See: thomcalandra.com
Athabasca— or is it? — Well,
I wish I could smelt a phrase like John Goodman does in ARGO, the film,
when he looks at the script of his fake sci-fi movie and says,“Argo-f%$&-yerself.”
I’ll take Atha-suggestions.
There are four times as many Athabasca Basin companies staking uranium concessions
up there in Saskatchewan, Canada, as
there were two years ago. When there is a scrum, I usually head in another
direction.
This, for instance, comes
from a member of our uranium-crazed TCR family:
it is one of dozens we receive. “As you probably know,Fission Uranium is creating a lot of buzz since it
announced a 105 million pound resource at its PLS project in the Athabasca Basin,
Canada. Speculation is swirling as to who is likely to buy PLS/Fission. Good
for resource markets, especially other explorers in the Athabasca Basin: one of
the world’s richest depositories of U3O8. ”
Fission’s latest uranium discovery boosted its
all-in equity worth to almost $500 million CAD. That’s two zones at FCU’s (Canada ticker) Patterson Lake South holdings.
Average grade of 1.58 percent U308, which is practically radioactive.
I am skeptical of the Basin, big B or small.
Lots of other people in Canada, USA and Europe, even South Africa, are
believers willing to put money into exploration up there. A clutch of tiny
Athabasca companies are finding it easier than, say, gold companies, to raise
the hundreds of millions of dollars via equity placements they need to
explore potential deposits.
NexGen Energy recently started an 18,000 meter drilling program to follow its
discovery east of PLS. (I actually like the upside prospects for NexGen, but
let me continue with my digs at the Athabasca Basin.) CanAlaska
Uranium has one of the largest land positions in the
Basin; partner Northern
Uranium is
drilling at NW Manitoba project. UNO’s major shareholder is gem finder Chuck Fipke, who recently acquired
10 million shares. If I neglect to mention your favorite, please don’t tell me
to Argo.
Athabasca Basin hype is as common these days as
stock market selloffs. So take this all with a grain of that U308. I swear, I
can go to breakfast or lunch twice a week anywhere in Canada and the USA with
someone trying to tell me why I should buy into the basin. Truth!
NexGen Energy (NXE in Canada) this month started a drilling program
on its Arrow discovery. If the recovery in uranium
equities continues for another month or two, NXE is probably a good bet for a
50 percent equity gain.
Oh, and that real tiny one, CanAlaska, might benefit from
Athabasca fever; the mom-pop prospector and land owner holds interests in 1.9
million acres in the region.
There are dozens of CLOSE-OLOGY tales of Athabasca
wanna-bes out there.
TCR family, I own none of these
above. The only uranium developer I own that has any size in the TC resources
portfolio is Azarga Uranium.
You see, the challenge with the
extreme high grades of the Athabasca Basin is the fact that most are not what
they call in-situ
deposits.
That is Alexander Molyneaux talking, albeit through me. Alex is,
age 40, a brand-new dad and a resident of Taiwan, is active in Asia financing
and energy circles — especially in Singapore. When we had dinner in Taiwan
earlier this year, I paid. When we have dinner in Vancouver this coming Sunday,
I think we both will try to find someone else to pay the tab.
“What’s causing the frenzy and excitement is that
investors are seeing very high grades being drilled up there.” Grade,
Alexander says, is not the be-all and end-all of uranium deposits.
“Certain uranium deposits are amenable to in-situ
recovery (ISR) mining and those tend to be the most
economic because they avoid the cost of physically moving ore and building
expensive mills,” the Azarga founder (western USA, Turkey and central Asia) says.
Mr. Molyneaux is former CEO of Mongolia’s SouthGobi Resources, a troubled coal developer that looks like it finally is
rebounding after a seemingly endless run of class-action investor lawsuits, money-laundering
accusations (dismissed against three employees or now
former employees) and shareholder disappointment. Turquoise Hill,
operator of copper-gold deposit Oyu Tolgoi in Mongolia’s Gobi steppe-lands, now
controls SouthGobi. (TRQ and SGQ in Canada).
“The Athabasca deposits are not amenable to most ISR
mining. My point here is that for many deposits in Athabasca, they will excite
with grade and scale but then disappoint with project economics.” That is Mr.
Molyneaux again. I give Alex his chops here because more than almost any single
individual, he has kept me up to speed in the U308 fast lane, where stocks go
up and down faster than a tidal wave headed for the western coast Japan.
Facts, figures, slides and opinions that I see
mostly getting realized a few months or years later — in coal themes, industrial
metals, global supply pathways and so on. Alex even has a diamonds theory for
China consumers, but later on that one.
One of Mr. Molyneaux’s solid takes on behalf
of Azarga (AZZ in Canada and P8AA in uranium-embracing France) is
a slide that explains in-situ recovery:
–In-situ
recovery is the
fastest growing source of uranium production — 48 percent of global
output.
– No movement of rock, nor dust or tailings during
in-place recoveries.
– Solution is
pumped into
ground and returns to surface with dissolved uranium particles.
–Average
global cash costs are
about 25 percent cheaper than non-ISR.
–Capital
costs pre-pound of
production are about 65 percent cheaper for in-situ than for conventional
projects.
Now, before you all tell me to go Argo myself, which, by the way, is
not easy for most human males, I point out that it is a relief to have someone
throw solution on all this Athabasca vaporware.
Right In Your Situ, Bro
Yes, I know Fission Uranium is a fast-growing enterprise and it
deserves every Fission dollar it raises to explore the basin. I also know that
high-grade uranium powers up nuclear plants in a hurry.
Still, this discussion is for the purpose of
explaining recovery methods, operating costs and cap-ex costs — subjects that
concern all investors.
Alex notes that only sandstone deposits with the
appropriate hydrological and geological conditions are suitable
for in-place recoveries.
Large uranium company Cameco has a conventional Canadian production
with an as average grade that is 200x higher than its ISR operations in USA and
Kazakhstan, Mr. Molyneaux says. Yet the in-situ stuff at Cameco has a 10
percent lower average cash costs. I prefer for the sake of space not even to
get into the lower capital expenditure costs per pound of capacity.
Oh, OK: a broker note from Ambrian last year
estimated in-site projects’ capex at averaging half that of conventional
uranium projects.
Naturally, Azarga’s flagship project, Dewey Burdock in South Dakota with an extension in
Wyoming, is what the company calls high-grade in-situ.
At any rate, Azarga at a market value of $25 million
might be a fitting complement to serious uranium investors that want low-cost
possibilities and conventional ones in their U308 developers. As I said, I own
it. Dewey Burdock in South Dakota received its Nuclear Regulatory
Commission license in April 2014. Azarga’s execs vow to be producing U308 from
the project in two years.
The company’s principals raised $5 million CAD in
2014 at a far higher price than the 38-cents CAD price AZZ sells for now. I
love the fact that this thing trades in France. That means U308 snobs there
have a chance at serving themselves an AZZ gourmand course on their bourse. Say P8AA, si’t’plait.
I will get the Azarga update from Azarga’s Alex Molyneaux, fresh in from Taiwan and Singapore, at
the Cambridge
Resource conference in
Vancouver.
THE CALANDRA
REPORT: Sample & Subscribe
Now $129 yearly!
At last:
A thomcalandra.com home for our
expanding TCR faithful; including benefits, secrets and subscriber-only
scoops.
Disclaimer: This article was posted
with the permission of a third-party contributor and the opinions
contained therein do not necessarily reflect those of Smallcappower.
Smallcappower does not endorse any investment advice provided by
these third-party contributors. Please consult your investment
advisor before making any investment decisions.
Ubika
Corporation and its divisions Smallcappower, Ubika Communication and Ubika
Research are not registered with any financial or securities
regulatory authority in Ontario or Canada, and do not provide nor claims
to provide investment advice or recommendations to any visitor of this site or
readers of any content on this site. – See more at: http://www.smallcappower.com/posts/small-cap-power-disclosure
