Rockgate and Delta crash on initial uranium results

Vancouver – Lower than expected drill results from the first two holes of the Falea uranium project in Mali, West Africa, sent share prices for Rockgate Capital (RGT-V) and Delta Exploration (DEV-V) tumbling to close at half their start value.

The initial two holes in a 16-hole drill program intersected the Kania sequence sandstones at approximately 260 metres. The first cut showed 0.034% uranium and 0.4% copper over 4.5 metres and second intercept of 0.05% uranium and 0.39% copper across 3.5 metres, while the second hole showed a more promising 0.207% uranium and 0.57% copper over 3.1 metres including 0.8 metres of 0.39% uranium and 0.61% copper.

The numbers did not satisfy investors. Rockgate plummeted 50% on the news, falling to $2.15 from $4.30 with trading volume of over 4.1 million shares. Delta fared no better, dropping 51% from $2.48 to $1.21 on almost 3.5 million shares.

There’s a whole lot of expectation and 0.2% uranium didnt meet the expectation, said Karl Kottmeier, president of Rockgate, on Thursday. Weve been battered around pretty good today, as has our partner, but thats the way things go.

Kottmeier said they thought it was important to release their early results as soon as possible, and that the initial findings are positive.

From our perspective, were very encouraged and think the results were getting are economic, so were going to stick with our knitting and keep going, he said. Weve got a drill turning right now and were going to keep it going.

In November, Delta acquired rights to restart development in the 150-sq km Falea basin located in western Mali. Cogema, now part of French energy giant Areva (ARVCF-Q), had mapped and tested the area in an 86-hole program between 1977 and 1981, but despite finding copper and uranium mineralization they dropped the project because of depressed metal prices.

Rockgate soon entered into an option agreement with Delta that will see it acquire a 60% interest in the property in exchange for $1.5 million in exploration funding. Rockgate is expected to vest its interest in a few months time.

Both stocks jumped in early May on the announcement that Pinetree Capital (PNP-T) had purchased 500,000 Rockgate shares at $2.70 apiece. The news rocketed Rockgate from $3.30 to $5.50 and sent Delta from $2 to $3.30. Both prices had settled somewhat in the past few weeks, until Wednesdays announcement sent them back downhill.

I think people were looking more to what Cogema had seen, and so until we get Cogema-type numbers people are going to say were underachieving, Kottmeier said. Cogemas exploration found uranium levels ranging from 0.2% to 3%.

Kottmeier said it is still too early to know what type of mining method might be utilized to extract the metals.