Uranium’s Explorers: Verbatim

Many (but not all) uranium equities worldwide are enjoying a bang-up rebound this January of 2017.

Yellocake concentrate -- no relation to sweet potage pie
Yellowcake concentrate — U3o8, and no relation to sweet potatoe pie

The speculating in small uranium-cos (Canada, USA, Australia) looks based on a small-dollar rise for the element itself. [Please see Cameco Corp. meltdown from the misfiring uranium producer — below.]

Our focus this coming weekend via live panels of “experts” is Athabasca Basin explorers and project developers. The Basin is that same Canada minerals mecca many of us have been hearing about these past 3 years.

If China is short uranium concentrates, investors might consider being long U3o8 concentrates. -- Thom Calandra
If China is short uranium concentrates, investors might consider being long U3o8 concentrates. — Thom Calandra

Our TCR Network‘s uranium-exec members are convinced recent signs of China demand are the fuel for this year-starting uranium rally. I agree. What China requires is almost always a solid investing choice.

Still, many speculators, including momentum morons, hedge fund wanna-bes and high-school-educated lap-toppers, are banking on spot “indicator” prices.

Free headline: such Internet-fed prices in real-time supply-demand markets are challenging to believe.

Uranium participation certs (U is one: Toronto ticker) also act as a flash indicator of possible coming demand for uranium concentrates. All of these indicators — with the exception of China’s import demands — are mostly of peanut-gallery quality.

The “U” trades at a premium, liked a closed end fund on a stock exchange, when investors expect physical uranium prices to rise or keep rising.Uranium executive Dev Randhawa, who has a master’s degree in international business, calls it “speculative uranium investing without management risk.”

This one packs most of the Basin into one schematic.
This map packs most of Canada’s Athabasca Basin into one schematic. [Click on media file to read it, please.]
Industrial delivery contracts for uranium (oxide, hexafluoride) are one of the better gauges of price health for radioactive “yellowcake,” but these concentrates contracts are hard to document. Plus, the buyers and sellers of this nuclear fuel can rework their ($42 USD to $50 per pound) delivery deals during long price slumps, such as the one that U3o8 concentrates are experiencing now with prices in the low $20s per pound.

Some of the camps in the Athabasca Basin's eastern half.
Some of the camps in the Athabasca Basin’s eastern half. [Click media file for improved reading of map, please.]
Speculative focus: uranium investors use equity proxies: the stocks of explorers and producers and holding-cos operating in Canada, Australia, Africa, the former Soviet-bloc “Stans” and the USA. (Utilities that purchase uranium concentrates to power their plants also use the U-equities as “hedges” and investments — on and off-balance-sheet .)

At any rate, after getting splonked with data, slide decks (some likely market-moving), telephone calls, videos and e-mails many days of this month of January 2017, I began to query some of the uranium execs and veterans I know. Most of these cats are in Canada.


Please see our TCR Network snap of what we will be addressing at this coming weekend’s two metals investing conferences in Vancouver, British Columbia — in Canada. 

Our thrust largely will be Canada’s mostly rich uranium deposits of Athabasca Basin East and Athabasca Basin West.

I will assist two uranium panels whose talking heads hail from Skyharbour Resources, CanAlaska Uranium, Fission Uranium, NexGen Energy, Denison Mines. The plan is to show a proprietary slide deck* that will help illustrate the international attraction of rich grades, easy access and existing refineries and explorations camps across the multi-province Athabasca Basin of Canada.
Xie-xie, but no thank you.
Xie-xie, but ‘no thank you.’
The two midday panels are this coming Sunday January 22. Peter Dasler,
Jordan Trimble, Leigh Curyer, David Cates, Dev Randhawa -- respectively, 
CanAlaska Uranium, Skyharbour Resources, NexGen Energy, Cameco Mines 
& Fission Uranium. Printed copies of our slides will go to the fist 30 or 40 takers.

Uranium verbatim  
The quotes presented here backdrop the half-billion of investor cash flowing into uranium stocks this month. (Highest trading activity in more than a year for many sub-$1 billion market explorers and producers.)

Cameco Corp: some — a lot, actually — of that cash is exiting this week. Cameco, after delivering 31.5 million pounds of uranium in 2016 at an average realized price of $54.46 CAD per pound, is on the ropes this Wednesday January 18, 2017.  The damage to CCJ’s stock price and the entire rest of the uranium sector’s stock prices comes in the wake of currency fluctuations, a legal tax disute and the company’s Rabbit Lake (Canada) shuttered mine and mill’s impairment expenses. These all are battering the financial results of one of the largest uranium producers in the world: Cameco is CCJ ticker in USA.

TCR take: this grotesque  Cameco cameo looks like a window for cheap seekers.

All of the following comments are gathered for our TCR Network directly from company execs. They are abridged — even the long-ish ones — and generally required at least an hour each of telephone conversation, Skype, e-mail and-or chat. The full monty (some of it actionable and more than a bit of it vitriolic, revealing, volatile and pointed) from these excerpts will come Sunday live in Vancouver; and for our private and dues-paying TCR Network.
Note: I generalize here about some of the Athabasca Basin geology distinctions (unconformities, sandstone, underlying basement rock; shallow vs. extreme high-grade uranium; and so on.) ***
— Jordan Trimble: a young-ish Canadian, he runs Skyharbour Resources.  (Denison Mines’ CEO, David Cates is on Skyharbour’s board.)  Skyharbour’s flagship exploration project is Moore Lake on the basin’s SE side in northern Sakatchewan. Moore Lake is within an hour’s drive of Cameco’s McArthur River mine and Denison’s Wheeler River exploration camp. Says: “Strong start to the year for uranium equities but given the spot price is still trading near all-time lows in real terms, I believe we still have a lot of upside from here.”
From Kerr-Wallis examination of Athabasca Basin uranium discoveries, 2014
From Kerr-Wallis examination of Athabasca Basin uranium discoveries, 2014 [Click for media file to read please]
Says: “The west side of the Basin has been the focus of a lot of investor interest recently but the reality of it is that the east side still has a significant exploration upside potential, good infrastructure, and lower costs. It’s not like lithium though with brines, or uranium ISR in the USA or Kazakhstan, as the high-grade uranium deposits are all hard rock sources with conventional mining techniques used for the most part. Anyway, the mines on the east side of the Basin are some of the most technically advanced operations in the world. “

 

— Peter Dasler: veteran New Zealand metals explorer and claims staker took his CanAlaska Uranium from deathly hallows of a penny-stock swamp to more than a dollar, enticing new partners with geophysical evidence from fresh uranium (and diamond) projects in eastern (and western) basin. CVV is probably one of the best performing equities worldwide (on a percentage basis) in uranium explorers’ landscape for 2016 (CVV ticker in Canada). Says: “High-grade mines make money when the investor (and industrial) markets stink. When you look at average pounds in the ground worldwide (except perhaps Olympic Dam (Namibia), most deposits are 5 million to 20 million pounds in size … vs 200M to 400M+ pounds for the key Athabasca mines. Canada properties tend to be reliable producers. Canadian politics are stable, and the mines have the ability to deliver the uranium needed for the life of a nuclear reactor, which is 40 years to 60 years.”

Says: “It was not possible to economically explore the deeper parts of the Basin before 2000. After this we had the models, computers, airborne and ground geophysical methods that are necessary, and the first pulse of market awareness gave us the money to develop all these tools.”


— David Cates:
Canadian exec runs Denison Mines, a developer of what it believes are prime uranium projects. Lukas Lundin, a Canada miner and probably a billionaire, is executive chair of Denison. Mr. Lundin the 2000s merged a USA (Arizona) entity with Denison Mines. Mr. Cates — Says: “Each company (in Canada’s Athabasca Basin) offers a different proposition for exploration in the eastern part. CVV (CanAlaska) looks for partners to fund and take projects forward (project-generator) with minority interests and large, credible partners. SYH (Skyharbour) is focused on being an operator of a prospective exploration property: looking for a discovery that will change its value dramatically. Denison is larger scale a developer, rather than an explorer, with a large land package and a group of select high-quality exploration properties with potential for a discovery.  We all believe in the benefit of being focused in the eastern Athabasca Basin for two reasons:  (1) geology, as the east is host to the only operating mines in the region and there is lots of exploration left to do, as geological models change; and (2) infrastructure and favorable economics associated with developing a mine in the heart of a mining district.”

 

— Dev Randhawa: well-traveled and experienced Canadian financier directs his Fission Uranium‘s Patterson Lake South in the western basin; his team includes Ross McElroy, a leading uranium exploration geologist who flies beneath the industry’s radar (and gets high presentation grades in my book). A second company, Fission 3.0, is a small exploration particle of the Fission nucleus and operates 18 properties in and around the Basin — all shallow targets. China Nuclear General owns about 19.9 percent of Fission Uranium’s stock (FCU ticker in Canada). Says: “China has 1.5 percent of its power coming from nuclear and America has 20 percent. You know and I know and China leaders know why that is unacceptable. Just visit any major China city; India, too.” [That references sovereign dynamics, I think. Super-powers and super-power wanna-bes are spreading their uranium exploration bets for “clean” nuclear fuel across several nations, Canada being near the top of their list — for the purposes of our examination here.]

 

 

Prepared presentation from William Kerr and Roger Wallis to Saskatchewan Exploraiton Group 2014
Prepared presentation from William Kerr and Roger Wallis to Society of Economic Geologists (SEG) 2014 *****

Says: “The east has mills, yes, but there is overcapacity there, too. Plus, at the big deposits, Cigar Lake, McArthur Lake,  you have water almost always messing with the unconformities. Where there is water, there are permitting issues. In the west, NexGen‘s Arrow deposit and our Patterson Lake South, well, we think Saskatchewan is a great jurisdiction. The Saudi Arabia of uranium. Ross McElroy flew his plane on the edge of the basin and looked for a shallow deposit at Patterson Lake South and found it. Traditionally, sandstone on top of basement rock in this area … but ours, all the sandstone was pushed away to the basement with just overburden on top. Not to beat all of this into the ground, but you find something with unconformities, as we see in the eastern part of the Basin, you have to spend $300 million or more to keep the water moving the right way. You become a permitting company. We have the best position of shall-target properties anywhere … our airbornes would never have found Cigar Lake (Cameco) or Nexgen’s 500 meters underground.”

 

Says Ross McElroy: “Then there is expense potential for high-grade that is deep anywhere in the Basin, not just east or west. Open pits are cheaper to operate than underground mines; cheaper to move large amounts of rock and dirt.” Mr. McElroy is writing, or speaking, between the lines here, I think: NexGen’s competing project in the western Basin, Arrow, is 500 meters and more deep.

 

— Richard Patricio: mid-40s Toronto securities lawyer hails from tattered merchant bank Pinetree Capital. Mega-Uranium‘s holdings include significant equity stakes in basin superstar NexGen Energy and Australia’s Toro Energy. Says: “When uranium price starts to move, this catch-up in the equities will be looked back on as trivial.”

 

— Leigh Curyer: Australian transported himself to Canada and secured Hong Kong real estate tycoon Li Ka-Shing ** as a major investor/lender into the basin’s most successful uranium explorer, NexGen Energy. NexGen (NXE) in about 30 months has turned heads of all large uranium interests, especially diversifying nations seeking the element. Those heads are turning toward its extremely high-grade exploration projects at Arrow, which is extreme high-grade basement rock underground, and not beneath water — so high grade as a percentage of uranium to ore (10 percent and greater) that remote-controlled, or robotic, mining almost surely will be required. Remote-controlled mining usually requires freezing the ore that eventually becomes yellowcake concentrate. Mr. Curyer, an accomplished presenter, will have plenty to discuss Sunday. The company’s NXE shares are the best market capital advancers (volume multipled by dollar amount) of the past two years among uranium equities worldwide. A phenom, honestly. Rarely does a lone uranium explorer reach almost $1 billion of stock market worth. NXE owns about three-qurter of ISOEnergy, whose properties in the Basin include Thorburn Lake and Radio.

— Craig Parry: This Australian is a contemporary of Mr. Curyer and runs NexGen offshoot ISOEnergy from Vancouver offices. ISO (ticker Canada) controls property for additional high-grade uranium exploration in the western part of the Basin. Says: “We are seeing a 4o percent jump in spot prices in a month. Equities have moved strongly but I think more to come. Imagine if gold jumped $400 an ounce; most gold equities would jump several-x. No reason to think U-equities won’t.”

Rich & getting richer, we hope.
TCR Network: what we believe is acceptably cheap in the basin’s uranium equities (not counting Australia titles) — Virginia Energy (USA-centric), CanAlaska, Skyharbour, Fission 3.0, Mega-Uranium (a holding-co). As Mr. Cates at Denison remarks, “The eastern part of the basin remains a highly prospective district that investors may have forgotten about following the discoveries by Fission and NexGen in the west.” Fission 3.0 is probing parcels across the Basin; Mega-Uranium owns a large stake in NexGen. Virginia Energy is eastern USA and family run — VUI Canada ticker and VEGYF USA ticker.

Rob Chang, a Canada uranium analyst (brokerage Cantor Fitzgerald):
"Sentiment for uranium continues to be positive as Uranium 
Participation (U: ticker Canada) trades at a premium to its
net-asset value for a third month. Investors are current implying
a US$23.33/lb spot price, which is an 8% premium to the current
market." This analyst sees a probable buying window as producer 

Cameco suffers from currency fluctiations. David Talbot of Dundee
is the other Canada brokerage analyst who gets attention these days.

 


China's import figures of raw materials probably are one of the biggest influencers of rising uranium prices -- and other metals -- this December and January 2017. -- Thom Calandra
China’s import figures of raw materials probably are one of the biggest influencers of rising uranium prices — and other metals — this December and January 2017. — Thom Calandra
That China thing: TCR Network members know, this paragraph feed from CanAlaska Uranium is lighting up the radiometric gauge the past two years to keep me up to speed on uranium, and a few other things, than most wikis do. 
The CanAlaska Uranium (CVV ticker) feed trough is https://twitter.com/CanAlaska. Peter Dasler, John Gomez and Karl Schimann at the eastern Athabasca Basin uranium project exploiter are choosing relevant events in timely fashion for their yellowcake feed.
Fision Uranium‘s Ross McElroy and Richard Matthews stoke educational fires with their own news feed, one I find thankfully light on corporate hype.
Irina Dorokhova of MINEX Central Asia hit it out of the park about a week ago when she assembled this overview of uranium prices, supply-demand, history and those U-participation certs; her article is here. Outstanding in its compact delivery of basic knowledge about uranium investing.
Screen Shot 2017-01-17 at 12.06.16 PM
Other feeds: this uranium documentary from Canada’s Jonathan Roth. It references, somewhat glowingly take note, GoviEx Uranium, a project developer with two permitted and unbuilt mines in Niger (Africa). Govind Friedland runs Goviex, which has backing from Cameco, Ivanhoe Mines, Denison Mines and others. Says: “We now have the highest uranium reserves after Cameco, Areva, Paladin and NexGen, but they — NexGen, only have resource.”
Resource vs. reserves — for now, this is true: NexGen haswhat they call less bankable  resource on Canada-complaint paperwork that is filed with securities agencies. That will change with the next NXE upgrade to its Arrow project, I imagine.
Mining Weekly spends time publishing news about uranium — like the Kazakhs’ intention to slice output, possibly because of rising production costs and existing supply contracts.
Screen Shot 2017-01-17 at 12.10.10 PM
 * Many executives — mostly IR and biz-dev VPs — lost a few of their nine lives and drinking rights gathering on their hearth-time this yellowcake knowledge for our TCR Network. To honor their sacrifice, we will distribute 40 or 50 printed copies of proprietary slide decks to early takers at this weekend’s Vanunnamedcouver Resource Investment Conference. I will be spending any free time at the CanAlaska booth, just because the tem there offered me a seat at their shack.
** I interviewed Li Ka-Shing in Hong Kong as a business reporter and columnist for San Francisco Examiner — 1989.
*** Basement rock is the rock below the unconformity where the Athabasca sandstone makes contact with the underlying rock. The mineralization came up from below through the basement rock so the highest grade feeder zones can be found at depth. Skyharbour’s Moore Lake is an example — as the current known high-grade zone at Maverick is unconformity style mineralization with untested basement rock below.  Denison’s Gryphon zone (eastern Basin) is basement hosted as well.
**** Underlying basement rock across and around the entire Basin is geologically prospective. This is the case with Fission’s Patterson Lake South deposit. Fission found PLS’s high-grade boulder field through Ross McElroy’s low flying radiometrics in 2012 after almost two years of flying. Mr. McElroy is doing the same now with Fission 3.0’s properties. 

***** The 2014 examination of Athabasca Basin uranium deposits is almost exhaustive and must reading for investors, geologists, execs and writers-researchers. 

“Real-World” Economics of the Uranium

Deposits of the Athabasca Basin, Northern

Saskatchewan: Why Grade Is Not Always King

William Kerr,† Exploits Exploration Corporation, Toronto, Ontario, Canada, and

Roger Wallis† (SEG 1984 F), Roger Wallis and Associates, Etobicoke, Ontario, Canada

 
-- Thom Calandra (None of these companies pays me -- not a one.)
The Calandra Report: Subscribe for $139 yearly
Thom Calandra & TCR are researchers and investors. Research and material they offer to subscribers are meant as editorial opinion. See: thomcalandra.com to subscribe. It’s a deal.

 

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