UEX (UEX-T) has bumped up resources at its 49% held Shea Creek uranium project in the Athabasca basin of northern Saskatchewan, now the largest undeveloped uranium resource in the much coveted basin, demoting Cameco’s (CCO-T, CCJ-N) Millennium to second and overall ranking in third, behind Cameco's McArthur River and Cigar Lake deposits.
Shea Creek hosts the Kianna, Anne, Colette deposits and the recently defined 58B deposit. It’s the most advanced of the nine western Athabasca uranium projects UEX jointly holds with project operator and majority owner Areva Resources Canada.
The latest estimate, prepared by Advantage Geoservices, shows Shea Creek contains 67.7 million lb U3O8 from 2.1 million indicated tonnes grading 1.48% and another 28.2 million lb U3O8 from 1.3 million inferred tonnes at 1.01%, at a cut-off grade of 0.3% U3O8 – representing increases of 6% and 15% respectively over the May 2010 estimate by Golder Associates.
The new resource incorporates all four zones and is based on 477 holes completed from 1992 to the end of 2012. Similar to the Golder estimate, the author at Advantage controlled the impact of anomalously high grade samples by capping grades but he also applied restricted interpolation ranges on very high grade samples, causing resources in the Anne and Colette deposits to drop from 2010.
With the revision in hand, the junior states much of the mineralization at the project occurs over a 1 km strike length in the southern portion of the Shea Creak deposit trend at the Kianna and Anne deposits, which make up more than 80% of the current resource.
Global resources at Shea Creek now stand at 95.9 million contained lb,marking a growth of 8.8% or 7.8 million lb with total grade slipping 4.2% to 1.3% U3O8, notes Raymond James analyst David Sadowski, adding he was disappointed with the update as he expected a growth of at least 12 million lb given 116 holes were drilled since the Golder estimate.
That said Sadowski points out some “bright spots” in the revision, noting the Kianna deposit grew 11.8 million lb, or nearly 30%, to 51.7 million lb U3O8 with grade improving by 4.5% to 1.4%, making it in his view “one of the more prolific single deposits of uranium mineralization globally.”
UEX explains resources at Kianna increased with the discovery of new basement hosted zones, including the Kianna East zone, and through successful drilling. It adds, this, along with the newly delineated 3.4 million lb 58B deposit, were responsible for the increase in the 2013 update.
The company states resources at Colette fell 27% to 13.5 million lb grading 0.74% following restriction of mineralization in that deposit's central and southern portions based on new infill drilling.
While no drilling was conducted at the Anne deposit since 2010, resources dropped 8% to 27.4 million lb due to the more conservative approach used to interpret high grade samples.
Despite the smaller than anticipated boost in the resource estimate, Sadowski says he believes Shea Creek could still grow to 150 million lb and is maintaining that as his resource target.
“Although initial resource data dampens our outlook somewhat on the eventual size and grade potential of Colette and 58B within the confines of their current strike length, we remain encouraged by the prospectivity of basement zones at Kianna and Anne; ground to the north of Colette and south of Anne; as well as at the multiple conductors running parallel to the [33 km long] Saskatoon Lake conductor.”
On the resource news, UEX gained 9% to close at 49¢. Sadowski lowered his price target to $1.20 from $1.40 but reiterated an “outperform” rating.
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