New drilling at Cauldron Energy’s (ASX:CXU) Bennet Well uranium project in Western Australia has exceeded the maximum target exploration range with exceptional results in thickness and grade.
Rotary drillholes from a target area known as Bennet Well Channel returned 4.15 metres at 529 parts per million uranium oxide from 88.9 metres, 3.05 metres at 397 ppm U3O8 from 72.4 metres and 1.9 metres at 480 ppm U3O8 from 70.1 metres.
The delivery of extensions to strike length and grade increased the exploration target at Bennet Well Channel five-fold to a range of between 1.6 million tonnes and 8.6 million tonnes mass of mineralisation at 470 ppm U3O8 for a contained uranium oxide content of between 1.6 and 8.9 million pounds.
Bound by an area approximately 3.2 kilometres (increased from 2.7 kilometres) in strike length and 510 metres in width, this target area is coincident with a high conductive response on the regional airborne electromagnetic (EM) survey data.
It is also situated at the southernmost extent of a close-spaced ground gravity geophysical survey that was completed in 2009.
Further successful drilling at Bennet Well Channel is believed likely to increase the overall Bennet Well resource, which currently stands at 36.1 million tonnes at 270 ppm U3O3 for a total contained oxide content of 21.5 million pounds of U3O3 at a 150 ppm cut-off grade.
The exploration target for the entire Bennet Well extended area is 19 to 54 million tonnes of mineralisation at a grade of 300 to 420 ppm U3O3 containing 18 to 53 million pounds of U3O3.
Mineralisation at Bennet Well is part of the Yanrey project, which comprises a collection of twelve exploration tenements in northwestern Western Australia.
Known deposits in the Yanrey region include Paladin Energy’s (ASX:PDN) Manyingee and Carley Bore properties, which contain 25.8 million pounds and 15.6 million pounds of uranium, respectively.
The area is prospective of sandstone-style uranium mineralisation capable of extraction by in-situ recovery (ISR) mining technique.
A recent review by Cauldron has developed a systems style exploration model that has allowed for a selection of areas for further airborne EM data acquisition.
These will be used to identify target areas capable of hosting uranium mineralisation that require further follow-up exploration.
Investor support
Earlier this year, Cauldron received $2 million in placement funds for Bennet Well from director and major long term Chinese shareholder Derong Qiu.
This underlines shareholder confidence in the company as demand for nuclear power increases in China. China’s electricity demand is growing at an average annual rate of 10%.
Cauldron has also received a $0.8 million tax rebate under the federal government’s Research and Development Tax Incentive Scheme.
The company held A$1.2 million in cash at the end of the June quarter.
Analysis
The latest drilling represents potential for a significant increase in value at Bennet Well, including a possible exponential growth curve for metal content at the deposit.
A near-100% success rate in drilling targeting helps underline understanding of Bennet Well mineralisation and reinforces confidence in Cauldron’s ability to leverage its in-house technical skillset to increase uranium endowment.
Bennet well is on a pathway to establish a producing operation by 2020 using the ISR uranium extraction technique, which is roundly considered the most economic and efficient means of uranium production.
Bennet Well is predicted to operate at a production price of US$13 per pound of uranium, which would make it economic at the current uranium price range around $40 per pound.
Western Australia is emerging as Australia’s next major uranium province, with Cameco (TSX:CCO) recently receiving an environmental clearance for its Kintyre development and Toro Energy’s (ASX:TOE) Wiluna project already approved to be the state’s first uranium mine.
Cauldron controls more than 6,000 square kilometres of uranium-prospective tenements across Western Australia and South Australia (Australia’s leading uranium state) as well as large projects with defined uranium mineralisation in Argentina.
This allows for diversification, both geologically and with regards to differing political sentiment and policy towards uranium exploration and mining within each region.
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