Development by Denison to hit into Canuc ground

Development headings being driven by Denison Mines (TSE) are expected to enter into ground controlled by Canuc Resources (TSE) by year-end, shareholders learned at the company’s annual meeting. Alan Spence, a director of Canuc, told the meeting that Denison is advancing four headings at a rate of 150 ft per month. The company is also extending a conveyor system, which will be completed by October.

Denison has the right to mine any ore found on the Canuc property, located near Elliot Lake, Ont. Canuc will receive a royalty of $1.025 per lb of uranium oxide contained in broken ore. The royalty, which is quoted in 1987 dollars, is subject to annual escalation.

Drilling completed in the 1960s suggests that the Canuc ground hosts reserve s of 7-10 million tons grading 1.86 lb uranium per ton. Canuc will actually receive only 82% of the royalty proceeds. The remainder will go to the original vendors of the property.

At the company’s gold property on Coronation Gulf in the Arctic, partner Orofino Resources is mobilizing an exploration crew which will carry out a program on the property this summer. Orofino has the right to earn a 70% interest in the claims by spending $5 million on exploration by February, 1993. Reserves outlined by previous programs total 860,000 tons grading 0.22 oz gold per ton.

Although uneconomic, Spence says the deposit could become viable if a higher grade can be established for some of the reserves. At current grades, a reserve of 3-5 million tons would be required before economic viablity could be established, Spence told a shareholder.

“It’s too soon to put odds on it, but past work indicates a sizeable resource,” Spence said. “The real question is, can they (Orofino), expand upon the known occurrence. If they can’t do that they have to find other zones of interest.”