise in many aspects. The true size and limits of this new meat zone in R780E is really a story not told yet. There are the other zones to the west (and possible east) but to me it was all about R390E to R945E, that could add pounds quickly, and in jumps. The recent add on hole 189 at a 75 metre step out with a huge whole that included 82.5 metres of total composite and off scale over 4 metres, shows that this is not a weak step out. Expanding the main zone on a highlight hole speaks much more than just hitting a few readings. This one hole expands this zone to 855 metres from 780 with almost a 10 percent increase in such a large high grade zone. Also another hit south of R1155E tends to show the possibility of the zone expanding on a southern line to hole 189 below the radon readings.
The north-south wide part on line 780 is now 95 metres. I am not ready to say that wide section can be proved throughout this zone, but the fact that this step produced such long lengths shows that the centre has potential to expand greatly. (this width if proven throughout the deposit would double the main zone of R780E)
The highlight Holes
After the incredible hole of 129 after the rushed assay, and halted stock, the continued release of impressive holes continues to surprise and exceed. The GT grade of these dotted throughout the deposit have now shown that, never say a better hole won’t be released. I have added one of the maps from the website and marked in yellow the highlight holes throughout the centre of the deposit. You can see below that from a pure layout it gives retail investors a real basic idea how these highlight holes are actually dotted across the whole deposit. These holes can add millions of pounds per hole. I recommend retails read some published calculations on a few of these holes, and work out a back of the envelope average for all of them.
https://dl.dropboxusercontent.com/u/17572201/Highlight%20Drill%20holes%20on%20Map.jpg
Financing
There seems to great swings in opinion and emotional response to the recent raising of 28 million. Many strong opinions for and against Management have been posted on this board. What the true average opinion of all the shareholders are remains unknown as this board is not a true representative of the shareholder base.
Here are some points. I don’t think anyone can predict where the price goes, as is seen with the predictions of analysts, board posters, and general population have been wrong. What I do know is that the terms of which this company raises funds, are much better than most of every single exploration company on the venture without a 43-101 (or with one). Also because the amount of uranium found has been so great and the market cap is so high, now the dilution has been low compared to others in the basin.
How much uranium do you think this exploration team can find with 28 million? If history shows us… a ton of it. I am not one to complain with hit rates like these per exploration dollar.
Let’s just do a simple and not accurate calculation of 100 million pounds found with 200 holes drilled on 33 million. That would be 3 million pounds found based on drilling history per million spent or half a million pounds per hole. Based on that inaccurate but good general calculation, they would find another 84 million pounds. This is not a fair comparison but no matter how you calculate it, is accretive to shareholders. Even at a 50% drop in findings.
Recent Basin financing:
Nexgen: Raised $11,540,250 by issuing 24,645,000 million units and gave a cash commission of 6% plus warrants of another 6% of proceeds to fund raisers. The buyers received another half warrant totally about another 12.8 million shares if exercised. The float now sitting at 159 million not fully diluted. I will leave it up to others to calculate but this is a much higher dilution than FCU with not near as much upside. (I like this company and not a slight on them but a comparison)
Radon Readings
After the results of drilling with some spectacular results outside the hot zones of radon readings, this gives us clues and hopes of expansion of the main strike. As radon readings are released they travel through channels in the rock geology, then they are distorted through the water. The results show that once the geology, drilling results, and strike direction are established, they don’t match with the maps perfectly. But what they do show is that holes that might miss directly over a hot spot, may just be misplaced from the source do to travel of readings.
https://dl.dropboxusercontent.com/u/17572201/Hot%20zones%20PLS%20April%206th.jpg
The New Zone and possible Others
The massive step out to the east on a new conductor, represents some great speculation, of what could be, but not known to the east. As stated with the radon readings, there are strong readings, but might not be the exact source of it. This along with really strong readings on line 1440E to the north, line 1850E, line 50W show that more discoveries are possible, they may just not be on the exact hot spot.
https://dl.dropboxusercontent.com/u/17572201/Many%20Hot%20Zones.jpg
Resource Estimate
Based on what my models show and the what highlight holes show along with the general deposit outlay, related to my expecations on the conservative side: 120 million pounds will be proved as a base case this year, with exposer to 150 to 200 million pounds depending on future drilling.
Buyout
Lots of discussion continues from friends and the board about possbile buyout. I won't comment on this much as it is really beyond anyones control. I prefer to follow the pounds as, if it comes early, investors are still pretected for a return. If it comes later after many more pounds are proved, and a raise in the commodity price occurs, it only gets better. It is a case of good or better, I see nothing else.
I look forward to the next NR, probably tomorrow.
Cheers
Presclubs
ps. I am not sure the picture links have worked properly. In the past I could just input a picture this time I had to add a link. Let me know if is not working. This site is not the easiest to work with.
(Disclosure: I hold a long position in FCU. I am not a broker, professional analyst, or work for a financial intuition. I am a retail investor. I do not receive commissions or compensation for posting. I have a group of friends who also are invested, and post on this site for their benefit and any other investors that find it relevant. It’s a hobby, enjoy it, and invest in this stock because of my belief of large potential returns with low risks. These are my personal opinions; investors should do their own due diligence on what to invest in. Team PLS-2.64m)