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Uranium Exploration Success May Be Connected to Ancient Meteor
ESO Uranium to Angle Drill near a Promising 1970's Hole
"I look at about 100 different projects a year, most of which go into the round filing cabinet on my floor," said Tony Harvey, the senior technical advisor to ESO Uranium (TSX: ESO), and formerly a senior manager of Wright Engineers-Fluor Daniels, which was involved with the design and construction of 14 mines worldwide. Harvey quickly ticked off what is necessary to attract his eye, "I need to see history. I need to see signposts before I give it any credence." So why is he advising little-known ESO Uranium, after a long, prolific career? Harvey helped found Amex-listed Azco Mining, and more recently was a director of Mexican mining firm, Cobre del Mayo, which sold two of its last three mines, which he helped discover, to Phelps Dodge (NYSE: PD).
"I believe this one has a huge amount of history," Harvey argued. "Not only have you got the Cluff Lake mine, which already confirms the presence of uranium, but you have got the Shea Creek drilling intercepts which validate it. We have the conductors streaming onto our property. We have the boulders, which is also another sign post." The boulders, of which Tony Harvey refers, are the six uranium-mineralized boulders near the ESO Uranium project on the company's Cluff property. Near those boulders, a promising drill hole from the 1970s indicated 0.85% U3O8 over 2.3 meters. It was all but forgotten until the recent explosion of exploration activity in Saskatchewan's Athabasca Basin, an area which has helped Cameco (NYSE: CCJ) grow into a company with a market capitalization of nearly $12 billion.
What ESO Uranium's geological team will be looking for at the company's Cluff property are Cluff Lake style uranium deposits in basement rocks with the Carswell structure close to the unconformity with sandstones of the Athabasca group.
Drilling in the Meteor's Wake
"The value of the ore extracted at the Cluff mine, in today's terms, would be equivalent to $2.6 billion," explained Harvey. "That's how much was extracted at the Cluff mine." The company's vice president of exploration, Benjamin Ainsworth, who is both a senior geologist and a mining engineer, helped explain the Cluff structure. "A meteorite probably impacted at this location and with sufficient force to break right through the layers of Athabasca sandstone on the surface. On rebound, basement rocks got lifted back up. In bouncing back out, it also lifted up the surrounding Athabasca rocks and tipped them up, if you can imagine, like an opening flower." As a result, the basement got lifted up to the surface and made it easier to find and mine the uranium at Cluff. Ainsworth added, "The significance of that for me and our group is that shows very high grade uranium deposits in the western side of Athabasca."
Drilling a property helps the geological team better understand the area. Since the Cluff property was mined out, two decades ago, additional scientific study has opened up new doors. At the 67th Annual Meteoritical Society Meeting, University of Quebec Earth Science professors presented a paper entitled, "A Re-Evaluation of the Size of the Carswell Astrobleme." The Montreal scientists concluded in the 2004 annual conference held in Brazil, "The Carswell impact structure is therefore older and larger than previously estimated... the central uplift considered to be under the annular dolomitic unit would suggest a crater size in the basement of 118 to 125 kilometers wide." While some believe the meteor hit about 478 million years ago, recent evidence suggests it may have been closer to 1.8 billion years ago.
Angle Drilling This Time
ESO Uranium plans a six-hole drill program to learn more about their Cluff property. The first hole hopes to confirm what was found earlier, "We're going to drill right up against the CAR-425 hole drilled originally in the 1970s, which indicated uranium of about 0.85 percent U3O8 over 2.3 meters." They will drill adjacent to the uranium-mineralized boulders. Ainsworth explained how the company's strategy is different from previous drilling, "We're drilling angle holes to give us a better opportunity to find more of the structures that can be carrying mineralization in that sort of system." In the 1970s, holes were vertically drilled. Harvey added, "We're going to be stepping out to the southeast, which bring us then closer to the original Cluff mine." The company plans 150 to 200-meter holes. Ainsworth noted, "The CAR-425 drill hole, which we're coming up close to, is 146.5 meters deep."
Robert Beckett, ESO Uranium's exploration manager, agrees about the 55 degree angle holes the company will be drilling at the Cluff property, "They were drilling vertical holes, and we'd like to go back and check it with an angle hole on the theory, which we interpret as some kind of subvertical system." Beckett talked about additional drilling to the south, after the property had been explored, revealed "the structure extends from the edge of the basin all the way through Shea Creek." He added, "We believe it extends onto our property to the north at 11 o'clock, just to the north. We see the extension of those conductors coming up through Shea Creek - conductors and by extension, structures, extending up onto our property. And the structures are the key thing - the destruction of the upper fold and the unconformity in the bedrock, it gives you the right kind of conditions for the deposition of uranium." Before Beckett joined ESO Uranium, he had been district geologist for Esso Minerals and for the Saskatchewan Mining Development Corporation, which later merged with El Dorado Nuclear to become Cameco Corp. He was the exploration manager at Midwest Lake and the project manager of the Port Radium mine.
The Hook Property
Another property in the ESO Uranium portfolio, which requires additional preparatory geological work and exploratory drilling, is called the Hook property. It's about ten miles south of the Shea Creek deposit and covers approximately 130,000 acres. The western one-third of the property has been minimally explored. ESO Uranium CEO Jonathan George said about it, "The Hook is one of the areas I'm particularly excited about, now that we've received the airborne geophysical survey, is because the conductors have shown up very strongly, coupled with dravite, which is an alteration clay, a key indicator to uranium deposits." Mr. George believes his company may have a new targeted area. "Cameco is drilling right on the doorstep on another project they have," he added. Cameco, he pointed out, is drilling just to the south and east of ESO's southern rim, below the company's border.
Ainsworth was also optimistic, saying, "That's part of the reason why that ground was selected earlier - Cameco had that position, and I could see, in the available information that there were structures and good probabilities of other types of systems being available." George said, "We're going to be drilling because we see an intense alteration on surface, of which that source has never been found. The alteration coupled with the structure leads us to believe we've got a great shot down there."
"I think we're much closer to having a hit at Cluff immediately," Ainsworth insisted. "It is probably a good thing to get some news on the table very early on." He did warn that there is a lot of risk in drilling for uranium deposits. "The geometry of these things is damn small." George pointed out that the world's richest uranium deposit, McArthur River, hosting about 400 million pounds of uranium, had half of its deposit in an area about half the size of a football field. "I think that's mind boggling," he said, "that a $7 billion project would be on an area that small."
Conclusion
Drilling is imminent on the Cluff property, depending upon ice thickness in Saskatchewan. News should be available fairly quickly. Ainsworth warns, "The individual deposits at Cluff are actually quite small." While quite a bit of work has been done in the Cluff area, many have recognized it's very easy to miss. But Ainsworth cheerfully exudes, "The key thing here is that the grade is so high that pursuing it further makes it worthwhile."
Another key to ESO Uranium is the strength of their exploration team. Technical adviser Tony Harvey has numerous credits to his long career. Robert Beckett has spent decades exploring in Saskatchewan and for the precursor company to Cameco, he was the in charge of the northern half of the Athabasca Basin. Benjamin Ainsworth held numerous senior positions with Placer since 1965, having once served as president of Placer Chile.
According to ESO's Corporate Communications Manager, Tom Corcoran, "We currently raised about C$4.7 million, which has been earmarked for exploration on and in the ground. If we don't spend it on drilling or exploration work, we have to give the money back." ESO Uranium planned to start drilling in early February, having had to slightly delay the start of drilling, according to Robert Beckett, until the weather got colder. Drilling is imminent, and results should appear fairly quickly. Ainsworth offered an insight about how soon we will know about drilling results, "One thing about uranium, unlike drilling for gold and other metals, you get a radioactive signal on a drill core as you're logging it. So you get a pretty good idea if you've got something there or not. You're not going to get a very precise assay at that point, but at least you can focus very quickly. You can see these uranium minerals with a naked eye."
We'll be looking forward to seeing those drill results shortly.
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