MINING IN CANADA — Athabasca uranium play heats up as Kennecott teams with JNR — Geophysical programs planned for eight unconformity targets in northern Saskatchewan

Now that Kennecott Canada Exploration has joined the exploration play in northern Saskatchewan, investors are showing renewed interest in the properties held there by JNR Resources (JNN-V).

In February, the wholly owned subsidiary of London-based major Rio Tinto (RTP-N) signed an agreement to earn a 65% interest in any or all of JNR’s eight properties in the Athabasca Basin.

Kennecott has already contributed a payment of $500,000 and is required to spend an additional $1 million on exploration by Jan. 31, 1999. By contributing these funds, Kennecott will earn not an interest in the properties but the right to option one or more of them, or to match arm’s-length offers for them.

Between Jan. 31, 1999, and Dec. 31, 2000, Kennecott will have the right to select claim blocks in which it can earn a 65% working interest. To do so, it must spend $1 million annually until a maximum of $25 million has been spent or a production decision has been made, whichever comes first.

For its part, JNR will commit $1.9 million to the joint venture and act as operator.

As part of the deal, Kennecott can buy up to 9.9% of the Vancouver-based junior’s fully diluted shares.

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Elephant country

Over the past 30 years, 18 uranium deposits totalling 500 million tonnes of uranium have been discovered in the Basin. The grade has ranged from 0.12% per tonne to more than 14%. With annual production estimated at 8.5 million kg, Saskatchewan ranks as the Western World’s leading producer, accounting for more than 20% of the world’s uranium production.

JNR had, at last report, staked eight blocks of claims in the area, comprising more than 180,000 ha. The blocks were selected by renowned uranium expert Les Beck, former executive director of the Saskatchewan Department of Mines and Energy and currently a technical advisor to JNR.

The high grade of the deposits combined with the low discovery costs (less than $2 per kg) make the Athabaska Basin an extremely attractive region for uranium exploration. And yet, despite the intensive exploration that has been carried out in much of the basin, the roughly 80,000-sq.-km region has not been fully explored. “Moreover,” Beck points out, “many areas that have been explored previously warrant re-evaluation, in view of advances in exploration techniques and the better understanding of the nature and geological controls of the deposits.”

JNR and Kennecott recently completed a 2,000-line-km, deep-penetrating airborne survey over several of JNR’s properties in the basin. The survey confirmed and expanded the number and length of the electromagnetic (EM) conductors that are present, JNR reports.

The company amassed its Athabasca portfolio based on current metallogenic models of unconformity-type uranium deposits and a review of government assessment data. The properties were selected based on the degree to which they conform to the following criteria:

* the presence of the unconformity between the Athabasca group and the Precambrian basement at a depth no greater than 500 metres;

* the development of a regolith at the top of the basement rocks; * the presence of metasedimentary units in the basement rocks, particularly pelitic types with graphite or pyrite;

* the presence of faults and fracture zones, especially those which displace the unconformity;

* the presence of alteration haloes, with emphasis on various types of clay alteration in the Athabasca sandstone that can be related to mineralizing fluids; and

* the presence of significant geophysical and geochemical anomalies.

Four of the properties covered by the Kennecott-JNR agreement are at an advanced stage of exploration. These include West Bear, Perch River-Newnham Lake, Cyprian Lake and Black Lake. The remaining four — Key Lake, Cigar Lake North, Midwest Lake and Poplar Point — will be subjected to regional geophysical and geochemical surveys in order to locate anomalies worthy of further exploration.

Plans are being drawn up for exploration of the following properties: * West Bear — These seven contiguous claims cover 23,954 ha and adjoin the West Bear deposit, which contains about 450 tonnes uranium oxide (U3O8) grading 0.37%. The claims cover the southwestern extension of the deposit and the pelite horizon that hosts the deposit. The pelite horizon extends across the centre of the claim block for a strike length of more than 20 km.

During exploration in the mid-1970s, one diamond drill hole, collared east of Wedge Lake and about 7 km west of the West Bear deposit, intersected a radioactive zone in the pelite horizon. No further work was done.

West Bear will now be subjected to ground geophysical surveys of the pelite horizon between Wedge Lake and West Bear, to be followed by preliminary drill-testing of anomalies.

* Perch River-Newnham Lake — Eight contiguous claims (46,100 ha) make up this property, which lies along the northeastern edge of the Athabasca Basin, east of Black Lake.

Previous exploration of this area proved disappointing, but the work was largely focused on a swarm of conductors in pelitic basement rocks southwest of Newnham Lake. Beck points out that other targets were not adequately explored. In particular, several conductive zones north of Newnham Lake, near the edge of the sandstone, remain untested, and anomalous hydromorphic uranium found at several locations along the unconformity were not followed up by geochemical surveys.

Plans call for clay geochemistry to be performed on outcrops of Athabasca sandstone, especially over conductive zones in the basement, significant structural lineaments and hydromorphic uranium anomaly sites. Also, ground geophysics will be performed on the two most promising conductive zones not previously tested. A second phase of work will consist of preliminary drill-testing of conductive zones and alteration haloes.

* Cyprian Lake — This 25,000-ha project comprises six contiguous claims that adjoin the Perch River-Newnham Lake block to the east. The target is a large uranium anomaly (more than 1% U3O8) in organic silts and muskeg in a well-defined glacial drainage channel underlain by a major fault structure.

The high values suggest that uranium has been leached from a nearby high-grade source and transported along the drainage channel, then scavenged (or concentrated) by organics in the muskeg.

Beck says three overburden-covered areas northeast of the radioactive muskeg lie next to a zone of intensely altered basement gneisses and are prime candidates for the high-grade source.

These overburden-covered areas will be explored in an attempt to locate mineralized boulders in the glacial cover. Also, magnetometer surveys will attempt to map the major structures in the bedrock, with drill-testing scheduled to follow.

* Black Lake area — Six claims totalling 20,730 ha constitute the property formerly known as Nisto Channel.

A prominent topographic lineament marks the trace of the Black Lake fault — a major crustal structure that separates two domains of the Precambrian Shield.

Narrow, high-grade pitchblende veins have been explored underground by adits in the side of the Black Lake fault, just west of the property. Systematic exploration of the unconformity in the vicinity of the fault, along the 35 km of strike length cover by the claims, is a high priority for JNR.

Exploration will also focus on three targets: a 10-km-long zone in the footwall of the fault in Nisto Channel, adjacent to the pitchblende veins in the hangingwall; a 2-km-long zone of electromagnetic (EM) conductors, where one of two previous drill holes detected anomalous radioactivity (1.5 metres of 160 parts per million U3O8) just beneath the unconformity; and a 3-km-long conductive zone (west of the first conductive zone).

Deep EM surveys will attempt to confirm and locate the two known conductive zones and search for conductors in Nisto Channel, with drill-testing expected to follow.

* Key Lake area — Five miles east of the Key Lake mine (where reserves were last pegged at 75,000 tonnes U3O8 at 2.45%), JNR has acquired six contiguous claims totalling 18,791 ha. L
ike the Key Lake mine property, JNR’s claims are partially underlain by pelitic basement rocks.

Exploration plans call for regional geochemical surveys to be carried out in an attempt to search for haloes similar to those present at the Key Lake deposit. A second phase of work will consist of ground magnetometer and EM surveys.

* Cigar Lake North — Seven closely spaced, non-contiguous claims, ranging in size from 530 to 4,322 ha and totalling 20,687 ha, constitute this property.

Exploration on adjacent claims has uncovered clay alteration haloes in the Athabasca Formation similar to those of the nearby Dawn Lake deposit (11,500 tonnes at 1.7%), as well as several anomalous uranium-gold zones in basement pelites.

An attempt will be made to trace clay alteration haloes on the JNR claims, followed by ground geophysics in selected localities.

* Midwest Lake area — JNR holds two claims in a narrow, southwesterly trending strip of ground comprising 9,500 ha. The claims adjoin the Midwest Lake deposit to the west (14,000 tonnes U3O8 at 3.8%), and are also on strike with the Cigar Lake deposit.

A regional geochemical survey will search for alteration patterns similar to the Midwest Lake and Cigar Lake orebodies. Once these have been found, ground magnetometer and EM surveys will be carried out over selected parts of the claims.

* Poplar Point — These three contiguous claims, totalling 14,970 ha, lie 25 km west of the Fond du Lac deposit (400 tonnes U3O8 at 0.2%).

Prospecting will be carried out in an attempt to delineate mineralized boulder trains detected by previous exploration. Source areas will then be located by means of ground geochemical and geophysical surveys.

JNR also holds considerable ground in the Hornby Basin of the Northwest Territories, where the geology is said to be similar to that of the Athabasca Basin.