North River Resources (LON:NRRP) revealed that a drill programme has now begun on the Uis uranium venture in Namibia.
The 2,000 metre programme will test two uranium targets that were identified via horizontal loop electromagnetic (HLEM) surveys conducted last year.
Uis is being explored by Brandberg Energy, a 50:50 venture between North River and Extract Resources (ASX:EXT, TSE:EXT) - an Australian explorer / mine developer with a proven track record in Namibia.
North River acquired its stake in Brandberg last month through a US$800,000 deal with Extract.
"I am delighted to announce the commencement of drilling, following receipt of highly encouraging HLEM results last year,” said managing director David Steinepreis.
“The HLEM surveys identified two significant targets for follow up work, one, the Orawab target, which is interpreted as a palaeochannel at least 14 kilometres long, between 100-1,000 metres wide and up to 50 metres deep.
“The second, the Ringo target, is interpreted to be a 7 kilometres long palaeochannel, 50-500 metres wide and 30 metres deep.
“This 2,000 metre drill programme should provide us with further insight into the resource potential of these nuclear fuel properties which are located in a highly prospective uranium district."
Extract is currently developing the world-class Husab uranium mine in Namibia.
The mine, located south of Rio Tinto’s Rossing mine, is expected to become one of the world’s largest uranium mines, producing 15 million pounds of uranium a year.
Fairfax Securities analyst John Meyer today points out that uranium in palaeochannels is similar to the style of uranium rich mineralisation that Extract found at Husab's Rossing-South deposit, and is present at Rio's Rossing mine.
"These structures host potential for uranium concentration in an area which is thought to offer potential for uranium concentration within this type of structure," Meyer said in a note to clients.
"Investors should note that uranium exploration is a high risk business which offers substantial reward if a company is lucky enough to drill into economic grades of uranium mineralisation."
He adds: "The Fukushima disaster changed the supply / demand balance outlook for nuclear fuels.
"The effect is to delay the impact of new demand within the uranium market. New reactors are still expected to require new uranium supply from new mines ensuring ongoing interest in the acquisition of production from new discoveries."
Last year Kalahari Minerals was acquired by a state-backed Chinese firm, called CGNPC-URC, in a deal worth £630 million. Kalahari was an indirect stakeholder in the Husab project as it owned a 42.5 per cent stake in Extract.
Kalahari also owned a 38.03 per cent stake in North River following an asset swap in late 2009.