What do Chuck Fipke, Cameco (TSX:CCO), Denison (TSX:DML), Korea Electric Power and De Beers have in common? - all have seen value of CanAlaska Uranium Ltd’s (TSXV:CVV) work on its extensive portfolio of ground in northern Canada.
The latest arrival onto CanAlaska’s powerful roster of friends is De Beers, which has signed a C$20.4 mln deal relating to kimberlites and kimberlite exploration in the Athabasca Basin in Northern Saskatchewan.
But this is only the latest in a string of big name deals that look set to put CanAlaska in a position of real strength ahead of the next mining boom.
Earlier this year Cameco took a US$12.5 mln option on CanAlaska’s West McArthur uranium project, and Denison optioned the Moon South property, while deals on projects elsewhere in the Athabasca basin have been in place with Chuck Fipke’s Northern Uranium Corp (TSXV:UNO), for C$11.6 million and Korean partners Kores and Kepco for a few years now.
A Korean consortium first came into CanAlaska’s Cree East and contributed C$19 million during the latter part of the last mining boom.
All of which means that CanAlaska is likely to be heavy on newsflow for months, and even years, as work cranks up on all these various interests, all at little or no cost to CanAlaska and its shareholders.
CanAlaska chief Peter Dasler makes no bones about the strengths and weaknesses of this strategy.
The market, he emphasises, has not been in a good way for some years. And particularly not for uranium, since the Fukushima accident happened in 2011.
“It’s probably best at the moment not to dilute our shareholders and spend more money ourselves , but to get other people to come in and do it for us while the market sorts itself out,” he says.
CanAlaska hasn’t issued equity in the last four years since Fukushima, so these are not just idle boasts.
Nor has it been sitting still either. There’s been steady development of projects powered by joint venture partners, and the Northern Uranium project in particular has delivered some good results.
And then there’s the diamonds.
Since uranium hasn’t exactly been flavour of the month, and since the latest techniques for peering electronically through hundreds of metres of overburden can allow for the assessment for diamond as well as for uranium potential, and since Canada is already established as a diamond producer of note, it made sense to take the potential of kimberlite’s on CanAlaska’s ground very seriously.
It’s also worth noting that CanAlaska’s main geological brain, Karl Schimann, the man who drilled the first hole into Cigar Lake back in 1981, has also got diamond mining experience.
All those factors came together in the deal with De Beers which covers 75 potential targets identified over recent years on what has hitherto been relatively underexplored ground.
What will it all amount to?
No-one knows at this point, but one thing Peter Dasler is clear on is that success in diamond exploration is unlikely to shift the overall focus of the company away from uranium.
The likelihood is that if the diamonds do come good, a new vehicle would be created in a manner that would be beneficial to CanAlaska shareholders, and which would possibly contain some of CanAlaska’s other diamond properties at Pikoo, south-east of the Athabasca Basin.
But while all that’s playing out, work on the uranium will be progressing apace.
In particular, the interest will focus on Cameco’s activities at West McArthur, because West McArthur is adjacent to Cameco’s Fox Lake high grade discovery, which is already known to contain 387,000 tonnes of U3O8 grading 7.99%.
Cameco’s plan is to track west along the Fox Lake conductor and onto the West McArthur ground, as well to look at other high priority targets identified by CanAlaska.
The thinking on the CanAlaska side is that following the recent success of Fission (TSX:FCU) and NexGen (TSXV:NXE) at Patterson Lake, the market is a bit more alive to what a high grade discovery really means, and to what it can do to valuations.
Having Cameco pay for the work helps mitigate the downside, while at the end of the process CanAlaska could still have 40% of a very significant find.
“We’ve got a large project,” says Dasler, “with a large area of alteration. We expect that we will be able to outline a target that we can take to the market. We like its location. It’s just 15 kilometres away from the McArthur River mine.”
The address is good, no doubt about it. It remains to be seen what the drill bit will show. But the market is now waking up, and when it gets around to taking a good look at CanAlaska proper, it’s likely to like what it sees.
“CanAlaska is a uranium company with a sparkle,” says Dasler. It may soon be shining even more brightly.