A new discovery of uranium on the western side of North Saskatchewan’s Athabasca Basin is a potential game-changer for the world-class district, says one of Canada’s leading uranium experts.
Dr. Michael Gunning, chairman of Vancouver-based Alpha Minerals, is talking about his company’s joint venture with Fission Energy at Patterson Lake South, where the results of a winter drilling program has increased Alpha’s share price from twenty cents ($0.20) to over $3 in the past six months with a high of over $5.
“The Patterson Lake discovery is really the first near-surface, high grade, potentially open-pittable uranium resource that we have found in the basin since the late seventies,” says Gunning. “And that is an important potential game-changer for the district.”
As Lead Technical Advisor on the Patterson Lake project, Gunning’s high hopes for the project are perhaps to be expected.
What is at first glance surprising — and what made the industry sit up and take notice — is that Gunning agreed even to consider joining a junior exploration company whose prospects in mid-2012 seemed less than rosy.
After all, Gunning was enjoying the fruits of one of the juiciest deals in recent Canadian mining history.
In his previous role as Chief Executive Officer of Hathor Exploration Ltd., Gunning spearheaded the advancement of the Roughrider uranium deposit in the eastern part of the Athabasca Basin, leading eventually to its sale to Rio Tinto for $654 million — one of the top ten mining deals in the world that year, across all commodities.
The deal was reached after Gunning and his tiny staff fought off a hostile takeover bid from Cameco in a highly publicized David and Goliath struggle.
“Yes, I could have retired at that point,” says Gunning. “But that’s not my personality. I was eager for a new challenge. I believe in giving yourself a change every few years, otherwise you can get too comfortable. From a creative thinking point of view, that’s dangerous.”
Offers to work on other uranium projects flooded in, but he turned them down. “I said thanks, but no thanks, because when you have gone through an experience like Roughrider, what are the odds of improving on it? Both emotionally and strategically you don’t want to get involved in something that is going to be less of an experience. The bar was set pretty high.”
But then, one morning last fall, Gunning had a visitor to his Vancouver office whom he knew well. Ben Ainsworth, Alpha’s CEO, had been vice-president of exploration at Hathor, and the two men had developed a mutual respect.
Gunning was intrigued by Ainsworth senior’s re-telling of the discovery by a Joint Venture team headed by his son Garrett of a field of radioactive boulders scoured from bedrock by moving ice. Members of the team were convinced the source of the boulders could be traced. But, strapped for cash, and with investors looking the other way, the search had been endlessly delayed.
Then, last October, results from four drill holes at Patterson Lake dramatically improved Alpha’s prospects. The company announced Discovery Hole 22 hit anomalous radioactivity over 21 meters. It was the beginning of a series of discoveries that have since revealed extensive, near-surface uranium mineralization over three major zones.
And the good news keeps coming: On April 22, the Joint Venture partners reported drilling highlights that included 53 meters at 6.57 per cent uranium, including 10.5m at 29.26 per cent. The joint venture noted: “These spectacular assays from zone R390E confirm a particularly high grade of uranium mineralization within wide intersections at shallow depth. The winter drilling program at Patterson Lake South continues to deliver exceptional world-class results in both quality and quantity.”
At the time he was approached, Gunning could not have foreseen these later discoveries. But he was persuaded to join Alpha on two counts. Firstly, his intimate knowledge of the geology of the Athabasca suggested the discovery of the boulders was hugely significant. Secondly, he had great respect for the work of Ben and his son Garrett.
In one of his earlier careers, as lead Minerals Deposits Research Geologist with the Saskatchewan Geological Survey, he had often puzzled over the fixation in the mining world with the eastern side of the Athabasca basin.
To be sure, it was in the eastern basin that the two richest uranium deposits in the world had been discovered, at Cigar Lake and McArthur River.
“It’s hard to describe how rich those deposits are, and how much of an anomaly they are in terms of other uranium mines,” says Gunning. “They have dominated the mystique of the Athabasca.”
As a result, he says, the eastern Athabasca has been the most heavily explored, with a well-developed infrastructure to support it.
“At the Geological Survey, we used to say there’s nothing wrong with the geology of the western side of the basin. Nobody has ever said: ‘You need to be on the eastern side.’
“The bread and butter of the Athabasca — the history of the basin since 1969 — was based not on Cigar and McArthur, which are essentially single ore bodies, but on clusters of smaller ore bodies. If you have six or eight of them, even three or four, they start to add up.
“The Patterson Lake discovery is going to remind people that before Cigar and McArthur came along, it was these smaller clusters that really did change the world of uranium.
“Patterson Lake is going to remind people that you can find uranium deposits with truly world-class attributes. It’s showing us near-surface mineralization that we haven’t seen in 40 years. Patterson is so significant in terms of reminding the industry of what the Athabasca is about.”
If Gunning’s best-case scenario stands up, that reminder could be quick in coming.
The task at Patterson Lake South this summer, he says, is to delineate the full extent of the mineralization in the three zones, with the first preliminary resource estimates ready by the first quarter of 2014.
“You can already see resource potential emerging on the three zones, based on the continuity of mineralization in drill holes,” says Gunning. “We will continue drilling on all three zones, and initiate resource estimates individually as they are closed off and fully delineated. That is the way Roughrider evolved, and that is the road that Patterson is taking, and it’s an exciting road at that.”
Looking to the future, Gunning says: “Our job is to keep our heads down, keep the drills turning, get the resource evaluation work going when appropriate and ultimately execute a full preliminary economic evaluation.
“If we can do that successfully, cost effectively and quickly, we will create shareholder value, no question. If Patterson continues to grow the way it did this winter, ‘the deposit will take care of itself’ as the saying goes. It’s already standing out as a potential game-changer.”
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