When boiled down to basics, the formula for exploration success seems simple-all you need is brains, money and projects. In reality, of course, each of those qualities can be elusive. But in northern Saskatchewan's Athabasca Basin, companies are joining forces to create what they believe will be the region's "premier uranium exploration company." That's the ambition of Clermont Capital Inc. and NexGen Energy Ltd.
The events began with work on NexGen's Radio project, continued with Clermont's capital pool IPO in August and further progressed with NexGen's November 15 acquisition of 10 Canadian projects from Mega Uranium (OTCPK:MGAFF). Further progress came with an LOI announced November 30, in which NexGen and Clermont would amalgamate to create a new TSXV-trading entity. That, in turn, would follow NexGen closing a minimum $6.6-million private placement.
The newly expanded portfolio means "we now have a very dominant position in the Athabasca Basin," explains NexGen CEO/director Leigh Curyer. "Our strategy is to find assets that are at the shallower sections of the basin and have existing geophysical signatures that make them prospective. While there are 10 properties in the Mega portfolio, each of them made that criteria. They predominantly straddle the unconformity, they're in the shallower part of the basin, they've got existing but not extensive work and we thought they had very strong technical merits."
Now with a total of 12 properties, NexGen's three focal points are Radio, Rook 1 and Northwest Athabasca. "One property has mineralization on it, another two are directly adjacent to significant discoveries. The geological trends that host those discoveries are interpreted to go into our properties. Our properties are even shallower than those with the existing deposits. If they prove to have a discovery, the economics should be comparatively more favourable."
Although Radio resides in a crowded neighbourhood with prominent neighbours, it's never been drilled. That's scheduled to change in January with an approximately 40-hole campaign. Adjacent to the Roughrider deposits that Rio Tinto bought from Hathor early this year for $654 million, Radio is interpreted to sit on the same east-west corridor hosting Roughrider and Fission Energy's (FSSIK.PK) J-Zone. Roughrider's indicated resource totals 17.2 million pounds triuranium octoxide while the inferred category shows 40.7 million pounds U3O8. The J-Zone at Waterbury Lake has an indicated resource of 10.28 million pounds and an inferred resource of 2.74 million pounds U3O8.
NexGen has an option to earn an initial 70% interest in Radio, then the additional 30% subject to a 2% NSR.
Rook 1 borders Patterson Lake South, a Fission Energy and Alpha Minerals JV near-surface discovery that's generated considerable market interest. The NexGen property could be on trend with PLS and, according to some interpretations, might host the bedrock source of a high-grade boulder field associated with the Fission/Alpha discovery. Rook 1 geophysics are underway and, if completed in time, will determine a drill campaign to start this winter.
A 1,300-metre autumn campaign at the Northwest Athabasca project wrapped up with its first results released November 26:
- 2.48% U3O8 over 1.5 metres at a vertical depth of 26 metres (including 5.77% U3O8 over 0.5 metres)
- 0.27% U3O8 over 20 centimetres at a vertical depth of 50 metres
With more results to come, the project is scheduled for additional drilling in 2013. Northwest Athabasca's Maurice Bay deposit has an historic, non-43-101 resource of 680 tonnes averaging 0.6% U3O8. NexGen has acquired Mega's share of a JV within a JV, giving NexGen and Forum Uranium (OTC:FDCFF) an option to earn 30% each of the project. Until that's completed, Cameco (NYSE:CCJ) holds 87.5% while AREVA Resources has the remaining 12.5%.
The other projects aren't as advanced, Curyer points out, "but have the characteristics that meet our strategy of shallower parts of the basin and good geophysical signatures." Thorburn Lake is 10 kilometres from the Cigar Lake mine, which Cameco and its JV partners have slated for production in 2013. Cigar Lake has proven and probable reserves of 216.7 million pounds averaging 18.3% U3O8. The Japan Oil, Gas and Metals National Corp (JOGMEC) has 50% earn-in options on each of NexGen's Border Block and Virgin Trend projects. Sandhill Lake and NexGen's single Nunavut property, Thelon Basin, both underwent early-stage exploration this year.
Contingent on the NexGen/Clermont amalgamation is a NexGen private placement closing on at least $6.6 million. After the financing, Curyer explains, Mega would hold about 31% of the new entity while the Tigers Realm Group would hold about 35%, the same interest Tigers Realm currently holds in NexGen.
As for uranium demand, Curyer sees it increasing "especially when Japan starts turning on more reactors in 2013. But the ability to bring on additional supply is quite limited. Hence the fundamentals look very strong for the next decade. You've also got the Middle East constructing 17 reactors, the first one in 2018. The UK just approved their next reactor. South Korea will double their consumption of uranium by 2016."
Curyer's resume includes time with Southern Cross Resources, which helped form Uranium One (OTC:SXRZF). While CFO for Southern Cross, he was credited with managing Australia's Honeymoon uranium project through feasibility and raising over $250 million. He and the NexGen team claim wide experience with uranium projects up here, Down Under and globally.
As a result, "we're becoming the premier uranium exploration company in the Athabasca," Curyer maintains. "It's exploration, but we're in the world's most prolific uranium district. We have very strategically located properties with very sound technical expertise on top of them."
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.