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Malcolm Shaw
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A retired sell-side analyst and hedge fund VP focussing on companies where technical understanding matters. With a MSc in Geology and 12 years of experience spanning the resource and investment industries, my focus is on companies where digesting data and looking at underfollowed companies can... More
  • UNO - Looking For Uranium Away From The Crowd 18 comments
    Apr 13, 2014 9:25 PM

    MPVC Inc. (UNO on the TSX Venture; there is no U.S. listing that I am aware of) is possibly the smallest and riskiest uranium exploration venture in which I have ever invested, which should be self-evident as soon as you notice the C$3.5 million market cap. It is a grass-roots exploration project that has been matured to drill-ready status over a multi-year period and the drills should be turning in the near future.

    In a nutshell, UNO is about to drill at its NW Manitoba project for the first time since a multi-year, multi-million dollar, major data acquisition program by its partner, CanAlaska Uranium (MPVC has the option to earn 80% of the project from CanAlaska through a series of capital expenditures and share issuances to CanAlaska at certain milestones).

    The story is fairly simple from a geological standpoint and is actually a textbook example of what you might look for if you were trying to discover a new uranium deposit in an area where few companies have looked before. The target area is within a corridor that is the interpreted extension of the Mudjatik-Wollaston Tectonic Zone, which is a major, regional-scale geological boundary that also hosts some of the largest uranium deposits in the world (Cigar Lake, McArthur River, etc). The same basement rocks which are associated with deeper deposits to the southwest are found at surface in the area where UNO is about to drill. There is high grade uranium vein mineralization in outcrop grading 9.5% U3O8 (i.e., high grade uranium in bedrock exposed at surface) within the target area and a number of uranium-mineralized pebbles and boulders have been found on the property, with one sample returning a value of >60% U3O8. That information got my attention... it's hard to ignore uranium at surface that can be sampled with a hammer and those uranium-mineralized boulders and pebbles must be coming from somewhere.

    It takes about 4 pictures to tell the story, which are included below with brief descriptions of the information being portrayed...

    Figure 1: A map of the Madjatik-Wollaston corridor shows the general trend of the major eastern Athabasca uranium deposits and gives a sense of the regional lineament.

    (click to enlarge)

    (source: company reports)

    Figure 2: A regional magnetic map of the eastern Athabasca Basin showing the magnetic signature of the Mudjatik-Wollaston Tectonic Zone and locations of key known deposits. The project area is outlined in yellow on the map (yellow star). Note how the low (blue) magnetic susceptibility trend becomes clearer as you move from the southwest to the northeast... that appears to be the geophysical signature of the basement rocks coming closer to surface as you move to the northeast (this interpretation has been ground-truthed by field work). So, to sum it up, the same basement rocks associated with the deposits to the southwest are at surface in the NW Manitoba project area and presumably may have similar potential for uranium mineralization. The surface sampling in the project area appears to support that theory.

    (click to enlarge)

    (source: company reports)

    Figure 3: A map focused on a smaller region of the project area outlined above. The map shows the same SW-NE trending magnetic low (blue) as well as the interpreted Maguire Conductor trend. There are some notes to the right of the image that shed a little more detail in terms of data/observations in the area. Note the scale bar... this is still a large area, but the right ingredients seem to be there.

    (click to enlarge)

    (source: company reports)

    Figure 4: This image is now zoomed to "target" resolution. Outlines of the survey areas in this image can be seen in figure 3 in black (Grid 2, Grid 2b, and Grid 2c). The Maguire conductor (marked as "VTEM anomaly") is annotated on the map and may be interpreted as a graphitic horizon that could be important for uranium deposition in the area. The map on the left is gravity data, which reflects the density of the rock in the area, while the map on the right is resistivity data, which measures the resistivity of the rock in the area. The hydrothermal alteration that is commonly associated with uranium deposits has a fairly specific geological signature... it often makes rocks both less dense and less resistive.

    (click to enlarge)

    (source: company reports)

    The 4 arrows in the image above are showing regions where gravity and resistivity are both low, which is exactly the signature you might want to see when looking for uranium. Combine that geophysical data with the regional trend, the uranium in outcrop at surface, the mineralized pebbles/boulders, all of which are adjacent to a large-scale conductor and the target becomes quite compelling, which is why I invested.

    UNO is also in the process of completing a radon survey (press release linked here) which has yielded promising early results. Recall that the only way to produce radon is via the natural decay of uranium, so the presence of radon suggests a nearby uranium source.

    Put it all together and these are the kind of targets that you want to see drilled. I cannot overstate how speculative a venture like this is, but the rewards are commensurate with the risks. If successful, the upside from a C$3.5 million market cap could be tremendous. The company has recently raised the money it needs to carry out an initial drill program, but it will mostly likely need to come back to market if there is to be a "phase 2" drill program. If the initial drilling yields encouraging results, the access to capital will likely be less of a factor... such is the exploration business.

    I am not recommending this as an investment, because it is strictly speculative, but this brief note does outline my thoughts on the opportunity from a technical standpoint. Those who followed my writing from the early days of Patterson Lake South will know that I am not shy about taking a stab at an early stage project, which this one most definitely is...

    A bet on UNO is like a bet at the roulette wheel in Vegas... once in a while you can get lucky, but at least if it doesn't work out, you know you can feel good about being at the table in the first place in light of the available data.

    Additional disclaimers: This is not investment advice, nor is it a recommendation to buy or sell shares in the company/companies mentioned. The information contained herein is accurate to the best of the author's knowledge, but the presented information should be verified by any party using this information as part of any decision making process. This view represents the author's opinion only, and as such readers should come to their own conclusions if they are using the opinions contained herein as part of any larger due diligence process. Geological inferences are, by their nature, subjective and interpretation dependent.

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Comments (18)
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  • Kiernan Lynch
    , contributor
    Comments (3) | Send Message
     
    Good Read Malcolm!

     

    Definitely a very early prospect with interesting prospects. Some thoughts in no particular order.

     

    1.Would you happen to know how the Radon survey strength from MPVC compares to FCU's Radon survey?

     

    2. The company recently raised $2,262,200 in December, do you know how much of this is slated for drilling? Said a different way, any idea how many drill holes we could see with this cash?

     

    3. Looking at Manitoba's licence map it looks like the nearest population to MPVC's mineral leases is the the village of Lac Brochet. (Can be seen at this link: http://bit.ly/1t0bKko). Considering the remoteness of this deposit, what sort of deposit size do you think MPVC needs to hit commerciality?
    14 Apr, 09:49 AM Reply Like
  • Malcolm Shaw
    , contributor
    Comments (169) | Send Message
     
    Author’s reply » Thanks for the comment Kiernan...

     

    1. I don't unfortunately. They reported the results as a multiple of background, which is a relative measurement. They are doing a lake survey right now, which I would expect will be more comparable to what the market has become accustomed to recently from PLS.

     

    2. Yes, that cash is indeed slated for drilling at the NW Manitoba project. Corporate G&A is very low as this is not a big organization.

     

    3. Hard to say regarding the size needed for commerciality. I do know that the company is not "thinking small"... these are first-order targets so they are elephant hunting, so to speak. I would think the commerciality threshold here would be in the 100 mmlb range, but don't hold me to that, as a lot of that depends on just what, if anything, is found!

     

    Best of luck.
    14 Apr, 10:04 AM Reply Like
  • Boomer123
    , contributor
    Comment (1) | Send Message
     
    Excellent article. Some very interesting points. I got in on the ground floor and have owned Canalaska for a few years. Potential good news for both stocks. UNO has also attracted the attention of some other investors, of note is Charles Fipke (geologist and discovered diamonds in NWT) who bought a large block of shares recently.
    14 Apr, 02:51 PM Reply Like
  • bobbafett38@yahoo.com
    , contributor
    Comments (94) | Send Message
     
    interesting prospect, thank you. I'm probably going to wait for the post discovery 2nd or 3rd round of financing to get involved. Your article makes me curious too-- if one could narrow down the Venture Exchange to perhaps a couple dozen "real" prospective companies and throw out the hundreds of trash, what would portfolio returns look like on a 5-10 year period? And what would they look like if you waited for discovery and paid up double instead (but with potentially less risk)? I'm guessing one of the Canadian brokers has stats on this, though I haven't seen them after a quick look around.
    15 Apr, 10:42 AM Reply Like
  • Malcolm Shaw
    , contributor
    Comments (169) | Send Message
     
    Author’s reply » Tough call, I've thought about that a lot. There are so many variables that go into a successful story that the study would be difficult to do. I think a lot of it would simply depend on timing with respect not only to individual speculations, but their respective sectors as well.
    15 Apr, 04:29 PM Reply Like
  • Barbarian
    , contributor
    Comments (20) | Send Message
     
    Bobbafett38 interesting idea but seems akin to writing and or buying a book about how to win the lottery. The reality is no one would write it if there was such a method. I agree with the idea of buying post discovery as a longer term vehicle for investment. What you miss in these very rare instances is the early chase that often times fizzles out if the follow up results don't expand the story. Alpha Minerals is one where I followed your plan and it broke all records for follow up performance but it is an outlier. I have in 20 years not experienced an exploration play that got exponentially better with each drill result. UNO has a fair bit going for it in terms of potential upside, especially from 10 cents where the bulk of the financing has come from. The fact that they have very little ground prospecting (VTEM, Soil, boulder prospecting) and can do quick turn around Radon and then drill makes for a potentially explosive situation. If the stock goes up into the mid 20's from here the early players can get out around even should it fall on failed drilling. If they hit those of us in in the teens will make out handsomely and you can add more as the story enters the expanding discovery story.
    16 Apr, 09:27 AM Reply Like
  • Barbarian
    , contributor
    Comments (20) | Send Message
     
    Sorry I meant very little ground work to do because CanAlaska has already done it
    16 Apr, 09:28 AM Reply Like
  • bobbafett38@yahoo.com
    , contributor
    Comments (94) | Send Message
     
    well fair enough. just trying to narrow down the number of "lotto tickets" to a higher probability set :)
    18 Apr, 03:43 PM Reply Like
  • ChuckNY
    , contributor
    Comments (3) | Send Message
     
    I remember a company, Paladin Energy, that went from 2 cents/share to about $9.00/share in a short period of time. I'm looking for a similar percentage appreciation here. Chuck Fipke was involved in the largest divorce settlement in Canada up until that time, I believe, $123 million. It's a good thing he had $ to put into UNO (lol!).
    16 Apr, 01:38 PM Reply Like
  • Energize
    , contributor
    Comments (20) | Send Message
     
    Here we are again. Very similar to the ESO beginnings. Again the evidence to date appears to good to be true. It's hard to believe this was not prospected in the past. A continuation of basement rocks getting shallower from west to east. Just happens they are on trend with Cigar lake and Mac river. Out crops of high grade uranium not just boulders. If there is a deposit here it might be sitting under organics. Look forward to the possibilities on this one.
    21 Apr, 04:49 PM Reply Like
  • Barbarian
    , contributor
    Comments (20) | Send Message
     
    Hi Malcolm I benefited greatly from your insight in the early days of AMW could you provide some perspective on UNO's recent Radon in water surveys? Also the Gamma Spectrometer mentioned at the tail end of the NR is that the same down hole Gamma logging used by AMW on PLS?
    Thanks again for the heads up on this one
    7 May, 09:38 AM Reply Like
  • Malcolm Shaw
    , contributor
    Comments (169) | Send Message
     
    Author’s reply » In my view, the radon-in-water surveys are confirmatory in nature of the high quality of the exploration targets. It looks like it won't take long to find out with the drilling starting soon. The gamma spectrometer is different, and a bit more specialized. As data comes in, I may have more comments, but for now it's sufficient to say that it is not the same.
    7 May, 06:04 PM Reply Like
  • highroi
    , contributor
    Comments (5) | Send Message
     
    2 Questions:

     

    1) In the latest news release it stated:

     

    The Company is encouraged by:

     

    • the bedrock geology being similar to the pelitic gneiss which hosts the mineralization at Fission Uranium Corp's Patterson Lake South deposit;
    • alteration similar to what would be expected in the vicinity of unconformity style uranium mineralization;
    • the high degree of fracturing and brecciation in the core showing the potential for the movement of mineralizing fluids.

     

    It seems that the first two holes confirmed many of the ingredients that are found in a deposit discovery. Are there anything else we should be on the look out for in upcoming news releases that would be a positive? (ie discovery of illite in addition to the chlorite already found?)

     

    2) Your analysis in figure 4 appears to show that the prime drill targets of low gravity and low resistivity are mostly over the lake. The drill program strategy doesn't seem clear but both recent news releases could be interpreted as saying the drill program will move to land after the ice is no longer safe which should be soon. Do you agree that the best targets are over water with no specific information of the results and locations of the Radon readings? Do you see them going back to drilling on pontoons once the ice completely melts?

     

    Quoted from news release:

     

    "Initially, targets beneath the lake are being tested while winter conditions exist"
    28 May, 03:24 PM Reply Like
  • Malcolm Shaw
    , contributor
    Comments (169) | Send Message
     
    Author’s reply » Good questions.

     

    In terms of clays, sudoite is viewed by many as the holy grail of clays when it comes to uranium hunting. Davite is also common. It looks like the right ingredients for a mineralizing system are there, but obviously a lot more drilling is needed.

     

    As for where the best targets are, they are reachable from the lake and from land, but they won't drill from the lake this summer. Barge drilling is too expensive for this early stage. They are probably off the lake already and will drill the balance from land.

     

    Remember that this is a highly speculative venture, so we'll need some good luck!
    29 May, 12:56 PM Reply Like
  • highroi
    , contributor
    Comments (5) | Send Message
     
    Thanks Malcolm...playing with house money on your other picks so I am ok with striking out.
    29 May, 01:44 PM Reply Like
  • Malcolm Shaw
    , contributor
    Comments (169) | Send Message
     
    Author’s reply » Well, there you have it… a prime example of some of the risks associated with a "frontier" project. Lake drilling has been "melted out" (summer will do that to ice!) and land drilling will be completed this summer. There are a lot of targets to be tested from both land and ice, with the land targets to be tested next. The project remains essentially "untested" but those hoping for a quick win from the ice drilling appear to be heading for the exit today.
    3 Jun, 09:56 AM Reply Like
  • Barbarian
    , contributor
    Comments (20) | Send Message
     
    Thanks Malcolm the byproduct of our AMW/FCU success is that "quick win" investors think its about drilling one or two holes to make a discovery... forget company maker discoveries like PLS 12-24 in November 2012. Understanding we have some time before they start drilling again on land could you comment at some point on the new "visuals" made on the company website. In particular what are the areas that represent the highest priority for drilling based on the updated maps. I find it hard to believe it would be so cliche as the faults near high radon results mark a proverbial X on the target. Thanks
    5 Jun, 08:43 AM Reply Like
  • TimeOnTarget
    , contributor
    Comments (2169) | Send Message
     
    This is a very cool article. Thanks
    15 Aug, 04:48 PM Reply Like
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