Short guide to uranium deposits - part 2 (Athabasca basin)

In this article we will focus on dimensions and grade of uranium deposits in the Athabasca basin and how this translates to resources and value of deposit. This short guided is aimed at investors with limited geology background. Warning: geologists may find it overly simplistic!

If you missed part 1, which focused on how uranium deposits form. You can access it here.

What you will learn in this guide?

• How big are uranium deposits in the Athabasca basin?

• What are the properties of small deposit (Tier 2-3*) and large deposit (Tier 1*)?

• How to estimate the size of deposit from drilling press releases?
  

How Athabasca uranium deposits compare with rest of the world?

Uranium deposits in the Athabasca basin have much smaller dimensions than deposits elsewhere in the world. They are still some of the world's best uranium deposits due to the high grades of uranium.

Let’s compare Nexgen’s Arrow deposit in Athabasca, which is a number one undeveloped uranium discovery in the world, with Paladin’s Langer Heinrich deposit in Namibia. Arrow deposit looks tiny next to Langer Heinrich (Fig 1.)! So how much pounds of uranium do these deposit hold? I guess you are thinking Langer Heinrich is much larger. Surprise, surprise! Arrow M&I resources are almost 5x larger than the Langer Heinrich and stand at 256 Mlb vs 65 Mlb for the latter. Arrow deposit average grade is so much higher that it makes up the difference in the tonnage. Average grade of Arrow is 2.1% U3O8 vs 0.06% for Langer Heinrich.

Fig.1 Langer Heinrich (Namibia) deposit with Arrow (Athabasca) deposit to scale. M&I resources in black.

How to differentiate between small vs large uranium discovery in the Athabasca basin?

When investing in uranium explorers, it is critical to have an idea of what significant uranium discovery may look like. Let’s compare two discoveries that have been appraised and represent Low (Tier 2-3) and High (Tier 1) side of what we can expect in terms of uranium deposits in the Athabasca basin. This will give you an idea of what to look for when interpreting drilling results and where you are on the scale in terms of size and grade of discovery. Horseshoe deposit will be our low case and Arrow deposit our high case.

Dimensions of deposits

Look at Arrow and Horseshoe (Fig.2,3) deposits below. Figure 2 shows that they are very similar in terms of dimensions in the plan view (looking from the top). When we look at vertical profile (slice through deposit) on figure 3, Arrow's footprint is approximately twice the size of Horseshoe. Total ore volume reported in Arrow deposit is 8.1 mt vs Horseshoe 5 mt. These ore volumes were calculated using advanced technical softwares, but we can see that the back of the envelope can help you as an investor to get an idea of the deposit size! 5mt x2 takes us to 10 mt, which is within 20% error.

So why does Arrow’s have 16x more uranium in the ground than Horseshoe?

Fig.2 Simplified plan view of Arrow and Horseshoe deposits. Note: black areas are measured & indicated resources, grey inferred resources.

Fig.3 Simplified vertical profile view of Arrow and Horseshoe deposits. Note: black areas are measured & indicated resources, grey inferred resources.

Ore grade

Let’s have a look at the Horseshoe deposit first. Detailed vertical profile (Fig.4) shows series of isolated lenses, rich in U3O8 with grades below 0.5% (red colours). The average grade is reported to be 0.26%. There are no high grade zones and deposit is relatively homogenous in grade.

Fig.4 Vertical profile through Horseshoe deposit from 2009 NI43-101 report by UEX Corp.

Moving to the Arrow deposit. Fig.5 shows again plan view of Arrow deposit. Note that the light grey envelope represents inferred resources, which are open in all directions, the average grade of this zone is 0.83%. The black area represents measured & indicated resources, which will be developed in the first phase of the project (Fig. 6). This area has an average grade of 2.1% U3O8. To the right, 3D vertical profile is shown crossing one of the high grade zones in the Arrow deposit. You can see that there is a significant number of intervals above 5% U3O8. Hole AR-16-78c4 has returned 37.5 m at 17.60% U3O8 including 5.5 m at 60.14% U3O8 and 1.5 m at 71.93% U3O8. While, hole AR-16-76c4 returned 68.0 m at 2.09% U3O8 including 14.5 m at 5.08% U3O8 and an additional section of 32.0 m at 1.97% U3O8 including 10.0 m at 5.15% U3O8. These thick high grade zones make Arrow a highly valuable deposit.

Fig. 5 High grade zones in the Arrow deposit.

Fig. 6 Profile view through the Arrow deposit showing that M&I resource (black) will be developed first. This is the zone with the highest grade.

*) For definition of Tier 1,2,3 please see guide from MINEX.