As David Sadowski mentioned in a recent interview with Uranium
Investing News (UIN), uranium producers with good long-term
contracts are arguably more sheltered from falling uranium prices
than companies at the development stage.
That means with uranium spot prices adrift at around $28.25 per
pound of U3O8, the unfortunate truth is that juniors and
development-stage companies are struggling. “I think it’s a pretty
difficult time for many of these juniors,” Sadowski told UIN,
adding that earlier this year investors were keener on uranium
juniors than they are today.
Although investment interest in juniors is on the wane, Sadowski
did point out that “a certain number of investors continue to see
the long-term value in some of these smaller-cap stories.” However,
it will be some time before junior uranium companies become the
talk of the town again.
For junior uranium companies, that isn’t a welcome reality. “As
a junior it’s tough because you’ve got to keep your lights on
somehow, and you have to add value for your shareholders because if
not, they are not going be there the next time you need to issue
equity and have to raise capital,” Sadowski explained.
But just because it’s tough for juniors right now doesn’t mean
there is no value to be had.
“There are definitely high-quality juniors out there,” Sadowski
said, adding that he doesn’t “think they are going to have much of
a problem keeping their projects going.” That said, he does
“anticipate tough times ahead for some of these other stories where
you can’t say the same.”
Who has a good story?
If there is one place to be in today’s weak market, it’s the
Athabasca Basin, where grades are high. Unsurprisingly, within that
area of Saskatchewan Sadowski has two top picks.
One is Fission Uranium (TSXV:
“I still see a lot of upside on stories like Fission Uranium,” he
told UIN. “I think that one is going to continue to be one of the
premier uranium juniors because of the high grades, the depth, the
location and the management team. I think that’s one company that
will withstand even a protracted period of weak spot prices and
will continue to add value with drilling.”
Beyond Fission, Sadowski’s other favorite Athabasca Basin junior
is a little further down the development pipeline: Denison Mines
When asked what it is about Denison that’s caught his attention,
Sadowski said the company is “dominant junior holder of strategic
ground and assets on the east side of the Athabasca Basin.” In
addition, Sadowski views Denison as “very well run with a very high
potential for a world-class discovery.”
Beyond the basin
Though junior companies located outside the Athabasca Basin
didn’t make Sadowski’s list, he did take some time to talk to UIN
about what’s been happening northeast of the Athabasca Basin and
Explaining the allure of land in that area, Sadowski touched on
the region’s geology. “It is theorized that the Athabasca Basin
[used to be] a lot bigger,” he said, adding that millions of years
ago, the basin extended from “beyond Patterson Lake South, in the
southwest, to the Genesis claims held by
Kivalliq Energy (TSXV:
in northeastern Saskatchewan, through the
Northern Uranium (TSXV:
project in Manitoba, and all the way to Nunavut.”
With many of the key ingredients found in the Athabasca Basin
present in the surrounding regions, Sadowski believes that it is
“highly prospective for high-grade uranium.”
Interestingly, one of the main differences between the two areas
is that companies exploring for uranium in the outskirts of the
basin aren’t going to find the same sandstone-hosted uranium as is
in the Athabasca Basin proper. However, according to Sadowski,
that’s perfectly fine. He said that “the high-grade uranium is
there, but it’s in the basement rocks, because the sandstone
isn’t there anymore – it`s been eroded away.” Instead, companies
exploring in the area are finding signs of uranium right at
That means while companies are unlikely to find a
sandstone-hosted uranium deposit like Cameco’s (TSX:
Cigar Lake or McArthur River, companies could potentially find
“half-expression, basement-hosted uranium targets close to
On that note, Sadowski said historic work on Kivalliq’s Genesis
property shows “very strong indicators” and “high-grade grab
samples.” Remaining on trend and flowing into Manitoba, exploration
work has found “high-grade pitch blend veinlets in outcrop.” That,
of course, means there is not just a small piece of rock that has
found its way to the surface, but rather a part of the rock that’s
still attached to the underlying basement.
Although there hasn’t been very much work done in the region,
the area northeast of the Athabasca Basin has undergone what
Sadowski deems the second staking rush after Patterson Lake South.
He expects that over the next 12 to 18 months the market will gain
a much clearer picture of the region.
Securities Disclosure: I, Vivien Diniz, hold no investment
interest in any of the companies mentioned.
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