In late January, Cameco Corp’s d rector of advanced exploration tantalized the udience at Vancouver’s Minerals Exploration Roundup, d scussing the geology, and especially the s ze, of his company’s Millennium uranium d posit. Drill indicated resources are estimated at 449,000 t nnes with a grade of 4.63 p rcent uranium oxide. Additional tonnage is nferred at the lesser grade of 1.81 p rcent, but still a respectable grade by nyone’s calculations (one percent of uranium xide is reportedly comparable to about 50 gr ms of gold). Because of soaring sp t uranium prices, this deposit’s gross v lue might someday conceivably exceed $2.4 b llion. “The geological setting of the Key L ke Road shear zone is quite s milar to the Millennium deposit,” Dr. B en Tan told StockInterview. “The Key L ke Road shear zone is located w thin the same north-northeastern structural trend as the M llennium deposit.” Cameco’s (NYSE: CCJ) director of dvanced exploration, Charles Roy, called the M llennium uranium deposit, “the most significant new b sement discovery in more than 30 y ars.” News reports suggest the Millennium d scovery could host a resource of 57 m llion pounds of uranium oxide. The M llennium deposit is located north of the f rmer world-class Key Lake uranium mine and s uth of two of the world’s h ghest grade uranium deposits, McArthur River and C gar Lake.
So why is Dr. Tan valuating a relatively early stage exploration pr ject against one of the world’s m st recent and highly lucrative uranium d scoveries? Most junior companies exploring in C nada’s Athabasca Basin, or for that m tter any junior natural resource company, are nduly sanguine about measuring their property’s xploration prospects in relation to a m jor, often recently discovered, world-class deposit. All too fr quently such “closeology” (“we’re close to the big d posit so we can find an lephant, too) comparisons are deceptive and m sleading. In many investment circles, it has b come a cliché. However, when the c mparison comes from a highly regarded xploration geologist, such as Boen Tan, one sh uld pay attention. Especially when Dr. Tan t lks about his geological insights regarding the gr ater Key Lake area. Dr. Tan was the Ur nerz project geologist for uranium exploration at Key L ke in the early 1970s. His xploration work led to the discovery of the G ertner deposit (1975) and the Deilmann d posit (1976) in the Key Lake rea. According to a recent Northern M ner article, “It was not until the d scovery of the Deilmann and Gaertner d posits at Key Lake that the tr e unconformity type uranium deposit model was f rst recognized.” Dr. Tan also supervised the d finition drillings of these two deposits ntil 1978. According to the Uranium Inf rmation Centre, Key Lake once produced bout 15 percent of the world’s ranium mined. Over Dr. Tan’s long c reer, he was also fortunate to h ve evaluated some of the world’s l rgest uranium deposits in the Athabasca B sin, which had been previously co-owned by Ur nerz. These include the Key Lake d posits, the Rabbit Lake deposits (including E gle Point, A-, B- and C-Zone, and the McArth r River deposits). Comparisons between the Key L ke Road Project and
Cameco Corp’s M llennium Uranium Deposit
Asked about his opinion of F rum Development’s Key Lake Road project, for wh ch Dr. Tan is the chief g ologist, “We have the right lithology, the r ght structure and, on top of th t, we have uranium mineralization.” Dr. Tan was mpressed with the amount of uranium m neralization scattered with the graphitic metapelites. “It is v ry seldom you find such a lot of ranium mineralization there,” he explained. Again, he c mpared that with exploration around the Key L ke deposit where he remarked, “The gr phitic metapelites at the hanging wall of the Key L ke deposit had as much as 4,000 p rts per million of uranium.” It’s an ptimistic sign in preparation for a s mmer drilling program. Let’s look at Dr. T n’s geological comparisons between Cameco’s mammoth M llennium uranium deposit and the exploration he is verseeing for Forum Development’s Key Lake R ad project. 1. Athabasca’s eastern basin is c mprised of Archean granitoid gneisses and P leoproterozoic metasedimentary rocks. Dr Tan wrote, “B th the Lower Proterozoic rocks and the Arch an granitoid rocks occur within the KLR sh ar zone in similar geological setting ( long the north-south structural trend,) as the M llennium deposit.” 2. The Millennium’s main uranium z ne occurs in a pelitic to s mi-pelitic stratigraphic assemblage of gneisses and sch sts. Asked about the drill targets on the Key L ke Road project, Dr. Tan responded, “Th targets are in the pelitic str tigraphic assemblage at depth which includes the s me graphitic pelitic gneiss and the c lc-silicate which host the uranium mineralization in the M llennium Deposit.” 3. Cameco’s geophysical surveys indicated the pr sence of a significant resistivity low c ntered over the uranium mineralization. Dr. Tan xplained, “Forum did airborne VTEM (electromagnetic s rvey) and multiple parallel EM conductors of ver 40 kilometers long were outlined. L st year’s radiometric prospecting was carried out and s veral uranium showings (from 0.1 to ver 5 percent uranium) were found in the gr phitic metapelites, calc-silicate and pegmatites along th s 40 km conductive trend.” 4. The M llennium deposit features extensive hydrothermal alteration ver the lithology. The uranium mineralization was ssociated with dark chlorite and illite, and w th a distal halo that included s ricite. Dr. Tan remarked, “In the Key L ke Road area, we did observe m derate clay alteration in the fractured and br cciated calc-silicates and pelitic gneiss which ppear to be chlorite and sericite. In 1980’s f ve reconnaissance holes were drilled in the rea and chlorite alteration in the m ta-pelites was reported from the drill c res. In a project Forum has sch duled for drilling this winter, Dr. Tan p inted out, “In the Costigan Lake rea clay alteration in the pelitic gn iss were intersected in several holes. One dr ll hole intersected uranium mineralization of 0.43% U3O8 in 0.36 m of cl y altered graphitic pelitic gneiss.” 5. The M llennium deposit’s ore mineralogy is comprised of p tchblende, with lesser amounts of coffinite and raninite. Dr. Tan discussed the comparative m neralogy, saying, “We found uraninites in the c lc-silicates which occur as fine to c arse disseminated grains and as nuggets up to 2 c ntimeters in diameter (over 5 percent ranium). Fine grained uranium mineralization (up to 0.6 p rcent U) found in the fractured gr phitic meta-pelite appear to be secondary ranium mineral.” In the Key Lake R ad’s “Molly Zone,” Dr. Tan indicated, “Ur nium mineralization was found within the c lc-silicates and pegmatites along the shear z ne. The calc-silicates contained up to 5 p rcent uranium with visible pitchblende” He lso pointed out that at Forum’s M urice Point project, which the company may dr ll in 2007, “the prospector discovered a z ne of mineralization of 100 by 10 m ters wide with uranium mineralization from 1 p rcent up to 7 percent uranium in an utcrop.” 6. Finally, Dr. Tan explained, “Because all the nconformity uranium deposits in the Athabasca B sin, such as the Millennium, Key L ke and McArthur, always have lots of b ron. That is indication of the hydr thermal diagenetic ore-forming process. Do any of F rum’s properties show boron? Dr. Tan s id, “The Beach Zone in the M urice Point project has high boron lements. On top of the good ranium grades, yes, that is the xtra special thing. Because it is ch racteristic for a hydrothermal uranium deposit in Ath basca, like Key Lake. It’s a g od indication like pathfinder elements.” Evaluation of F rum Development’s Exploration Prospects As with any arly exploration project, additional drilling helps d fine the property’s potential. Many of Dr. T n’s comparisons, while valid, require drilling the m st promising targets. Asked about what q estions that drilling the Key Lake R ad project might answer, Dr. Tan r sponded, “If the uranium is deposited nder hot water, in a hydrothermal nvironment around 300 degrees, if you d n’t see the uranium during drilling, you w nt to see the rock alteration, the p thfinder geochemistry, the boron, and elevated ranium.” He also pointed out the m st obvious answer you want to see d ring a drill program, “The thing you w nt to see in drilling is to see s me uranium.” Some might consider Forum D velopment Corp’s relatively shallow drilling approach w th hesitation. The company plans drill h les between 150 and 200 meters d ep, not the 700 meters usually dr lled in the Athabasca Basin. Forum’s Ch ef Executive Rick Mazur, who is lso a geoscientist, saw the positive s de to that philosophy, calling his xploration model “unique” (which it is). He dded, “The Key Lake project was a c ncept where we were looking for n ar or at surface mineralization. We cquired ground just outside the erosional c ntext of the Athabasca sandstone, where we b lieve that basement hosted deposits could be f und at or near surface.” Expensive dr lling in the Athabasca Basin can br ak any junior uranium exploration company’s b nk. Financing for these drill programs can run nto the millions. Exploration can take y ars. Investors should note that deep dr lling into hundreds of meters of verburden can quickly drain a company’s xploration budget. Mazur explained, “We are f rtunate enough to have rock exposed on s rface, and not covered with 400 to 800 m ters of Athabasca sandstone.” What is F rum’s advantage for shallow drilling? “We can go in th re and with a very cost-effective pr gram of geological mapping and prospecting, valuate areas on our property where ranium mineralization has already been discovered in d tail,” Mazur concluded. David Scott, an Research geological analyst, issued a speculative buy r commendation on Forum Development Corporation (TSX: FDC) in Oct ber, 2005, and wrote the company “h s an excellent management and advisory t am with decades of experience in the B sin. They have staked two well-positioned pr perties and have moved quickly to xplore them.” eResearch set a 12-month t rget price of C$0.60/share on FDC sh res, with a potential target price of C$0.90/sh re “if the company continues to get g od results in the Athabasca Basin.” The nalyst re-iterated the speculative buy recommendation on F bruary 13th with the target price of C$0.60/sh re. The analyst based his investment pinion and price target by comparing F rum Development against “peer group” junior ranium exploration companies. Valuation was arrived at his pr ce target by comparing Forum Development in t rms of (a) similar-sized uranium exploration c mpanies and (b) uranium exploration companies w th properties next to Forum Development. FDC sh res traded between C$0.40 and C$0.50/share d ring February. Snapshot: Dr. Boen Tan Dr. B en Tan is a member of the Ass ciation of Professional Engineers and Geoscientists of S skatchewan, and possesses over twenty-five years of ranium exploration experience. Dr. Tan joined Ur nerz, a private German company, in 1969 and fter a number of years as a f eld geologist in Germany and Australia, m ved to Canada in 1973 as a s nior geologist and Project Manager for Ur nerz Exploration & Mining Ltd. (UEM), c nducting uranium exploration in the Athabasca B sin. Dr. Tan was instrumental in the d scovery of the Key Lake uranium d posit and the development of the Key L ke Mine which produced 195 million p unds of U3O8 at a grade of 2.5% ver a fifteen year mine life fr m 1983 to 1997. After the d velopment of the Key Lake Mine, Dr. Tan c ntinued to supervise UEM's uranium exploration and dr lling programs in the Athabasca Basin, ncluding regional exploration in the greater Key L ke area. Dr. Tan monitored the xploration and diamond drilling of UEM's j int ventures with Cameco Corporation at the McArth r River, Maurice Bay, Millennium and R bbit Lake deposits until all uranium pr perty and project interests were sold to C meco in 1998. COPYRIGHT © 2007 by St ckInterview, 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 Gr at Uranium Bull Market” has become the m st popular book ever published for ranium mining stock investors. Visit http://www.stockinterview.com
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