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From Junior Mining Stock Report
Interview with Uracan Resources
Clif Droke
May 25, 2009
Uracan Resources Ltd. (symbol URC:TSXV) is a uranium exploration company
which specializes in exploring a shallow, bulk tonnage style of uranium
mineralization in Canada. Uracan is led by a team of exploration and mine
entrepreneurs and mine builders, which collectively, have helped to build
some of the biggest and most impressive junior companies in history,
including Bema Gold, Silver Wheaton, Diamond Fields, Adastra Minerals and
Arequipa Resources. The management team alone at Uracan is worth
referencing since many of the companies that Uracan's management were
involved with went from the start-up stage to being acquired by senior
producers in the billions of dollars. In our latest company spotlight,
Junior Mining Stock Report interviews Gregg Sedun, Uracan's President and
CEO, along with Marc Simpson, Uracan's Exploration Manager.
Q: How did you get your start in the uranium business?
Sedun: My background is I'm a former
corporate finance mining lawyer and venture capitalist for last 14 years.
What I do is look for opportunities in the right sector. I became aware
of an exciting uranium opportunity in Quebec that was put together by a
legend in the Canadian mining business by the name of Pat Sheridan out of
Toronto. He has a real history of success with his previous discoveries.
Back in the 1970s was the last uranium rush in Canada prior to the Three
Mile Island accident [in 1979]. There were about 50 companies exploring
in Quebec at the time with some really interest results and good grades
and discoveries. There were a few majors and several junior companies
involved in this. After the [Three Mile] meltdown and the uranium price
came down we started getting interested again around 2000. Instead of
having 50 or so companies, Pat [Sheridan] consolidated these companies
and had it all under one roof. So we started talking to him and I
partnered up with Clive Johnson from Bema and Frank Giustra and Gordon
Keep with Endeavor with a vision of putting together this company and
going after these projects. Pat's initial view was to have a number of
different companies involved; he didn't want to sell them all to one
company. We had enough financial clout and exploration success that were
able to do a deal on the entire package. So we put a massive area of over
1,000 square kilometers under our roof to form Uracan.
We then began exploration and very quickly thereafter had our key
discovery hole, which was longest of the longest holes of continual
uranium mineralization found in Canada by juniors. It was about 160
meters from surface. Our model is a little different than other a lot of
the other juniors. We're not going after the deep and expensive-to-drill
uranium. We're open pit, near surface, low-cost in terms of exploration and
the cost of the mine. We have the unique situation of having incredible
logistics on this project. We're in a top mining jurisdiction, one of the
best in the world. We happen to have a highway running through our
project. We have the power lines and have all the hydro power we need.
We've got all the fresh water we need and we also happen to be right
tidewater near a port on the St. Lawrence Seaway. Since our discovery of
a couple of years ago we've just continued to build the resource and now
we're into year three. We've grown the resource to one of the larger
uranium resources in Canada for juniors of approximately 40 million
pounds.
Q: Please give us some background on Uracan's flagship uranium
property
Simpson: We started our exploration of the North Shore Property
[in Quebec] in 2006 and started off with some basic prospecting, mapping
and sampling. Based on that work we started a drill program in January
2007. During the initial drill program in '07 we had our discovery hole
on the Double S zone, which was one of thickest we had seen to date. For
followed that up with drilling for the rest of 2007 focusing specifically
on the Double S area and drilled 14,000 meters there. We then made the
decision at end of '07 to step out along the mineralized trend - about a
7 kilometer trend - that SS occurs on with a number of historic anomalies
along there as well as some other prospects that we generate ourselves.
In 2008 we essentially focused on developing additional targets and
mineralization along that trend within a 6 kilometer radius. In the
spring of 2008 we started a resource estimate on the Double S zone and
came up with just under 20 million pounds containing uranium at 0.012
percent average grade. In February 2009 we came out with our resource
estimates for both the TJ Zone and the Middle Zone. Those two zones
contain approximately between 20 to 21 million pounds between them at an
average grade of 0.012.
Sedun: We've got two definite areas we're working on: one is
called and one is called Lac Turgeon and one is called Costebelle. They
are both massive exploration areas, somewhere around 250 square
kilometers for Turgeon and more for Costebelle. That's where we have all
our resource and is the areas where we're building pounds in the ground.
Most of it is within our Lac Turgeon area and that's our main focus right
now and that's where we think we will have a resource, something that we
can mine.
On the other hand we also have a really exciting new area a little
earlier in its exploration history and that's in the Costebelle claim
group. This series of claims is about 500 square kilometers combined.
Those two areas represent about three quarters of our work in Quebec.
We've got higher grade material but it's at surface and it's much earlier
on in terms of exploration. We think it presents a tremendous blue sky
opportunity and we want to get in there and drill that hopefully by year
end. This year we'll be doing some more advanced exploration on that
project. The project we talk about the most is on our Lac Turgeon
property and that's where we're building a resource of about 40 million
pounds of uranium in the ground. When I referenced earlier on the
benefits of the logistics of the highway and the power and the fresh
water and the access to tidewater, you can see it really does have all
the ingredients of a fabulous mine. Also, Quebec is building a power
station not far from our actual project.
Q: You recently completed a winter drill program at the North Shore
Uranium Property in Quebec. When do you expect the results from this?
When will the next drilling program begin?
Sedun: We have a number of results in. Suffice it to say we're
very encouraged by what we see and the effect when we put news out on it
and our project will continue to grow.
Q: Please also provide some background on your Pipewrench Lake Property
in Saskatchewan
Sedun: What's exciting about that project is that it borders on the
Athabasca Basin and is on trend with most of the major uranium mines in
the Athabasca in that southeast corridor along the eastern border of the
basin. It's in an area known as the Wollaston Belt and we're south of
those major mines. What they're now finding, geologically, is that the
Wollaston may well contains the basement rocks of the Athabasca Basin.
What we're doing is looking for near surface, open pitable resource. We
don't want to go down a thousand meters and search for the deep stuff;
we're looking for near surface uranium. In terms of geological sluicing,
what our team, and Marc [Simpson] in particular, discovered was explored
in the 1950s and there was some very good high-grade drill intercepts of
multiple pounds, two to three pounds. This had been dropped because the
price of uranium at the time had waned and companies lost their capital
and exploration budgets. In any event we were able to pick up this ground
and quite soon thereafter after we staked all the area we wanted and we
got what we considered to be a very significant property there. We've
since joint ventured with another company that had come in after us and
we've got an option to earn 75 percent interest in their property.
Simpson: We've got about 4,800 square kilometers there and it's
five times as big as what we've got in Quebec.
Sedun: It's a lot of ground to cover so we're being very careful
how we spend our money there. We've done some detailed geology work at
surface with some drilling on our own property there, not on the joint
venture.
Simpson: We did work last year on the joint venture ground and we
think there's really good potential in that area for uranium
mineralization. We'll continue assessing that area going forward. We did
some drilling on our own ground in 2008 and we got some very good results
from that including a new discovery at up to 13 meters just under three
pounds at surface, so we've got some encouraging results from that
property as well and will be following that work up going forward.
Q: What would you say are some of the strengths of your geological team?
Sedun: It has both the geologic success in its background in terms
of the Bema guys on board, and on the finance side of the business with
both Endeavor and myself. This is a very unique grouping of guys coming
together to form this team. There's probably up to 10 companies that have
gone from startup to over a billion dollars in market cap within our
group. The team is unique for both financing and for exploring and
building mines. We have two tremendous projects with both size and scope
and in the mining business that's what the investment community wants to
see. We own 100 percent of our projects, aside from the joint venture in
Saskatchewan. Having 100 percent of our properties is significant and these
are large scale properties with the potential to build very large mines.
This isn't about hitting a single in any one of our assets, it's about
hitting the home run.
Q: Are there any partnerships or joint ventures you're looking at
right now?
Sedun: We continue to look at other opportunities in other
countries and we are spending time in due diligence on a few projects in
one particular country. With our group we have very good deal flow, so we
continually see different opportunities. A lot of things we dismiss
quickly because they don't have what we see as the requirements for our
company. But we're looking at a couple of [potential deals] right now
which I'm really not at liberty to discuss at this time.
Q: What kind of institutional following does Uracan have?
Sedun: We're mostly a Canadian story. There are a few institutions
back east with holdings in us, like Mineral Fields, Middle Fields,
Sprott. As far as what percentage of our stock is owned by institutions,
I can't put a specific percentage on it since you never really know for
sure, maybe 15 to 20 percent.
Q: Are you optimistic for a continued recovery in the uranium price in
2009 and beyond?
Sedun: Yes, we're very optimistic of a uranium price recovery and
we think the fundamentals within the uranium business are tremendous. In
so many different businesses and commodities you see the pendulum
swinging in opposite directions. A year ago the markets were heavy and
went to an extreme within six months or less last fall. With the uranium price
it's the same it went too far up and has come too far down on this latest
contraction. We've seen the bottom in our view and we see more experts
project that price is the only thing that matters. The spot price is
irrelevant to us where we're at in terms of our fundamentals. Our view is
that the long-term uranium price has a lot of upside.
Q: What are the overall future prospects for Uracan?
Sedun: We have the ability to have year-round news flow, other
than Christmas, break up and freeze up, because the property in Quebec is
accessible year-round. Also, there are two more points to consider. We
financed this company in the midst of one of the darkest storms we've
seen in our careers last fall. Our last financing of late October/early
November was as dark a time in financial market as we've seen and yet we
were able to complete a financing. With a lot of the juniors the risk is
that they dry up and go away. The reason everyone plays the junior market
is because of the huge percentage gains they can sometimes give you and
we definitely have that potential. But we also have been able to
eliminate some of the associated risks [of being a junior] for our
shareholders. We've always been able to finance and we're confident we'll
be able to continue to do it. Secondly, at 40 million pounds the deposit
is still open in every direction. The grades of our deposits at the North
Shores [property] have made investors some fantastic money and we're
focusing on building out our resource going forward.
For more information please contact
Keith Schaefer
Vanguard Shareholder Solutions
Tel: 604 608 0824
Toll Free: 1 866 898 0824
www.uracan.ca
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