Purepoint teams up with Cameco in Athabasca basin

It’s not often a uranium giant like Cameco (CCO-T, CCJ-N) initiates a joint venture on one of its projects and then hands over the keys of the operation to the incoming company.

But Purepoint Uranium Group (PTU-V) has managed to secure the right to guide exploration and earn into 50% of Cameco’s formerly 100% owned Smart Lake uranium project in the southwestern edge of the Athabasca basin.

“This validates what we’re doing. It validates that we’re serious about being there and serious about developing new resources in this area rolling forward,” says Purepoint’s president and chief executive, Chris Frostad.

The news sent the Toronto-based uranium exploration junior through its 52-week high of $1.35, as shares were up nearly 20% or 23 to $1.40 on 1.3 million shares traded. Cameco shares were trading at $44.68, down 42 on roughly 1.1 million shares.

Purepoint can acquire an initial 35% interest in the project by spending $4 million over 6 years. It can earn the remaining 15% by sharing costs equally with Cameco up to feasibility.

Frostad is keen on the fact that the company won’t be coming into the project blind, as Cameco has already done extensive early stage exploration on the property since 2004.

“It’s been advanced to the point where we have specific drill targets,” says Frostad. He expects drilling to get going within four weeks.

Purepoint says it has both the resources and finances in place for drilling.

In late October the company announced a private placement for roughly $4.6 million. The share offering brought its number of shares outstanding to just over 62 million.

The origins of the deal

The deal came about after Cameco approached Purepoint and other juniors last November in an effort to advance projects in the basin as quickly as possible.

As activity in the region reaches a near torrid pace, it has become increasingly difficult for any one company to find all the resources necessary to advance all of its projects.

That’s where the nimbleness of a junior like Purepoint came in.

“Last year you saw a shortage of property in (the Basin). This year it’s a shortage on the operation side. The easy money has been spent,” Frostad says, referring to the less labour intensive surveying and early stage exploration that went on in the region last year.

With the recent hiring of Dale Huffman as the company’s vice-president of field operations, Purepoint is showing that it is taking the right steps towards ensuring it has the people it needs to enter the next stage of the company’s development.

Huffman is a 15-year veteran of the uranium industry, having held a variety of senior positions at French nuclear and uranium behemoth AREVA (CEI-P). He will look after field work at all of Purepoint’s four camps, so that “our technical people can focus on what they have to do,” Frostad says.

Smart Lake is composed of two claims that cover of 97 sq. km and is described as a shallow sandstone project where depth to the unconformity ranges from 0 to 350 metres. Aeromagnetic and electromagnetic patterns are said to be similar to those underlying UEX‘s (UEX-T) Shea Creek deposits, which are situated 55 km north of Smart Lake.

The deal will see Cameco retain the right to mill and market any uranium mined from the project.

In all, Purepoint has eight projects in the Athabasca basin. It was able to secure its large position by being one of the first juniors to establish itself there.