Otish Energy goes from hot spot to clear skies

As newly named uranium explorer Otish Energy (OEI-V, OEIGF-O) mobilized two drills in Quebec’s Otish basin in late March, the snowy conditions were a far cry from the company’s past experience developing a copper-cobalt project in the Democratic Republic of the Congo.

Civil war and lasting instability prompted the company, formerly Kakanda Resources, to give up its namesake project in the central African country in 2003.

That was when Steve Smith became president and CEO of the company, and since then, the geographic and geological focus has changed.

“Some (companies) could afford to wait it out but we decided to move on,” says Smith from his office in Vancouver.

From that point, the company worked on a zinc-copper project near Timmins, Ont., with Selkirk Metals (SLK-V, SKRKF-O) before it began picking up properties in the Otish basin in 2007.

The first was a 50% joint venture with Hinterland Metals (HMI-V, HNLMF-O) on the Euro and Tonka properties in the Otish basin (now 100%-owned) that got the company noticed.

“We flew an airborne survey over

Tonka and we caught the (attention) of a group of prospectors and people out in Toronto,” Smith says.

Soon Otish Energy acquired another 330 claims totalling 170 sq. km known as the Gateau property, where the company is now drilling. Gateau is next to Cameco’s (CCO-T, CCJ-N) Gamie River property.

In total, the company has a 100% interest in 548 sq. km of land, plus a 50% interest with Santoy Resources (SAN-V, SANRF-O) for 650 sq. km in the Otish basin.

Otish Energy’s 100%-owned properties include the Matoush-North property, totalling 31 sq. km, and the Otish-Tichegamy property, covering 135 sq. km. Both are north of Strateco Resources’ (RSC-T, SRSIF-O) Matoush property, where drilling has intersected up to 15.2 metres grading 2.13% U₃O₈. Otish also holds a 100% interest in the Ridgestake properties, in the southwestern portion of the basin, totalling 100 sq. km.

The Santoy joint venture includes the Group A, B and C claims. Santoy and former joint-venture partner Melkior Resources (MKR-V, MKRIF-O)completed line cutting and a magnetometer survey over the claims in 2007. Several test holes were completed on the Marc-Andre target, but Otish Energy has reported that the holes were drilled incorrectly, missing the target. Further sampling and fieldwork in 2007 have resulted in a better understanding of the geology on the property.

Smith says some people have told him that Otish Energy is consolidating the basin.

“I wouldn’t put it that way,” Smith says. “I would just say that we are obtaining some very good targets through Benoit Moreau, (vice-president exploration), who’s been working up there for many years.”

Smith says he wanted to work on projects that have a “macro aspect” to reward shareholders who have stuck with the company over the years.

He says that developing the Otish basin is something that can be done over the long term.

“Athabasca is very deep, (but) it’s been land-grabbed all in all,” Smith says.

He says there’s a general consensus that results so far from Strateco and Cameco demonstrate that the Otish basin could be similar to the unconformity-type mineralization in the Athabasca basin.

Uranium from the Athabasca accounts for about one-third of global production and about 15% of world reserves.

Smith points out that the Matoush deposit is thought to be linked to a fault that appears to act as a conduit for uranium-bearing fluid. Uranium mineralization lies well above the basin rim and resembles the “perched bodies” that are found in the Athabasca, Smith says.

“Our geologist feels it resembles (Cameco’s) MacArthur River and Cigar Lake,” Smith says.

Otish Energy plans to drill 2,000 metres on its Gateau property, starting with the C block, located near Cameco’s Gamie River project. Drilling at Gamie River recently cut an intersection of 13 metres grading 1.5% U3O8.

Last year, Otish Energy completed a National Instrument 43-101 technical report on Gateau that outlined several uranium targets.

The property lies in the western part of the Otish basin along its southern contact with Archean basement rocks. The property straddles an unconformable contact with an underlying granitic complex.

Otish Energy says the property offers good potential for classic unconformity- type uranium mineralization both above and below the unconformity surface.

The company also plans to do some airborne and radiometric surveys, ground prospecting and mapping on its other properties this summer.

The company has set up a winterized camp, which includes about $325,000 worth of trailers. Otish Energy has also set up a field office in Montreal, though the corporate office will stay in Vancouver.

The company completed a $3.2- million financing in November but expects it will have to go to the market for more money later in the year to continue exploration.

Otish Energy has about 49 million shares outstanding on a fully diluted basis and traded recently at 17.5. The stock has a 52-week rolling high of 48.5 and a low of 14.

Smith is not concerned about the share price; he’d rather focus on exploring.

“If you can control your own work programs and get them done, then at least you’re doing what an exploration company raises money to do,” he says. “There are people who sit on their hands and look at their budgets too long and they could miss it.”

Quebec is a world away from the Congo, Smith says.

“We had a feasibility study done, many years of our lives were spent on the Kakanda project but the difference in the political climate (in Quebec) is immeasurable,” Smith says, adding that millions of people died in the Congo’s civil war.

“We had a wonderful project we’d spent millions on and we had the financing lined up for $256 million but we could not get risk insurance.”

But he sees only clear skies ahead in Quebec, at least in one important sense.

“I don’t see any one-man tanks coming over the horizon in the foreseeable future,” he says.