Northern Uranium’s Ulansky: ‘We’ve found the system’

With Chuck Fipke — the man who discovered the Ekati diamond mine — as a geological consultant, advisor and significant shareholder, and a recent run-up in the share price, Northern Uranium (TSXV: UNO; US-OTC: NOURF) is generating some interest.

Just days before the start of the annual Prospectors & Developers Association of Canada mining convention in Toronto, the junior reported “a spectacularly encouraging drill hole” from its North West Manitoba uranium project, sending its shares up 20% to 6¢. The stock surged again on March 3, on no company-related news, climbing 50% to 9¢.

In a news release Feb. 25, Northern Uranium reported that alteration occurring in core from the four most recent drill holes show patterns similar to those associated with uncomformity-style uranium deposits, and that vertical drill hole 15DD-9 intersected “an intense hydrothermal [alteration] system,” suggesting there may be “close” uranium mineralization.

“We’ve drilled over 30 holes, and we’d always had sniffs and knew we were getting close to something, but we were some ways from the actual source, so this hole for us was the first time at Maguire Lake that we were actually in a substantial system potentially associated with high-grade mineralization,” president and CEO Chad Ulansky says.

Northern Uranium optioned the property in late 2013 from CanAlaska Uranium (TSX: CVV; US-OTC: CVVUF) and owns a 50% stake. It is earning a 70% interest and could raise that to 80%.

The property’s land package stretches 30 to 40 km east–west by 100 km north–south, but so far all of Northern Uranium’s work has concentrated around Maguire Lake. Last year, the company completed a radon survey over this 10 by 3 km focus area at Maguire Lake, and the results show that uranium mineralization exists on the property.

According to Ulansky, Linden Charlton, president of RadonEx, has said the radon in water values at Maguire Lake approach closely the highest values received at Fission Uranium’s (TSX: FCU; US-OTC: FCUUF) Patterson Lake South uranium discovery. (Anomalous concentrations of radon gas, which can migrate up through permeable rock and soil to surface, can reflect uranium mineralization at depth.)

“We’ve always been strong believers in the potential for the Maguire Lake focus area to host significant mineralization, and it’s gratifying that we have found the system,” Ulansky says. “Now, the challenge is finding exactly where the mineralization lies within it. But we’re certainly seeing a system with the scope to potentially contain significant pounds of uranium.”

Commenting on the recently released assays from hole 15DD-9, CanAlaska’s vice-president of exploration, Karl Schimann, called the alteration “impressive by its length [in the hole] and its intensity,” and said it is “typical of the alteration associated with an unconformity uranium deposit.”

Beneath 20.5 metres of water, the hole penetrated 14.7 metres of overburden before intersecting bedrock, and Schimann noted that the alteration “starts near surface and increases in intensity and quality down hole.” He said there was less core recovery as the rock altered further, adding that from a 135-metre depth to the end of the hole at 174 metres, virtually no core was recovered.

Northern Uranium says the hole was designed to test a 500- by 800-metre, intense-low (1.5 mgal) gravity anomaly, coincident with a conductivity anomaly and associated with anomalous results from the radon in water survey conducted by RadonEx. Prospecting has found boulders down-ice from the anomaly that have assayed up to 66% uranium.

The company points out that gravity anomalies are associated with uranium mines and deposits within the Athabasca basin, such as NexGen Energy’s (TSXV: NXE) Arrow discovery, and beyond the basin, such as Areva’s Kiggavik deposit in Nunavut.

In addition, conductivity anomalies are associated with Athabasca uranium deposits like Fission’s Patterson Lake South, the company says, and an anomalous radon in water anomaly was used to target drilling at PLS.

The company says it needs a more capable drill rig that can drill at an incline to better crosscut the sub-vertical hydrothermal alteration system in drill hole 15DD-9.

The project is located along the extension of the Mudjatik Wollaston tectonic zone, which hosts most of the major uranium deposits within the Athabasca basin. These deposits are of the unconformity type, situated near the boundary of the overlying basin sediments and underlying basement rocks.

While the North West Manitoba project is not underlain by basin sediments, it is thought that the extensive glaciation has stripped these sediments away, leaving the basement rocks exposed.

Before Northern Uranium optioned the project, $8 million had been  spent on exploration, including airborne magnetic, electromagnetic and radiometric surveys, detailed prospecting and ground gravity surveys.

Unconformity-style uranium deposits are formed as uranium-rich fluids come into contact with reducing conditions, which precipitates the uranium.

David Sadowski, an analyst at Raymond James, whose coverage universe of uranium stocks does not include Northern Uranium, points out that evidence of strong hydrothermal systems in the Athabasca basin typically boosts uranium-mineralization discoveries.

He explains in an email that “since the sandstone and basement unconformity is considered a critical actor in the formation of these uranium deposits, systems found outside the basin would be most prospective for uranium at shallow vertical depths.”

Ulansky notes that he and Fipke first got involved with the project at the same time. “There was a group of people who were evaluating this project and looking to option it, and they approached Chuck and me to sit through a presentation by the CanAlaska geologist, and we were both impressed with what we saw,” Ulansky recalls. “It was shortly after Fission’s PLS discovery became significant, and in CanAlaska’s data, we saw a lot of similarities with PLS. So we became investors in a seed run.”

The pair remained investors until the group behind the project at the time struggled to manage the field program and raise enough financing to advance the project. “At that point, Chuck and I decided we should probably get more involved,” Ulansky says, “both to save our investment, and because we were true believers in the project.”

The company is raising $2.5 million, which the CEO says will be used for drilling later this year.

Ulansky describes himself as a “firm believer” in the uranium sector and its mid- to long-term potential, and says he doesn’t “get caught up in the ebbs and flows of the uranium spot price.”

He explains that “for our project — in the best case — we’re a couple of years away from the uranium price having any impact on what the economics will be. Ten to fifteen years beyond that, when it would go into production, and when the uranium price matters, I expect the price won’t be at the depressed level we see today.”

At press time, Northern Uranium’s shares were trading at 7¢.