CanAlaska Uranium regains momentum in the Athabasca

VANCOUVER — Project generator CanAlaska Uranium (TSXV: CVV; US-OTC: CVVUF) has been on a rough run since the Fukushima Daiichi nuclear disaster rocked the uranium industry in mid-2011, but the uranium junior remains one of the largest landholders in Saskatchewan’s Athabasca basin.

The company is sitting on 8,720 sq. km in the region, where it has spent $85 million in exploration since 2004, and thanks to a pair of recent option agreements with notable uranium companies, it has re-emerged as an active explorer.

Five years earlier CanAlaska was humming along at $1.67 per share, with two partners funding large exploration programs on two slices of the Athabasca. The company had a joint venture at its West McArthur project, wherein Japan’s Mitsubishi would earn a 50% interest for $14.4 million in spending, while the Korean Uranium Consortium would invest $19 million to earn 50% in CanAlaska’s Cree East asset.

The Athabasca Basin. Credit: CanAlaska Uranium.

“Everyone in our industry recognizes how difficult it has been to move forward with things in a post-Fukushima world,” president and CEO Peter Dasler said during an interview.

“It’s all about trying to get the value out of the ground. We have a large amount of money invested in exploration events that have given us a lot of targets. The market hasn’t been ideal for funding the kind of work those targets deserve, however, and since we’ve done all that work we have our assessments covered, and can afford to wait it out a little bit,” he added.

The company’s patience may be paying off, as it recoups $30 million in market value from the past five years. Since bottoming out at 8.5¢ per share in late November, CanAlaska shares have more than quadrupled to a 47¢-per-share close at press time.

The share price rise coincides with good news elsewhere in the Athabasca basin. Nexgen Energy (TSXV: NXE; US-OTC: NXGEF) unveiled a stellar maiden resource at its Arrow discovery in early March, while Fission Uranium (TSXV: FCU; US-OTC: FCUUF) locked up an $82-million financing with China’s CGN Mining for its Patterson Lake South  discovery in late January.

The Rook I and Arrow exploration camp. Credit: NexGen Energy.

“We’ve seen a number of exciting discoveries in the region over the past few years. The Athabasca has demonstrated an ability to host these giant deposits, and I don’t think we’ve really seen the entire story yet,” Dasler said. “We started our modelling based on four or five deposits, and that’s not really a broad sample size for data … there’s a lot more hidden out there, and I’m quite sure the big miners see that as well.”

But CanAlaska unveiled its own good news, too. On Jan. 21 the company announced it would reacquire Mitsubishi’s 50% interest in West McArthur for $600,000 and a 1% royalty arrangement. A month later Canadian major Cameco (TSX: CCO; NYSE: CCJ) swooped in to option the property, which sits 15 km west of the McArthur River uranium mine.

A drill crew, staff and elders from Patuanak at CanAlaska Uranium’s Cree East uranium property in northern Saskatchewan’s Athabasca basin.  Credit: CanAlaska Uranium

CanAlaska got word that there were good drill results at the Fox Lake regional target back in 2009. The area sits close to the Western McArthur claim blocks, and Cameco quickly called it a potentially “significant discovery.”

It wasn’t until earlier this year, however, that a maiden resource was released for Fox Lake, which now hosts 387,000 inferred tonnes grading 7.99% uranium oxide for 68 million contained lb.

“We’re surrounded by Cameco’s land position at the project, and there was a report in their annual filings that they had hit pretty promising uranium grades at the target, 200 metres above the unconformity,” Dasler said.

“There’s a lot happening on the property that we didn’t have images of until the new airborne surveys. Once we had those results we saw these large systems, and of course we’re looking for something the size of Cigar Lake or McArthur River, so having that big plumbing system gives you a good indicator of where to drill,” he continued.

McArthur River is the world’s largest high-grade uranium mine. Credit: Cameco Corp.

Fox Lake sits along the C10 conductor at Cameco’s Read Lake project, and the feature extends right onto CanAlaska’s Grid 5 target area. So the companies came to an arrangement wherein Cameco will invest $12.5 million in cash and exploration at West McArthur in return for a 60% interest in the project.

Cameco will pay CanAlaska $725,000 to earn a first-stage 30% interest via a $5-million exploration program within three years on two target areas: Grid 1 and Grid 5. The next 30% stake will require a $500,000 payment and another $6.3 million in project work.

“Earn-in expenditure is significant enough to generate a discovery hole on the project. It’s an opportunity to combine any discovery with the deposit Cameco is drilling at Fox Lake, which is 10 km away from a major mine complex. It bodes well for the project being developed in the shorter term,” Dasler said.

CanAlaska negotiated a smaller agreement on parts of its Moon claims with Denison Mines (TSX: DML; NYSE-MKT: DNN). The subject properties adjoin the Wheeler River project, where Denison is drilling 47,000 metres this year in search of unconformity and basement targets near its Gryphon deposit.

Denison would earn a 75% interest in the Moon claims via $500,000 in project expenses.

Wheeler River senior project geologist Chad Sorba. Credit: Denison Mines

“The deal with Denison came up late last year when, once again, they were drilling right up to our property boundary,” Dasler said. “They approached us about earning an interest in the property, and it’s one of our non-core assets, so we came to a deal. They wanted to drill across our concessions and I believe they got the drill rig in there in February, so we’re just waiting on results.”

And the two deals occupy only a fraction of CanAlaska’s property holdings in the Athabasca. The company hopes to find a partner for its Cree East project, 35 km west of the historic Key Lake mine, where the Korean Consortium has contributed $19 million and earned a 50% interest. To add a wrinkle, CanAlaska also staked 75 kimberlite targets in the Western Athabasca based on magnetic anomalies generated by a 2011 Saskatchewan Geological Survey.

“As a junior we had to decide what we could handle with the market changing,” Dasler said. “So we made a corporate decision to rapidly find joint-venture partners for as many of the projects as we could, because we had the bulk of our resources committed to Cree Lake and West McArthur. It takes time, effort and money to work on the smaller projects. They all have targets and we love them all, but we recognize it’s better to get them into other hands.”