Cogema, UEX drilling hits 58% U3 O8

Vancouver — Drilling by uranium producer Cogema on its western Athabasca Basin Shea Creek joint venture with UEX Corp. (UEX-T) has intersected extremely high-grade uranium values.

Drill hole SHE-114-5 intersected 8.8 metres at 668 metres below surface grading 27.4% U₃O₈, including a 3.5-metre interval averaging 58.3% U₃O₈. The spectacular intercept was encountered about 30 metres above the unconformity, in the sandstones.

The same hole also intersected a 2.2-metre interval, at a depth of 814 metres down-hole, grading 1.1% U₃O₈, including 1.8 metres of 5.5% U3O8 within a strongly argillitized fault/breccia zone about 100 metres below the unconformity in the basement rock.

The new mineralized zone is situated in the 63B area, about 600 metres northwest of the Anne deposit and about 1,600 metres southeast of the Colette deposit in a sparsely tested section of the Shea Creek corridor. A number of drill holes in the area encountered elevated uranium values well above the unconformity, possibly indicating a strong mineralized system.

The holes were drilled using a navigational drilling system from an initial pilot hole. The technique uses a “steerable” drill bit which allows several target intersections, or unconformity impacts, from the pilot hole. Two directional-capable rigs remain active on the project.

In early-2004, UEX entered an agreement with Cogema, a subsidiary of French energy giant Areva (ARVCF-Q), to earn a 49% interest in eight western Athabasca Basin uranium projects, including Shea Creek. UEX is spending $30 million on exploration over 11 years, earning 12.25% for every $7.5 million spent. Cogema remains the operator.

UEX is also looking to top up its treasury on the heels of the latest drill results. A private placement of 10 million shares at $2.65 apiece, for gross proceeds of $26.5 million, will help accelerate exploration and development of its Athabasca Basin projects.

UEX was formed by Pioneer Metals (PSM-T) and Cameco (CCO-T) in 2002 to explore for uranium deposits in the Athabasca Basin. Pioneer transferred its uranium portfolio to UEX for 46.5 million shares, which were subsequently redistributed to shareholders. Cameco transferred its advanced-stage Hidden Bay project to UEX in exchange for 31 million shares, making it the largest stakeholder in the company, and now owns 24%.

The Shea Creek high-grade intercepts placed the spotlight squarely on UEX in trading on the Toronto Stock Exchange. The uranium junior rallied 78% on the news, gaining $1.42 in mid-July to close at $3.24 per share on volume of almost 5 million shares. With 152 million shares outstanding, the company now posts a market capitalization of $490 million.

Spot uranium prices have recently risen further to the US$29.50-level per lb. U3O8, propelled by increased demand in Asia.