High prices drive uranium activity

Interest in uranium exploration is growing across Canada, thanks to the strong price for the metal. The spot price for U3O8 at the end of December 2004 was US$20.70/lb, after a steady two-year rise. The price has more than doubled since the end of 2002, and the gains are expected to continue, perhaps reaching US$27/lb for contracted supply.

Here is a review of some projects in Canada, starting with the world’s largest uranium producer, Saskatoon-based Cameco Corp. Construction is beginning on the Cdn$450-million Cigar Lake mine (Cameco 57%) in the Athabasca Basin. Production could begin in 2007 and reach designed capacity of 18 million lb/year over the following 36 months.

Despite the heavy commitment to Cigar Lake, Cameco is actively exploring in northern Saskatchewan and Australia. Cameco holds 58% of the Dawn Lake deposit, with indicated resources containing 11 million tonnes at 1.9% U3O8 in Saskatchewan. Cogema Resources, another Saskatoon-based producer, holds about 23% of the Dawn Lake project.

Cogema and Cameco are working on pit optimization studies for the Midwest deposit, another Athabasca Basin project 20 km from the McClean Lake mine. Midwest has total proven and probable reserves of 382,000 tonnes at 3.97% U3O8. Ore will be treated at the McClean Lake mill and tailings impounded at the JEB facility.

Saskatchewan projects

Saskatchewan remains the prime target for uranium exploration because of its successful producing mines. Toronto’s Denison Mines is interested in projects at Wheeler River, Waterford and Russell Lake. The first two were drilled during 2004; Russell Lake was inactive. Denison announced in October 2004 that it has an agreement to increase its interest in Wheeler River to 60% from 40%. The property lies along strike west of the McArthur River mine. The company also has an option to earn up to 22.5% interest in Cogema’s Wolly project, which surrounds the McClean Lake mine.

Vancouver-based UEX Corp. is a very active player in the Athabasca Basin. Formed by Cameco and Pioneer Metals Corp., UEX has a couple dozen properties on the go including several optioned this winter. In October 2004 the company raised $10 million, part of which will go to funding exploration at Hidden Bay ($2.5 million), Black Lake ($2.7 million), Beatty River (see below) and Riou Lake ($1 million). UEX has outlined a $2.5-million program for this winter. Plans include drilling at West Bear Mitchell Lake, Tent-Seal, Telephone Lake, Moosippi Lake and Post Landing. The company also announced plans for MegaTEM surveys of its latest acquisitions.

UEX and Cogema signed an agreement last year whereby UEX has an option to acquire a 49% interest in eight more of Cogema’s uranium properties located in the western part of the Athabasca Basin. UEX has agreed to spend $30 million for exploration of the projects over the next 11 years. Watch for activity on the Shea Creek (containing the Anne and Colette uranium deposits), Douglas, Alexandra, Erica, Nikita, Laurie, Mirror River, Uchrich, Brander Lake and James Creek.

Formation Capital of Vancouver has two active joint venture projects in Saskatchewan–Kernaghan Lake and Virgin River. The projects are ventures of UEM Corp. (owned by Cameco and Cogema) and Formation subsidiary Coronation Mines. Five years ago a drill intercept at Kernaghan Lake cut 0.7 m of 29.9% U3O8.

A 1,900-m winter drilling program is underway on the Beatty River prospect. The project is a joint venture of Cogema and Japan-Canada Uranium Co. JCU has granted UEX an option to earn 25% of the project.

Denver-based International Uranium(USA) is earning a 75% interest in the Moore Lake project, which lies in the southeastern portion of the Athabasca Basin. The balance of the property is owned by JNR Resources of Saskatoon, and the partners have launched a $3-million, 15,000-m drill program this season to follow up on previous intersections (10 m grading 4% U3O8 and 1.4-m grading 20% U3O8).

Northern Continental Resources of Vancouver is drilling its Russel Lake property where previous drilling on the Gayling Conductor assayed up to 3.5% U3O8 over 0.3 m. The $480,000 program includes line-cutting and electromagnetic surveys.

The Carswell uranium project, adjacent to the former Cluff Lake mine in the southwestern part of the Athabasca Basin, is the focus of International KRL Resources‘ work. The company is conducting a search of existing databases, geophysics and diamond drilling on its part of the Carswell Dome Formation, and it would entertain joint venture offers.

Other Canadian locations

With its high grades and successful mining history, northern Saskatchewan is the focus of most uranium exploration in Canada, but it is not the only region under investigation. The hunt is on in other provinces and territories.

Besides its large landholdings in Saskatchewan, Strathmore Minerals of Kelowna, B.C., has a property in Alberta. The property is known as the Athabasca and covers over 242,000 ha within the westernmost parts of the Athabasca Basin near the Maybelle River.

The Hornby Bay Basin and the Thelon Basin in Nunavut host claims belonging to Hornby Bay Exploration of Toronto. The company has completed a technical report detailing its drilling and survey findings for the Hornby Bay property, which is believed to be geologically similar to the Athabasca Basin.

Also interested in the Hornby Bay Basin, Triex Minerals of Vancouver raised money in the fourth quarter of 2004 for further work on its Mountain Lake property. The property is an equal venture of Triex and Pitchstone Exploration. Pitchstone is a private Denman Island, B.C.-based company with six 100%-owned properties (Darby, Waterfound, Moon Lake, Lynx Lake, Fireweed and Gumboot) in the eastern Athabasca Basin plus an option on the Candle property.

Ontario, too, has potential uranium resources. In the Nipigon Basin, NewShoshoni Ventures‘ Wolfpup Lake claims cover lake sediments from which the Ontario Geological Survey has recovered grab samples grading as high as 12% U3O8. The company’s Black Sturgeon West claim group includes an occurrence of narrow pitchblende veins cutting an iron formation. Both properties have been joint ventured with Rampart Ventures (both of Vancouver).

Globex Mining Enterprises of Rouyn-Noranda, Que., holds claims covering a uranium showing in that province’s Atwater Township. The Hunters Point property has been idle for 20 years although old grab samples returned 12% U3O8 and 23.99 g/t Au.

Junior JNR Resources of Saskatoon holds a 70% earn-in option on the Rocky Brook property belonging to St. John’s-based Altius Resources in the Deer Lake Basin of Newfoundland; exploration there is in the early stages. Previous work on the property produced estimates as high as 11.5% U3O8 plus gold and silver values.

Altius has entered into a strategic alliance with Fronteer Development Group of Vancouver covering the Central Mineral Belt in Labrador. Together the Michelin and Post Hill deposits are estimated to contain 20 million lb of uranium. These are Olympic Dam-type occurrences and also contain copper and gold. These deposits and the Melody Hill property will be drilled in 2005.

The potential of the Central Mineral Belt will be further tested by Vancouver-based Santoy Resources. It has signed a letter of intent to earn 50% of the Bruce River and Mustang Lake properties belonging to Monster Copper Corp. of Richmond Hill, Ont. Santoy has agreed to spend $600,000 over two years.

Related activity

In the Northwest Territories, several com
panies are hoping to find Olympic Dam-type deposits. These are large-tonnage iron oxide/copper/gold deposits containing significant uranium values as well, although uranium may not be the primary target. Fortune Minerals of London, Ont., is working on such a deposit 175 km northwest of Yellowknife. Vancouver’s Allyn Resources is seeking a partner for its West Arm project 75 km west of Yellowknife. A third such project 350 km northeast of Yellowknife is Longtom, which is a joint venture of Tyhee Development and Alberta Star Development, both headquartered in Vancouver.

Likewise in the Yukon, War Eagle Mining and Strategic Metals have Olympic Dam-type hopes for their separate properties.

North Vancouver’s Rare Earth Metals is conducting grassroots exploration work at Eden Lake, Man., in hopes of uncovering an Olympic Dam-type deposit. The site is between the historic mining towns of Lynn Lake and Leaf Rapids. The Eden Lake property is also of interest for the metals cerium, neodymium, ianthanum, yttrium, dysprosium, erbium and ytterbium.

Finding and developing a uranium mine takes perseverance and hundreds of millions of dollars. If using uranium to generate electrical power is truly the long-term answer to reducing global greenhouse gas emissions, the financial risks are worth taking. While we wait for news of the next Canadian uranium mine to reach production, hundreds of junior exploration companies are looking for uranium in almost every corner of the country.

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