Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
We are going to follow the process a junior resource company takes in making a discovery; in this case we are going looking for uranium, but are also reminded of the Voisey’s Bay story when two diamond prospectors almost inadvertently found a large nickel, copper and cobalt deposit. This junior has potential for not only uranium, but also gold and platinum group elements.
In this case, our junior is looking in the most prospective and geologically fertile place in the world for discovering uranium. There’s no contest here, if you are looking for uranium the Athabasca Basin in Northern Saskatchewan and Northeastern Alberta is where you need to be.
Athabasca Basin
The Athabasca Basin is an ancient, roughly bathtub shaped, sedimentary basin located along the Northern Alberta-Saskatchewan border south of Lake Athabasca. The Basin covers approximately 100,000 square kilometers in Saskatchewan and a small portion of Alberta.
An airborne survey (a consortium flew an airborne radiometric survey over the Basin in 1967) and follow-up ground radiometric prospecting with systematic drilling led to the early discoveries of Rabbit Lake in 1968 and Cluff Lake in 1970 (the discovery of these two deposits led to the recognition of the unconformity deposit model).
When the Cluff Lake D Zone was found in 1969 the Athabasca Basin become host of the highest grade uranium deposit ever discovered. The D Zone discovery news resulted in a huge staking rush by not only junior companies, but also large multinational oil companies. The Athabasca Basin legend had been born and heralded the beginning of a prolific period of ongoing high-grade uranium discoveries incomparable to any other district in the world.
The initial discoveries were made by airborne then surface indicators – radioactive boulders, geochemical anomalies in the surrounding lakes and swamps and geophysical signatures. Hydrothermal fluids associated with high-grade uranium deposits will cause extensive alteration of the host rock, resulting in displacement and removal of minerals/elements, creating porosity and subsequent density contrast. This density contrast will be expressed as a gravity low anomaly and is a prime drill target when qualified by other coincident indicators of uranium mineralization such as geochemistry and radon.
The discoveries at Key Lake (richest open-pit deposit in the world) in 1975-76 and Cigar Lake in 1981 prompted a growing emphasis on Electromagnetic (EM) conductors as a key factor in exploration for these unconformity deposits.
Electromagnetic surveys outline areas where conductive material exists in the basement rocks. The commonly recognized conductive feature is graphite within meta sedimentary rocks. Although graphite does not always have uranium mineralization, the known uranium deposits in the Athabasca Basin almost always have graphite associated with them. Since 2006 virtually the whole basin has been covered by EM surveys.
It’s important to note that the same methods which led to the early basin discoveries are the same methods currently employed to make new discoveries.
Unconformity-related deposits
Most economic uranium deposits form when uranium is remobilized from one area and re-precipitated in a host rock where chemical conditions are conducive to concentrating the uranium at higher concentrations.
An ‘unconformity’ is a time gap in the rock record between two rock units. In the Athabasca Basin, the lower unit may be deformed brecciated or altered while the overlying units are less deformed. Uranium deposits can occur in both the underlying and overlying units.
In the underlying units, there may be a weathering zone, fault zone or some other feature that increases the rocks porosity and permeability. In the overlying units, it may be the sandstones or some other features that allows the concentration of uranium. Most commonly these deposits form at or near a major fault zone, where waters enriched in uranium mixed with a reducing agent that facilitated the deposition of the uranium in the host rock.
The deposits in the Athabasca Basin can occur below, across and immediately above the unconformity, with the highest grade deposits situated at or just above the unconformity (eg Cigar Lake and McArthur River). The earliest known discoveries within the Athabasca Basin were lower grade basement hosted deposits (eg. Cluff Lake, Key Lake and Rabbit Lake). Recent discoveries such as Roughrider and Patterson Lake South, are also basement hosted deposits.
Discovery
Geologists – our juniors equivalent of a police forces crime detective – need to follow various clues in order to discover the presence of uranium. That means our geologists need to be experienced in the search for our chosen mineral, knowledgeable in regards to our chosen area, armed with all the latest and greatest tools of the trade, and be up to date on the latest geophysical and geochemical techniques.
Upon interpretation of historical and modern data – and often times our management and geo’s proprietary knowledge of the area – claims are staked.
Initial work often includes airborne surveys that could include VTEM, ZTEM and a full tensor gravity gradiometry survey. Company’s geologists are then sent to the property to collect soil and rock samples, complete radon surveys, and/or complete geophysical surveys such as resistivity or HLEM. Samples are sent to the lab, surveys results are compiled, analyzed and tied together with results from the lab.
If results are favorable and provide good indications for the discovery of a mineralized body, a drill program is formulated and announced in a news release.
Lakeland Resources TSX.V – LK Announces Drill Program at Gibbons Creek and Star Properties
Early stage results from Lakeland Resources (TSX.V – LK) two adjacent north-central Athabasca Basin’s properties – Star and Gibbon’s Creek – were promising enough to vault LK’s properties into Ahead of the Herd’s top spot on the list of prospective for deposit discovery projects in Saskatchewan’s Athabasca Basin.
With only 54 million shares issued and outstanding, Lakeland is held strongly
by insiders (25%). The company is well cashed-up with an estimated $2 million, and three projects are at the drill ready stage. Your author believes Lakeland represents the best early-stage drill speculation in the entire basin.
Here’s a summary of the first Lakeland project to be drilled.
Star/Gibbons Creek
The company wholly owns Gibbon’s Creek and holds a 100% option on Star, these two adjacent properties have been combined into one project.
Lakeland generated several drill ready targets at Star/Gibbons Creek based on their fall 2013 exploration program. Prospecting methods employed included:
Consider
ü One kilometer south of the Star uplift there’s a massive alteration zone showing up in the resistivity data set. The periphery of the zone was drilled in the 1970s. Assays returned up to 1,500 parts per million uranium – that’s 1,500 ppm proximal to a massive alteration zone.
ü In the Athabasca Basin pathfinder elements – gold and Platinum Group Element (PGE) would be included in this group – are usually counted in parts per million. To be counting gold and PGE in grams per tonne is highly unusual, although Shea Creek and Patterson Lake South did have high grade gold values.
ü The property was covered by airborne EM surveys and airborne gravity surveys in 2006. There’s also a very good set of historic data – during the 1976-1981 exploration boom Eldorado Nuclear Ltd. completed soil sampling, prospecting, ground EM surveys, gravity surveys and resistivity surveys.
ü There’s a major regional structural lineament running 30 to 40 kilometers north to south. Every significant uranium deposit is structurally related – there has to be a fault zone or a structure of magnitude. Having it reactivated time and time again allows multiple generations of fluid to flow along that structure and deposition of perhaps multiple high grade ore bodies.
ü The deposits in the Athabasca Basin are considered “blind” deposits – there’s no surface expression so one of the major keys to success is maximizing the number of holes drilled. Shallow depth – it’s just 50 to 250 meters to the sub-Athabasca unconformity on Lakelands Star/Gibbons project – leads to cheaper drilling per hole. More holes equals more exploration bang, more chances of success for the buck.
ü Roads and power lines cross the property which lies only a few kilometers from the town of Stony Rapids. When everything is taken into consideration it’s easy to see why Lakeland anticipates an economical program of shallow drilling.
ü The company is in receipt of the necessary permits to carry out the work program, a drilling contract has been negotiated and the company is fully funded to complete the work. The drill program will commence as soon as winter ground conditions permit.
Something to take note of here – Lazy Edward Bay, the second of Lakeland’s three drill ready projects, is an outstanding project and as I said is ready to be drilled. LK is definitely not a one shot Co. and this is extremely important when doing due diligence on a prospective junior – always have a second, even third, project ready to go. If the first program isn’t the success you’d hoped for there’s no sitting around waiting for junior to raise money, acquire another project and get it ready to drill. I think it’s obvious why I like LK, three drill ready projects and $2m in the bank.
Conclusion
An investment into junior resource company’s should be based on who is involved. Lakeland has put together a management team, and advisory board with considerable expertise and experience in the uranium sector.
The driving force, on the geological side of Lakeland Resources is the same team of geologists (Dahrouge Geological) that originally conceived the Waterbury Lake Property (J-Zone sold to Denison) and the Patterson Lake Project that eventually turned into the Patterson Lake South (PLS) Uranium Deposit, being developed by Fission Uranium Corp.
Add Zimtu Capital’s funding network to the mix and you have a junior with the ability to raise money and a team that is noted for generating multiple early stage discoveries!
Can lightning strike three times for Mr. J. Dahrouge & Co., our detective geologists?
Mother Nature never gives guarantees, and neither do I, regarding the location of her treasures, but your author believes all the geological necessities are present for a discovery, potentially a very large and rich discovery. Add in the fact three drill ready projects considerably de-risk the investment and you can see why Lakeland Resources TSV.V – LK is on my radar screen as one of the best prospective for discovery juniors on the TSX.V today.
Richard lives with his family on a 160 acre ranch in northern British Columbia. He invests in the resource and biotechnology/pharmaceutical sectors and is the owner of Aheadoftheherd.com. His articles have been published on over 400 websites.
