UEX-Areva plan Shea Creek shaft

Vancouver – Areva Resources Canada, a subsidiary of French energy giant Areva (ARVCF-O) has told joint venture partner UEX (UEX-T, UEXCF-O) it plans to sink a shaft on its Shea Creek uranium project located in the western Athabasca Basin region of northern Saskatchewan.

The initial phase will see launch of regulatory applications for the sinking of an exploration shaft and drift development.

With an expected vertical depth of about 950 metres, the partners estimate capital costs for the shaft to fall in the neighbourhood of $100 million.

Following preliminary site characterization and baseline testing, the partners hope to have a project description filed by late-2007. The endeavour would then enter the environmental assessment process leading to the construction permitting phase.

The decision to go underground at Shea Creek is the most significant event in UEXs short, five-year history, stated UEX president and CEO Stephen Sorensen in a release. In my opinion, Shea Creek could eventually become one of the largest producing uranium projects in the world, elevating UEX to the ranks of a major uranium producer.

Drilling on the Kianna deposit indicates high-grade uranium mineralization within multiple zones and occurring at depths from 662 metres to 922 metres and over a strike of 200 metres and width of 150 metres, remaining open in all directions. The three main types of mineralization with examples of high-grade uranium values are:

• Perched that occurs within the sandstone, as discrete zones, tens of metres above the unconformity; Hole SHE-114-5 drilled in 2005 intersected 8.8 metres grading 27.4% U₃O₈ including 3.5 metres of 58.3% U₃O₈;
• Unconformity-type at the sandstone – basement rock contact zone; 2006 hole SHE-115-3 cut 11.9 metres of 12.57% U₃O₈ including 4.2 metres of 27.35% U₃O₈;
• Basement-hosted occurring up to 200 metre below the unconformity; Hole SHE-114-11 drilled in 2005 returned 37.7 metres of 5.4% U₃O₈ including 4 metres of 25.46% U₃O₈.

The JV partners currently have a pair of drill rigs working on Kianna plus a third rig testing towards the south within the Shea Creek corridor. Two additional drills are scheduled to arrive shortly to the project area.

Shea Creek is one of ten western Athabasca Basin projects UEX has under option from Areva. The junior has lodged 24.5% interest in the project portfolio by spending at least $15 million in exploration so far, and can boost its interest to 49% for additional expenditures of $15 million by the end of 2015.

UEX anticipates that by the fourth quarter of this year it will vest to the 36.75%-level and will earn its full 49% interest by mid-2008.

For this year the company has budgeted $25 million in exploration and development on its 19 uranium projects in the Athabasca Basin.

Shares of UEX recently rallied to new highs at the $7.90-level, giving the company a $1.4-billion market capitalization based on its 182.1-million shares outstanding. Cameco (CCO-T, CCJ-N) holds a 21.5% interest in UEX.