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Virginia Energy Resources Inc. - Virginia Completes Uranium Program and Acquires More Land

Published: 23:47 16 Sep 2009 BST

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Following the merger between Santoy Resources Ltd and Virginia Uranium Limited, the new entity Virginia Energy Resources Inc. (TSX.V: VAE) has lost no time in launching its development programme. The company has completed a 7-week, $800,000 exploration programme on its Otish Basin properties in north-central Québec, and has also signed an agreement to acquire the nearby Strategis property from Big Red Diamond Corporation.

With the acquisition of the Strategis property, Virginia now controls interests in ten claim blocks within and on the margins of the Proterozoic Otish basin. These properties are prospective for high-grade uranium deposits similar to the Matoush deposit of Strateco Resources Inc., the Seru L zone deposit of Abitex Resources Inc., the South Otish project of Cameco Corporation and the Mistassini property of Strateco Resources Inc / Majescor Resources Inc.

Those who are familiar with the Canadian uranium space will of course remember these deposits. The Otish Mountain Proterozoic Basin uranium district of central Québec contains uranium deposits similar to those in the prolific Athabasca Basin of Saskatchewan. The Matoush deposit for instance has a 43-101 compliant indicated mineral resources of 3.73 M pounds U3O8 grading 0.68% U3O8 and inferred mineral resources of 13.07 M pounds U3O8 grading 0.44% U3O8. Others operating in the Otish Mountain also have similar high grade deposits.

Virginia's 2009 work was focused on defining drill targets on four properties under option from Xemplar Energy Corporation. Work accomplished included the recovery and re-sampling of 115 metres of well-preserved core from 14 historical drill holes, stripping and channel sampling of several prospects, 90 line-km of detailed ground magnetic surveys over seven targets, 769 soil samples on nine grids and approximately 850 km of prospecting traverses including the collection of several hundred rock and water samples. Several promising prospects have been identified in the process and assay results are expected to be released soon.

As a part of its expansion endeavours, Virginia has signed an option agreement with Big Red Diamond Corporation (TSX.V: DIA) for the Strategis Property, comprising 5100 hectares of map designated claims in 97 cells, located between Virginia's wholly owned Otish West property and the Lorenz property under option from Xemplar. The property straddles the Otish Basin unconformity and is located directly west of the Lorenz Gully uranium prospect on the Lorenz property.

Under the terms of the agreement, Virginia can acquire a 100% interest in the Strategis property subject to a 2% Net Smelter Royalty interest in favour of Big Red and certain underlying vendors, of which 1.5% can be bought back at any time by payment of $1.5 million. To earn its interest, Virginia must pay $50,000 on signing and issue $180,000 in shares within four months after signing. Big Red agrees to finance an approved work programme of prospecting, soil sampling and ground geophysics on the property, which will commence immediately.

In July 2009 Virginia issued 600,000 post-consolidation shares as a part of its agreement with Xemplar. To complete the acquisition of a 60% interest in the properties, Virginia must expend $1.5 million on exploration prior to the second anniversary of the agreement (July, 2010). Approximately $1.3 million has been spent to date. Once that work commitment is met, Virginia has the choice of initiating a 60% Virginia-40% Xemplar joint venture in which Xemplar will be carried for the first $1 million in expenditures, or delivering 1.2 million post-consolidation shares to obtain a 100% interest in the property, subject to a 3% NSR, of which 1.5% can be purchased.

Virginia also stands to benefit from ongoing infrastructure development activities in the area. In its 2009 budget, the Government of Quebec has allocated $130 million for completion of an all-weather road extending north to the Otish Mountains. The Quebec Ministry of Transport is targeting early 2010 for the start of construction on this important road, which would pass within 5 kilometres of Virginia's Otish West and Beaver properties, providing excellent access for future exploration and development.

All is set to go at Virginia. The merger has brought an excellent prospect portfolio to the company’s fold and we are encouraged by its concerted development efforts. As world economies come out of recession, fundamentals for uranium are expected to improve, thus underpinning the investment case of companies such as Virginia.

About Virginia Energy Resources Inc.
Virginia Energy Resources Inc is focused on discovering and developing high-grade uranium deposits and on exploration for coal throughout North America. The company has a portfolio of uranium, coal and gold prospects in well known mining districts in Canada.

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