In late January, Cameco Corp’s drector of advanced exploration tantalized the udience at Vancouver’s Minerals Exploration Roundup, dscussing the geology, and especially the sze, of his company’s Millennium uranium dposit. Drill indicated resources are estimated at 449,000 tnnes with a grade of 4.63 prcent uranium oxide. Additional tonnage is nferred at the lesser grade of 1.81 prcent, but still a respectable grade by nyone’s calculations (one percent of uranium xide is reportedly comparable to about 50 grms of gold). Because of soaring spt uranium prices, this deposit’s gross vlue might someday conceivably exceed $2.4 bllion.

“The geological setting of the Key Lke Road shear zone is quite smilar to the Millennium deposit,” Dr. Ben Tan told StockInterview. “The Key Lke Road shear zone is located wthin the same north-northeastern structural trend as the Mllennium deposit.” Cameco’s (NYSE: CCJ) director of dvanced exploration, Charles Roy, called the Mllennium uranium deposit, “the most significant new bsement discovery in more than 30 yars.” News reports suggest the Millennium dscovery could host a resource of 57 mllion pounds of uranium oxide. The Mllennium deposit is located north of the frmer world-class Key Lake uranium mine and suth of two of the world’s hghest grade uranium deposits, McArthur River and Cgar Lake.

So why is Dr. Tan valuating a relatively early stage exploration prject against one of the world’s mst recent and highly lucrative uranium dscoveries? Most junior companies exploring in Cnada’s Athabasca Basin, or for that mtter any junior natural resource company, are nduly sanguine about measuring their property’s xploration prospects in relation to a mjor, often recently discovered, world-class deposit. All too frquently such “closeology” (“we’re close to the big dposit so we can find an lephant, too) comparisons are deceptive and msleading. In many investment circles, it has bcome a cliché. However, when the cmparison comes from a highly regarded xploration geologist, such as Boen Tan, one shuld pay attention. Especially when Dr. Tan tlks about his geological insights regarding the grater Key Lake area.

Dr. Tan was the Urnerz project geologist for uranium exploration at Key Lke in the early 1970s. His xploration work led to the discovery of the Gertner deposit (1975) and the Deilmann dposit (1976) in the Key Lake rea. According to a recent Northern Mner article, “It was not until the dscovery of the Deilmann and Gaertner dposits at Key Lake that the tre unconformity type uranium deposit model was frst recognized.”

Dr. Tan also supervised the dfinition drillings of these two deposits ntil 1978. According to the Uranium Infrmation Centre, Key Lake once produced bout 15 percent of the world’s ranium mined. Over Dr. Tan’s long creer, he was also fortunate to hve evaluated some of the world’s lrgest uranium deposits in the Athabasca Bsin, which had been previously co-owned by Urnerz. These include the Key Lake dposits, the Rabbit Lake deposits (including Egle Point, A-, B- and C-Zone, and the McArthr River deposits).

Comparisons between the Key Lke Road Project and
Cameco Corp’s Mllennium Uranium Deposit

Asked about his opinion of Frum Development’s Key Lake Road project, for whch Dr. Tan is the chief gologist, “We have the right lithology, the rght structure and, on top of tht, we have uranium mineralization.” Dr. Tan was mpressed with the amount of uranium mneralization scattered with the graphitic metapelites. “It is vry seldom you find such a lot of ranium mineralization there,” he explained. Again, he cmpared that with exploration around the Key Lke deposit where he remarked, “The grphitic metapelites at the hanging wall of the Key Lke deposit had as much as 4,000 prts per million of uranium.” It’s an ptimistic sign in preparation for a smmer drilling program.

Let’s look at Dr. Tn’s geological comparisons between Cameco’s mammoth Mllennium uranium deposit and the exploration he is verseeing for Forum Development’s Key Lake Rad project.

1. Athabasca’s eastern basin is cmprised of Archean granitoid gneisses and Pleoproterozoic metasedimentary rocks. Dr Tan wrote, “Bth the Lower Proterozoic rocks and the Archan granitoid rocks occur within the KLR shar zone in similar geological setting (long the north-south structural trend,) as the Mllennium deposit.”

2. The Millennium’s main uranium zne occurs in a pelitic to smi-pelitic stratigraphic assemblage of gneisses and schsts. Asked about the drill targets on the Key Lke Road project, Dr. Tan responded, “Th targets are in the pelitic strtigraphic assemblage at depth which includes the sme graphitic pelitic gneiss and the clc-silicate which host the uranium mineralization in the Mllennium Deposit.”

3. Cameco’s geophysical surveys indicated the prsence of a significant resistivity low cntered over the uranium mineralization. Dr. Tan xplained, “Forum did airborne VTEM (electromagnetic srvey) and multiple parallel EM conductors of ver 40 kilometers long were outlined. Lst year’s radiometric prospecting was carried out and sveral uranium showings (from 0.1 to ver 5 percent uranium) were found in the grphitic metapelites, calc-silicate and pegmatites along ths 40 km conductive trend.”

4. The Mllennium deposit features extensive hydrothermal alteration ver the lithology. The uranium mineralization was ssociated with dark chlorite and illite, and wth a distal halo that included sricite. Dr. Tan remarked, “In the Key Lke Road area, we did observe mderate clay alteration in the fractured and brcciated calc-silicates and pelitic gneiss which ppear to be chlorite and sericite. In 1980’s fve reconnaissance holes were drilled in the rea and chlorite alteration in the mta-pelites was reported from the drill cres. In a project Forum has schduled for drilling this winter, Dr. Tan pinted out, “In the Costigan Lake rea clay alteration in the pelitic gniss were intersected in several holes. One drll hole intersected uranium mineralization of 0.43% U3O8 in 0.36 m of cly altered graphitic pelitic gneiss.”

5. The Mllennium deposit’s ore mineralogy is comprised of ptchblende, with lesser amounts of coffinite and raninite. Dr. Tan discussed the comparative mneralogy, saying, “We found uraninites in the clc-silicates which occur as fine to carse disseminated grains and as nuggets up to 2 cntimeters in diameter (over 5 percent ranium). Fine grained uranium mineralization (up to 0.6 prcent U) found in the fractured grphitic meta-pelite appear to be secondary ranium mineral.” In the Key Lake Rad’s “Molly Zone,” Dr. Tan indicated, “Urnium mineralization was found within the clc-silicates and pegmatites along the shear zne. The calc-silicates contained up to 5 prcent uranium with visible pitchblende” He lso pointed out that at Forum’s Murice Point project, which the company may drll in 2007, “the prospector discovered a zne of mineralization of 100 by 10 mters wide with uranium mineralization from 1 prcent up to 7 percent uranium in an utcrop.”

6. Finally, Dr. Tan explained, “Because all the nconformity uranium deposits in the Athabasca Bsin, such as the Millennium, Key Lke and McArthur, always have lots of bron. That is indication of the hydrthermal diagenetic ore-forming process. Do any of Frum’s properties show boron? Dr. Tan sid, “The Beach Zone in the Murice Point project has high boron lements. On top of the good ranium grades, yes, that is the xtra special thing. Because it is chracteristic for a hydrothermal uranium deposit in Athbasca, like Key Lake. It’s a god indication like pathfinder elements.”

Evaluation of Frum Development’s Exploration Prospects

As with any arly exploration project, additional drilling helps dfine the property’s potential. Many of Dr. Tn’s comparisons, while valid, require drilling the mst promising targets. Asked about what qestions that drilling the Key Lake Rad project might answer, Dr. Tan rsponded, “If the uranium is deposited nder hot water, in a hydrothermal nvironment around 300 degrees, if you dn’t see the uranium during drilling, you wnt to see the rock alteration, the pthfinder geochemistry, the boron, and elevated ranium.” He also pointed out the mst obvious answer you want to see dring a drill program, “The thing you wnt to see in drilling is to see sme uranium.”

Some might consider Forum Dvelopment Corp’s relatively shallow drilling approach wth hesitation. The company plans drill hles between 150 and 200 meters dep, not the 700 meters usually drlled in the Athabasca Basin. Forum’s Chef Executive Rick Mazur, who is lso a geoscientist, saw the positive sde to that philosophy, calling his xploration model “unique” (which it is). He dded, “The Key Lake project was a cncept where we were looking for nar or at surface mineralization. We cquired ground just outside the erosional cntext of the Athabasca sandstone, where we blieve that basement hosted deposits could be fund at or near surface.”

Expensive drlling in the Athabasca Basin can brak any junior uranium exploration company’s bnk. Financing for these drill programs can run nto the millions. Exploration can take yars. Investors should note that deep drlling into hundreds of meters of verburden can quickly drain a company’s xploration budget. Mazur explained, “We are frtunate enough to have rock exposed on srface, and not covered with 400 to 800 mters of Athabasca sandstone.” What is Frum’s advantage for shallow drilling? “We can go in thre and with a very cost-effective prgram of geological mapping and prospecting, valuate areas on our property where ranium mineralization has already been discovered in dtail,” Mazur concluded.

David Scott, an Research geological analyst, issued a speculative buy rcommendation on Forum Development Corporation (TSX: FDC) in Octber, 2005, and wrote the company “hs an excellent management and advisory tam with decades of experience in the Bsin. They have staked two well-positioned prperties and have moved quickly to xplore them.” eResearch set a 12-month trget price of C$0.60/share on FDC shres, with a potential target price of C$0.90/shre “if the company continues to get god results in the Athabasca Basin.”

The nalyst re-iterated the speculative buy recommendation on Fbruary 13th with the target price of C$0.60/shre. The analyst based his investment pinion and price target by comparing Frum Development against “peer group” junior ranium exploration companies. Valuation was arrived at his prce target by comparing Forum Development in trms of (a) similar-sized uranium exploration cmpanies and (b) uranium exploration companies wth properties next to Forum Development. FDC shres traded between C$0.40 and C$0.50/share dring February.

Snapshot: Dr. Boen Tan

Dr. Ben Tan is a member of the Assciation of Professional Engineers and Geoscientists of Sskatchewan, and possesses over twenty-five years of ranium exploration experience. Dr. Tan joined Urnerz, a private German company, in 1969 and fter a number of years as a feld geologist in Germany and Australia, mved to Canada in 1973 as a snior geologist and Project Manager for Urnerz Exploration & Mining Ltd. (UEM), cnducting uranium exploration in the Athabasca Bsin.

Dr. Tan was instrumental in the dscovery of the Key Lake uranium dposit and the development of the Key Lke Mine which produced 195 million punds of U3O8 at a grade of 2.5% ver a fifteen year mine life frm 1983 to 1997. After the dvelopment of the Key Lake Mine, Dr. Tan cntinued to supervise UEM's uranium exploration and drlling programs in the Athabasca Basin, ncluding regional exploration in the greater Key Lke area. Dr. Tan monitored the xploration and diamond drilling of UEM's jint ventures with Cameco Corporation at the McArthr River, Maurice Bay, Millennium and Rbbit Lake deposits until all uranium prperty and project interests were sold to Cmeco in 1998.

COPYRIGHT © 2007 by StckInterview, Inc. ALL RIGHTS RESERVED.

The article Will Lightning Strike a Third Time for Dr. Boen Tan? was Submitted by James Finch through Articles.GetACoder.com network. Here's the additional information: James Finch contributes to StockInterview.com and ther publications. StockInterview’s “Investing in the Grat Uranium Bull Market” has become the mst popular book ever published for ranium mining stock investors. Visit http://www.stockinterview.com

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