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On Monday, March 18, Fission Energy (FSSIF.PK) and Alpha Minerals (ESOFD.PK) released additional drilling data on their rapidly evolving drill program at the Patterson Lake uranium project. In particular, a new zone of uranium mineralization has now been discovered approximately 390 meters northeast of the 390E Zone, where previous holes have intersected strong mineralization over significant widths. Results in the new holes included a total of 0.9 meters of off-scale mineralization across three graphitic shear zones that total 21.5 meters in total mineralized thickness in hole PLS13-055. Fifteen meters to the north of this hole, hole PLS13-048 intersected a 22 meter wide band of weak to moderate mineralization.

The depth at which the mineralization was encountered is generally comparable to the depths where mineralization was seen in holes 390 meters to the southwest. From end to end, this result extends the prospective corridor to approximately 800 meters in strike length. This is not to say that the full 800 meters is mineralized, as the areas between these 3 discovery zones remain largely untested, but seeing mineralization along this amount of strike length is clearly encouraging from a geological perspective. In uranium exploration, 10-20 meters can make a big difference in terms of what kind of mineralization you hit, as was evidenced by prior holes PLS13-038, PLS13-044, and PLS13-046. The companies have stated that additional drilling is planned in the Zone 780E area before the end of the winter program.

Additional data from the 00E Zone (on land) was released on March 19, which has expanded that zone further. The 00E Zone now spans approximately 80 meters by 50 meters in plan view and the zone remains open to potential expansion with further drilling. Ten holes were reported, six of which showed off-scale mineralization. Two of those holes, PLS13-043 and PLS13-052, encountered more off-scale mineralization (4.63 meters and 5.95 meters respectively) than any prior holes drilled at the 00E Zone. The mineralization in this area is described as generally flat-lying.

Taken as a whole, the data appears to show that there are two distinct rock types in the area which are separated by a graphitic shear zone that is often associated with the mineralization. Graphite is potentially important because it is often associated with uranium deposits, since graphite can chemically reduce uranium bearing fluids, leading to uranium deposition. The potential significance of the shear zone itself appears to be in the fact that it seems to represent the contact between a quartz feldspar gneiss to the south and a semi-pelitic gneiss to the north. It follows that the shear zone may represent a relatively large scale contact between these two rock types where uranium-bearing fluid flow was concentrated at one time in the history of this rock package. The bottom line is that the overall geological environment looks highly conducive to uranium mineralization and that the system itself has the potential for additional strike length. Uranium is being found in steeply dipping zones as well as flat-lying ones.

A picture is worth a thousand words, so I have prepared a "block model" of what I believe the data is showing thus far. The diagram is highly schematic and based on the limited data available, but in my interpretation it does fit quite well with the drill data that has been reported to date. Geology is an interpretive science and I must stress that this is simply an interpretation. I provide this diagram in order to illustrate a working model that honors the data available. It should serve well for those looking for a starting framework from which to begin to interpret the data for themselves, or for consultation with your own experts. The diagram is highly simplified; geology is never this neat. As mentioned in prior articles, I would expect the shear zone and mineralized zones to pinch and swell along their strike lengths.

Figure 1: Proposed Block Model for Patterson Lake

It may be worth re-introducing a cross-section from a prior article at this time, using the same color scheme. This cross section is again presented for the purpose of illustrating the nature of uranium deposits in general so as to help readers form a framework with which to conceptualize additional information. It is far too early to make a cross section this detailed from the data at available at Patterson Lake, but understanding the general characteristics of uranium deposits is a key skill required in the evaluation of information as it comes in.

Figure 2: Schematic Cross Section of a Uranium Deposit

Source: Modified from S. Harvey, 2004 and from Areva/Cogema SGS Open House Presentation, 2005.

ETF Buying

Earlier this year I had speculated that this project would eventually attract the attention of uranium ETFs. Recent filings by the Van Eck Global Uranium and Nuclear Energy ETF (NYSEARCA:NLR) have confirmed this thesis, with its holdings now totaling 1.066 million shares of Alpha Minerals, which appears to be a new addition within the last week (the fund holdings as of March 18 can be found here). It is interesting to note that the Global X Uranium ETF (NYSEARCA:URA) does not show as holding any of either Alpha Minerals or Fission Energy at this time (the fund holdings as of March 18 can be found here). Looking at the rest of the fund's holdings, it seems logical that the Global X Uranium ETF would add Fission and/or Alpha to its holdings at some point.

It is also worth noting that the pending acquisition of Uranium One (OTC:SXRZF) by Russian-backed ARMZ is expected to close in June of this year. Current holdings of Uranium One in the aforementioned ETFs total approximately $26 million, which will need to be reallocated when the Uranium One deal closes. This could result in a relatively broad bid across a number of uranium names during that reallocation.

Summary

The drill program is ongoing and I continue to encourage readers to continue to do their own due diligence with respect to this project. Mining exploration is speculative by nature and is not for everyone, so be sure to evaluate your own risk tolerance and consult with investment professionals prior to making any investment decisions.

Assay results are pending (I would expect assays to start to come in within one to two weeks) and true thicknesses are to be determined. I believe that assays are perhaps the most critical remaining piece of information before broader market acceptance is achieved. Assays should be expected to come in "batches" of holes once they do start to come in, though I have seen single-hole assays reported by other companies for materiality reasons. For the uninitiated, assays are the chemical analysis of drill core that tell you what the grade of the rock is, which in this case will be expressed as "% U3O8." At these depths, anything in the 2% range is very good. Recall that the average grade of the Cluff Lake mine (62 million pounds produced from near-surface) was approximately 0.93%.

I have drawn parallels to Hathor Exploration in prior articles and based on my knowledge as an early investor in that company, I can say that Hathor did not show this kind of prospectivity in terms of strike length in the early days. Patterson Lake has already yielded three "discovery zones" and the source of the very large boulder field that was the impetus for this whole exploration program still has yet to be found.

Source: Patterson Lake Speaks Again: What The Geology Is Saying