Rockgate Capital (RGT-T) recently reported a 258% increase in the contained uranium resource in the measured and indicated category at the Falea project in Western Mali.
The uranium-silver-copper property is near the village of Falea, 350 km west of Mali’s bustling capital city, Bamako, and covers 150 sq. km.
Cogema (now Areva) discovered the Falea project in the late 1970s, drilling 86 holes into the property before halting exploration activities in 1982 owing to low uranium prices.
In 2006, Delta Exploration entered an agreement with the Malian government to explore the property, and during the same year optioned Falea to Rockgate. By July 2007, Rockgate became the project’s operator, and in November 2008 it agreed to acquire all of Delta’s outstanding shares.
The company says the uranium oxide (U3O8) resource grew thanks to the 2011 infill program, which identified continuity of mineralization and found bounding structures and controls to mineralization.
As of Jan. 12, the measured and indicated resource at Falea stood at 8 million tonnes grading 0.11% U3O8, 68 grams silver per tonne, and 0.207% copper for 18.6 million lbs. U3O8, 17.5 million oz. silver, and 36.4 million lbs. copper.
It has another 7 million lbs. U3O8, 5 million oz. silver and 15.6 million lbs. copper in the inferred category contained in 3.1 million tonnes at slightly lower grades for each.
The estimate is based on 442 diamond drill holes, completed by the end of last August.
“At first glance, the new resource update might underwhelm some investors,” Dundee Capital Markets’ analyst David Talbot notes, explaining Rockgate had loosely set expectations for a total resource of 27 million lbs. U3O8 and 41 million oz. silver based on last January’s uncapped estimate.
Based on a 0.04% U3O8 cut-off and capped grades, the updated resource sits at 11.1 million tonnes grading 0.107% U3O8, 63 grams silver, and 0.212% copper for 25.7 million lbs. U3O8, 22.6 million oz. silver, and 52.1 million lbs. copper.
Talbot notes that the new estimate “appears smaller with no uranium grade improvement and that silver appears to be slashed in half from the uncut numbers.”
The uncapped silver resource estimate from last January was 40.6 million oz. grading 111 grams silver.
That said, Talbot points out if the new capped resource is compared to last year’s capped resource, the resource appears to have grown slightly. “We do see an improvement in the deposit when comparing apples to apples,” Talbot writes in a Jan. 17 note.
The 2011 program also unearthed three areas outside of the current resource for the 2012 drill program. These exploration targets include: the Kania-East zone, the NE plateau and Bodi.
“The Bodi area is particularly exciting as it contains potential for shallow ore that may be open-pittable, thus facilitating early access to production and further enhancing project economics,” the company stated in its January 2012 corporate presentation.
Rockgate recently started a 60,000-metre program on Falea for the first half of 2012. The program will focus on exploration outside of the currently defined resource areas.
The Falea property hosts six defined uranium-silver-copper zones. The company describes the orebody as relatively flat and shallow lying, with an average 4-metre thickness defined to date. The deposit could be mined using underground methods, with uranium recovery expected to be around 80%.
Uranium is present mostly as pitchblende or uraninite, while silver mainly occurs as native silver, Haywood Securities’ analyst Geordie Mark notes in a recent report. He adds that sediment-hosted copper is closely associated with uranium mineralization.
Talbot of Dundee says metallurgical results are expected shortly, and another resource update is slated for the last quarter. He points out the company has put scoping studies on hold, but will continue metallurgical work, rock mechanics and mine planning.
Because of that, Talbot has pushed back the anticipated start-up date for Falea by a year to 2015, and has reduced his 12-month target price to $3 from $4 a share.
Nonetheless, Mark has listed Rockgate as one of the juniors to watch this quarter.
Rockgate has $44 million in cash, which could cover two years of exploration and development work.
On the updated resource news, the company gained 7¢ to close Jan. 16 at 87¢ on more than 1 million shares traded.
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