Kivalliq looking to establish uranium district in Nunavut

VANCOUVER — Kivalliq Energy (KIV-V) is cashed-up and moving forward with an ambitious exploration program on its 1,000-sq.-km Angilak property in Nunavut.

The company just completed an $11.6-million financing at 50¢ per flow-through share, which follows a $9.5-million financing at 45¢ in February, and together will cover the $20-million in exploration planned this year.

Kivalliq CEO Jim Paterson described the 2012 program as “one of the largest exploration programs on the planet for a uranium junior” in a recent phone interview, excited for the year ahead.

The company’s plan is to focus partially on expanding the existing resource centred around its Lac Cinquante deposit, while also testing some of the many other targets it has identified so far on the property.

A January resource update on the Lac Cinquante deposit established 1.8 million inferred tonnes grading 0.69% uranium oxide, plus 16.3 grams silver per tonne, 0.16% molybdenum, and 0.25% copper for 27.1 million contained lbs. uranium oxide plus by-products using a 0.2% cut-off. The update represented a 92% increase in the resource and led to the company’s share price briefly spiking from 40¢ to 64¢.

Kivalliq secured the Lac Cinquante deposit as part of a deal with Nunavut Tunngavik Inc., the government entity tasked with managing land from the Nunavut Land Claims Agreement. The deal came after Nunavut Tunngavik and the Nunavut Government outlined clear policies on uranium mining and exploration in 2007, which opened the doors for expanded exploration and allowed the government to vend out its Lac Cinquante project for development.

“We’re certainly happy to have, effectively, the blessing of NTI in terms of looking for uranium in Nunavut,” Paterson said of the deal.

The government actually made the deal with Kaminak Gold (KAM-V), but that company soon became fully focused on its Yukon holdings and spun out Kivalliq to develop the uranium holdings. Rob Carpenter, co-founder of Kaminak, is still a technical advisor for Kivalliq, and Paterson serves on Kaminak’s board.

The increased resources came partially from the Western and Eastern extensions of the deposit, which Kivalliq both discovered and integrated into the resource last year. Paterson said he was encouraged that the discoveries fit with their geological expectations for the property.

“We knew they were geophysical conductors, we knew they were legitimate targets, but we didn’t know they were mineralized until we drilled them last year,” Paterson said.

The next steps are to shore up some of its other recent nearby discoveries including Blaze, Pulse, and Spark, and start to test some of its more far flung targets to show the property has district potential.

“For us to prove the thesis that these other conductive targets that run parallel and are within a few km of Lac Cinquant actually run, and that Lac Cinquant is not a unique deposit is actually pretty powerful,” Paterson said. “Because that sets the stage for us to show the growth potential and get us to a level where we’re showing this is a new uranium district rather than one solitary deposit.”

The company’s 2012 exploration program includes roughly 26,000 metres of core drilling and 9,000 metres of reverse circulation drilling, plus further ground geophysics and prospecting.

Kivalliq managed to fund its sizeable exploration program in part because it has some well-regarded backers, including Ross Beaty’s Lumina Capital. The fund now owns 18.17% of Kivalliq’s 149.2 million outstanding shares after it added 4 million shares to its total in the February financing.

“Lumina provides great creditably because evidently they know what they’re doing, and they provide some comfort to investors that don’t have a technical background,” Paterson said.

Other big groups bringing some indirect credibility to Kivalliq’s story are Areva and Cameco (CCO-T, CCJ-N), with both investing millions to advance their own uranium projects in Nunavut. Areva is currently working to permit its Kiggavik project, which if successful, will add legitimacy and infrastructure to Nunavut’s mining industry.

But Paterson is also looking to Kivalliq itself to prove Nunavut’s potential as a uranium destination.

“If Kivalliq can prove to the world that this is a new uranium district, then I think it’s going to be a fabulous jurisdiction going forward for other uranium companies to be active as well,” Paterson said.