Cauldron Energy (ASX:CXU) has upgraded the Bennet Well uranium resource in Western Australia by 16% to 21.5 million pounds of contained uranium oxide.
Further highlighting the value of the project, the Indicated Resource has increased by 90% to 11.9 million pounds of contained uranium oxide.
Equally important for Cauldron, the new exploration model based on Bennet Well success allows new geological intellectual property (IP) to be leveraged into Cauldron’s extensive Yanrey landholding.
Re-interpretation of the mineralisation setting at Bennet Well and identification of a high grade area that will be targeted for field leach trials in the first half of 2016.
Cauldron intends to commence a drilling program in the September 2015 quarter to test mineralisation along the strike extension of Bennet Well and in recently interpreted zones
De-risking this activity, the Western Australian Department of Mines and Petroleum has awarded the company a grant of up to $150,000 for drilling under the Exploration Incentive Scheme.
Earlier this month, the company received $2 million in placement funds from director and major long term Chinese shareholder Derong Qiu.
Simon Youds, manager of operations, said:
“We welcome the improvement in the Mineral Resource at Bennet Well.
“The company stands to significantly increase the value of Bennet Well for shareholders and for potential investors with this increase in mineral inventory.
“Most importantly for Cauldron, the company is now poised to take this IP and deliver on the potential that the company’s large landholding in the Yanrey region has promised.
“Other companies in the industry have appeared to recognise this potential, judging by the recent increase in corporate merger and project acquisition activity in the region.”
Resource Upgrade
The Resource upgrade by Ravensgate Mining Industry Consultants to 36.1 million tonnes at 270ppm U3O8 using a cut-off of 150ppm follows the December 2014 drilling program.
This is an increase in the total uranium content of the deposit as a consequence of a significant improvement in geological confidence level.
The improved geological confidence has also allowed for an increase in the proportion of mineralised material reporting to the Indicated Resource classification level.
In addition to upgrading the Resource of Bennet Well, Cauldron has completed a comprehensive review of exploration data of the Yanrey Project and derived a systems style exploration model.
This model aims to significantly improve drill targeting of new zones of mineralisation.
The key intellectual property (IP) developed from Bennet Well and the Yanrey Project improves both the potential for exploration success and the cost efficiency of further uranium exploration.
Cauldron is set to resume its drilling program at Bennet Well in late July or early August.
The drilling has been designed to test mineralisation along the strike extension of Bennet Well and also in potential new zones of mineralisation predicted by the exploration model, which has the potential to significantly increase the resource.
Subject to the results of this drilling, a further update to the Resource is anticipated.
Analysis
With a 16% increase in resources to 21.5 million pounds of U3O8 and a 90% increase in the Indicated Resource to 11.9 million pounds of U3O8, Bennet Well is a clear value driver for Cauldron Energy.
More interesting in the long run is the strong IP represented by the new exploration model based on its success at Bennet Well.
This has the potential to be a real value multiplier, allowing the company to unlock its extensive landholding in the Yanrey region.
Successfully application of this IP could substantially increase the company’s uranium resources and improve the attractiveness of its acreage.
Interest in the region is also building and projects that are closer to realisation with improving confidence are certainly more attractive to end users.
Power utilities in particular have to ensure supply in an uncertain market.
While demand is increasing, there is very little new supply in the medium term capable of being initiated due to low commodity prices combined with the very long lag between exploration and production for uranium projects (>10yrs) due to social perception & approval processes.
The company is also active in Argentina where the changing political mood is expected to generate positive news flow.
Cauldron is well funded for its projects next year, with drilling and other activity to provide news flow into 2016.
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