Azincourt Energy CEO Alex Klenman discusses the advantages of being neighbors with billion-dollar-market-cap companies in Saskatchewan’s Athabasca Basin.
In the interview below, Klenman talks about the effect their neighbors could have on Azincourt’s market cap if they make a discovery in their spring drill program at East Preston.
Below is a transcript of our interview with Azincourt Energy CEO Alex Klenman. It has been edited for clarity and brevity.
Investing News Network: Please give our investor audience an overview of Azincourt and its assets in Saskatchewan’s Athabasca Basin.
Azincourt Energy CEO Alex Klenman: We’re a lithium and uranium exploration company and our primary 25,000-hectare asset, East Preston, resides in Saskatchewan’s Athabasca Basin, which is home to approximately 20 percent of the world’s uranium supply.
INN: East Preston isn’t isolated and has a lot of good neighbours. How did you manage to get control of it?
AK: Over the course of the uranium bear market, Skyharbour Resources (TSXV:SYH) and their joint venture partner, Clean Commodities (TSXV:CLE), bought most of the land in the area and then optioned off the 75,000-hectare Preston project in a prospect generator model. As it currently stands, 50 percent of the property went to AREVA and 25 percent went to Azincourt.
We’re also in a compelling risk-reward scenario as most of our neighbours have billion-dollar market caps while we have a C$4 million market cap. As we head into our drill season, we have the potential to make a significant discovery and drive value for our shareholders.
INN: Why do you believe that uranium is coming out of a bear market?
AK: The disaster at Fukushima cooled the uranium market significantly, but we’re coming out of that now. More reactors are coming online and more are planned to come online in the future.
On the supply side of things, it currently costs more to mine uranium than it does to buy it and, with production being cut, it’s pulling on the supply. For example, Cameco (TSX:CCO,NYSE:CCJ) has shut down McArthur River, the world’s largest uranium mine, and KazAtomProm (FWB:0ZQ) has done the same thing. It’s equivalent to Saudi Arabia shutting off all oil production. All of the fundamentals are there to continue to drive uranium prices up.
INN: What will the role of uranium be in green technology and how will this affect demand?
AK: It depends on the perception and, as movies and disasters point out, it can be a risky endeavour. However, technology changes daily and many of the new reactors are smaller, making them easier to contain.
Overall, uranium is a clean alternative energy source with little chance of disaster in the production and generation of electricity. You can have disasters, like Fukushima, that can take up to 10 years to recover from, but the technology is sound and we know it works. As reactors come online, the supply and demand dynamics are going to create a strong uranium market.
INN: What’s next for Azincourt and how does this fit into the company’s long-term goals?
AK: We’ve done all the geophysical work that we can do and have planned a spring drill program for East Preston with the hope of making a discovery. If we find what we’re looking for, we’ll no longer be a $4 million market cap company.
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