The Conversation (0)
Mar. 10, 2015 03:00PM PST
William Kerr of Exploits Exploration discusses why investors should be wary of jumping at every high grade-drill result from the Athabasca Basin.
The locale is host to plenty of high-grade, massive deposits like Cameco’s (TSX:CCO,NYSE:CCJ) McArthur River, Rabbit Lake and Cigar Lake. But while investors and companies alike are keen to pool their investment dollars into the Athabasca Basin, it might be worth exercising a little caution, at least in the early stages.
That’s the idea that was put forward at this year’s PDAC convention by William Kerr, mining consultant with Exploits Exploration in Toronto. At the event, he delved into some of the reasons why investors should be wary of jumping at every high-grade drill result released from the basin.
Specifically, Kerr noted that since the discovery of Rabbit Lake in 1968, 80 uranium discoveries have been made in the area; however, despite high grades and huge mineral resources, only four mines have been put into production, and just three mining camps have been developed. All that is to say that the vast majority of the deposits in the Athabasca Basin are not economic.
What’s economic anyway?
Kerr defined economic deposits as those that are in production, or as those with an application sent off to the Canadian Nuclear Safety Commission — the first step to becoming a development.
“No unconformity-hosted project in the pipeline is economic or has any realistic chance of becoming a development,” Kerr told investors, adding, “there have been no economic unconformity-hosted greenfield discoveries since the last unconformity was discovered over 26 years ago.”
Unconformity-hosted deposits are formed close to major unconformities between quartz-rich sandstones and deformed metamorphic basement rocks. These deposits make up the majority of the uranium deposits in the Athabasca Basin and include some of the largest and richest deposits to be found.
That said, Kerr insisted that the Athabasca Basin still has superb exploration potential. And he maintained that it is not for lack of exploration dollars that discoveries are coming up short on the economic scale.
With only three producing mines, and over 45 years of production history, Kerr believes that the current search for unconformity-hosted, super high-grade deposits is unwise. Instead, deposits found at any depth that are lower grade and amenable to underground or open-pit mining are more economic — for example, the basement-hosted Eagle Point, Beaverlodge or Cluff Lake. Likewise, the giant, incredibly high-grade unconformity deposits like Cigar Lake and McArthur River also check out on the economic scale.
“Smaller, non-giant, high-grade, unconformity-hosted deposits are physically and economically stranded,” Kerr said, noting that “basement-hosted deposits have much lower opex and capex and can be mined and milled conventionally, hence cheaply — 75 percent of basement-hosted deposits have gone through a mill compared to 26 percent of unconformity-hosted deposits.”
Kerr pointed out that at depths less than 200 meters, these giant unconformity-hosted deposits are able to sustain huge, capital-intensive mills, tailings management systems and open-pit mine costs. Meanwhile, if an unconformity-hosted deposit is less than 150 meters in depth, it can only manage a smaller open pit if a permitted mill is close by, unless of course the deposit is a behemoth like Cigar Lake or McArthur River.
Where’s the problem?
As market watchers know, the Athabasca Basin does not lack for exploration and discovery. Unfortunately, discovery success has not necessarily meant new mines. And that is because companies are relying on an outdated exploration model to get them going.
Kerr explained that due to an overreliance on getting that high-grade intersection, and ignoring the fundamental “how big can it get” question at an early stage means that definition drilling deposits have little hope.
With that in mind, Kerr suggested that explorers in the basin needs to rethink their methods. Specifically, they need to “change focus rapidly to larger targets, or we are going to have another 26 years of no economic unconformity discoveries.” Furthermore, he noted that exploration in the region has been focused on the wrong grade — high-grade unconformity — and the wrong size of deposit — small — using the wrong techniques.
The upshot is that for investors it is smart to exercise a little bit of caution. After all, the Athabasca Basin can come with a hefty price tag, and high grade is not everything when it only comes in select intersections.
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Investor Insight
Generation Uranium offers investors high-leverage exposure to a potential major discovery in Canada’s underexplored and resource-rich Thelon Basin, led by a management team with a proven track record of securing high-value exits.
Overview
Generation Uranium (CSE:GEN, OTCQB:GENR, FRA:W85) is a Canadian exploration company focused on wealth creation through discovery within the uranium sector. The company’s primary strategy is to build a high-caliber exploration team that can rapidly test and drill high-potential targets, de-risking projects for potential takeover by larger producers. Currently centered in the prolific Thelon and Angikuni Basins of Nunavut, the company is also actively evaluating additional project acquisitions in the Athabasca Basin to expand its portfolio.
The company is led by a veteran management team with nearly 30 years of experience in mineral development. CEO Michael Collins has a significant track record of building and exiting public companies, including the co-founding of Bluerock Resources, a conventional uranium producer during the 2000-2008 cycle. This expertise is paired with a focused business model that leverages modern geophysical targeting to accelerate exploration timelines and reduce costs, ensuring the company can deliver results quickly in a bullish uranium market.
Company Highlights
- Strategic Location in a Premier Uranium District: The flagship Yath Project is located in Nunavut’s Thelon Basin, contiguous to ATHA Energy’s Angilak Project, which hosts the high-grade Lac 50 deposit.
- High-Grade Discovery Potential: Historical surface sampling at the Yath Project has yielded exceptional uranium grades, including boulders testing at 9.81 percent, 3.95 percent, and 2.14 percent U3O8.
- Expert Management with Exit Experience: Led by CEO Michael Collins, the team has decades of experience in mineral exploration and a history of co-founding companies that were later acquired, such as Prime Mining and Nuclear Fuels.
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Key Project
Yath Project - Nunavut, Canada
The Yath Project is Generation Uranium’s flagship project. This 100 percent owned property covers about 120 square kilometers within the underexplored Thelon Basin in Nunavut, Canada. The project is located where the Yathkyed and Angikuni sub-basins meet, which is a region known globally for high-grade uranium potential. It sits directly along the same trend as the Angilak Project owned by ATHA Energy (TSXV:SASK, OTCQB:SASFK, FWB:XSU.F), which contains the Lac 50 deposit, one of the highest-grade uranium resources found outside of the Athabasca Basin with a historical mineral resource estimate of 43.3M lbs at an average grade of 0.69 percent U3O8.
The Yath Project is contiguous to the Lac 50 trend and is crossed by several regional faults and basin boundaries. Past exploration work has already identified high priority targets, while surface sampling in the area has produced uranium grades from boulders, with some testing at 9.81 percent, 3.95 percent, and 2.14 percent U3O8.
The company has commenced its initial field program at the site, set to define and rank drill targets. Historic showings will be combined with new anomalies from the MMT geophysics survey, preparing the project for an anticipated drill permit.
Management Team
Michael Collins - CEO & Director
Michael Collins is a professional geoscientist with nearly 30 years of experience in mineral exploration. He has co-founded several public companies, including Exploits Discovery, Prime Mining (acquired in 2025), and Nuclear Fuels (merged with Premier American Uranium in 2025). He is also currently a director of First Atlantic Nickel.
Christoph Bruening - Director
Christoph Bruening is the founder and managing partner of Value Relations GmbH, a full-service investor relations and public relations agency in Frankfurt with over 25 years of excellence, focusing on mining, exploration, biotech and health care. In addition, he has listed over 600 companies on the Frankfurt Stock Exchange and is a speaker and author of several publications, including on rare earths and uranium.
Dallas Miller - Director
Dallas Miller has been working within the international mining industry for over 15 years, working with BHP and Santos Ltd. He has experience on the ground from an operational standpoint, as well as being an integral part of raising millions of dollars in capital funding for both private and public companies in recent years.
Roger Leschuk - VP Corporate Development
Roger Leschuk has been in corporate management for over two decades, with the past 15 years dedicated to corporate development and investor relations. He has experience participating in and assisting with mergers and acquisitions, and was an investment advisor for various services such as stocks, mutual funds and tax-sheltered investments. He is a Chartered Investment Manager and a Fellow of the Canadian Securities Institute.
Monty Sutton - CFO
Monty Sutton brings over 35 years of experience in public markets and corporate governance. He previously served as CFO for Nuclear Fuels from its IPO through its acquisition.
