VANCOUVER — Investors are waiting with bated breath for the next set of drill results from Hathor Exploration’s (HAT-V, HTHXF-O) Midwest Northeast project, which produced several sets of spectacular uranium intercepts following its discovery in February 2008.
Hathor started its winter drill program at the Roughrider zone in mid-January. The company plans to complete 60 holes totalling 22,000 metres before the spring thaw disrupts work. In early March, the first set of results showed nine of 10 infill holes hitting mineralization, while six stepout holes failed to find uranium.
Some of the infill intercepts, which all came from the eastern corner of the zone, carried significant uranium grades. Hole 56 cut 15 metres of 12.03% U3O8 from 229 metres depth and then hit 3 metres of 0.94% U3O8 at 260 metres down-hole. Hole 55 returned 1.91% U3O8 over 16.5 metres, from 232 metres depth, and then returned eight short intercepts over the next 60 metres, including 2 metres of 3.59% U3O8. Hole 52 returned 6.18% U3O8 over 3 metres from 242 metres, and hole 60 cut 2.5 metres averaging 1.19% U3O8 from 260 metres.
At presstime, the core from another 10 holes, at least, was in the lab for assaying. Vertical depth to the unconformity is 210 to 215 metres. High-grade mineralization at Roughrider occurs in basement rocks that are a heterogeneous mix of clay-altered pelitic gneiss, graphitic pelitic gneiss, granitic pegmatite, and microgranite.
Hathor is drilling Roughrider in a grid pattern this time around in order to define an initial resource. Some analysts have noted that this may mean more drill hits than in last year’s drilling, when drill collars were located based on gravity lows. Based on last year’s results, most analysts expect the deposit is of reasonable size, though, which means investors can still expect some impressive results. Hathor owns 90% of Midwest Northeast, with Terra Ventures (TAS-V, TASFF-O) holding 10%.
And even though expectations for Roughrider are high, Hathor is not placing all of its eggs in one basket. The company recently signed on to earn into Forum Uranium’s (FDC-V, FDCFF-O) Henday project, 11 km northeast of the Roughrider zone. Both sit within the Mudjatik-Wollaston tectonic zone, a northeast trend that cuts across the southeastern corner of the Athabasca basin and hosts several significant uranium deposits.
The Midwest Lake deposit, a development- ready project owned by Paris-listed Areva (ARVCF-O) and Denison Mines (DML-T, DNN-X), sits 30 km southwest of Henday and hosts 41 million lbs. U3O8 at an average grade of 5.5%. The Cigar Lake mine, being developed by owners Cameco (CCO-T, CCJ-N) and Areva, is roughly 100 km southwest of Henday along the trend. McArthur River, home to the world’s largest high-grade uranium deposit with 730 million proven and probable tonnes of reserves grading 20.7% U3O8, is another 40 km along trend. The Millennium deposit, with its 48 million lbs. U3O8 in indicated and inferred resources, is 40 km southwest of McArthur River. And 40 km past Millennium is Key Lake, a now-depleted mine that produced more than 200 million lbs. U3O8 from ore averaging 2% uranium oxide.
Last year, Forum completed a small drill program at Henday that identified a strong illitic alteration halo with associated tectonization, quartz dissolution, and anomalous geochemisty at Mallen Lake, a target at Henday’s eastern end. These features indicate activity associated with uranium formation. Just outside of the Henday property boundary near Mallen Lake, Areva previously drilled 5.9% U3O8 over 0.3 metre in basement rocks.
In early April, the new partners announced the start of a geophysical program at Henday. Ground electromagnetic and gravity surveys will target the newly discovered east-northeast conductive structure that showed illitic alteration and elevated geochemical indicators in two drill intercepts last year. Both are indicators of the kinds of fertile hydrothermal system that host uranium deposits in the Athabasca basin. The surveys will also cover two north-northeast structures, one of which appears to be the northeastern extension of the Roughrider structure.
The surveys should be complete by mid-April and results will be used to determine drill targets. Importantly, gravity surveys led Hathor to the Roughrider discovery — basement-hosted deposits in the Athabasca basin show up as gravity lows, provided the sandstone cover is not too thick, because mineralization is hosted in low-density clay-rich rock.
Hathor is funding exploration activities on the site, having committed to spending $500,000 in its first year at Henday for a 20% interest. The company can increase its interest to 40% by spending another $1.5 million in its second year, and then boost it to 60% with another $1.5-million investment in the third year. A feasibility study could ultimately boost Hathor’s ownership to 70%. Forum remains project operator until Hathor earns 60%.
David and Eric Coffin, co-editors of the newsletter Hard Rock Analyst, approve of the partnership. “This is a good deal for both parties,” they wrote recently. “We’ve said before that Forum has one of the best uranium exploration portfolios around but it’s always been market-challenged, which made financing difficult and dilutive. Hathor recognized the value of Forum’s technical team and the potential of the Henday project.”
Patrick Donnelly, an analyst with Salman Partners, agreed: “We believe that Hathor has made a very astute agreement with Forum, given that the Henday property is located in the heart of probably the most prospective uranium exploration territory in the Athabasca basin, and probably the world.”
And at Dundee Capital Markets, analyst David Talbot was also pleased with the deal. “With the Henday property option, Hathor is bolstering its pipeline of solid projects in the Athabasca basin, concentrating on an area near operating uranium mills and ample infrastructure,” he wrote. “Mineralization at both Henday and Roughrider are currently located entirely within basement rocks, reducing the potential for many technical challenges often associated with unconformity-type deposits.”
Henday is by no means Forum’s only project. Roughly 200 km southwest of Henday, near the Key Lake mill and along that key structural trend, Forum is exploring the Key Lake Road project. On the northwest corner of the Athabasca basin, Mega Uranium (MGA-T, MGAFF-O) is earning a 55% interest in Forum’s Maurice Point project. And in Nunavut, Forum’s North Thelon project sits adjacent to Areva’s massive Kiggavik deposit; if development at Kiggavik is approved, the road to the mine will run through Forum’s property.
On another Hathor note, the company’s spinout of Max Minerals is almost complete. Hathor is placing its prospective portfolio of gold-silver properties in northwestern British Columbia in a dedicated junior, giving Hathor investors one Max share for every 10 Hathor shares held. Max shares were expected to start trading on April 6, and the company will have $1.6 million in the bank, more than half of which is earmarked for exploration.
Hathor has roughly $30 million in the bank and carries no debt. The company’s shares recently traded near the $2-mark in a 52-week range of $1.03-4.40. Hathor has 86 million shares outstanding.
On news of the Hathor joint-venture deal in late February, Forum’s share price doubled, climbing to 8¢ from 3.5¢, and it has stayed close to that level since. The company has a 52-week trading range of 2.5-48¢ and 88 million shares outstanding.
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