Transcript: 92 Energy (92E) - Uranium Discovery on 4th Drill Hole
92 Energy is an ASX Listed exploration company exploring for high grade unconformity related uranium in the Athabasca Basin, an area that has some of the largest and highest grade uranium deposits in the world, including the Cigar Lake and McArthur River mines.
92 Energy has five uranium project areas in the the Athabasca Basin region - Gemini, Tower, Clover, Powerline and Cypress River.
00:00 – Company Overview
00:34 – Background, Business Plan, Studies, Historical Data, Exploration
06:32 – Raising Money, Drilling Zones, Seasonality Component, Journey as CEO
11:13 – Iso Energy Deal, Timing, Financial Overlay, Beating Competition, Replication
17:28 – Playing the Market, Drilling Component, Interest of North American Investors
21:47 – Excitement Moving Forwards & Concentrating on Winter Drilling Campaign
22:52 – Outro
Siobhan Lancaster: Hi, my name's Siobhan Lancaster. I'm the CEO and Managing Director of 92 Energy. 92 Energy is a uranium exploration company. We recently listed on the ASX in April of 2021 and we're exploring for high-grade unconformity-related uranium in the Athabasca Basin of Canada.
Matthew Gordon: Siobhan, it's good to have you on the show. We've being trying to get you on for a while now. I’m intrigued; Aussie company in the Athabasca Basin - always interesting. Let's start with you though, what's your background?
Siobhan Lancaster: Sure, I was actually around during the last uranium cycle. I worked for Extract Resources. Extract, you might remember, had the Husab uranium deposit, which was the third-largest uranium-only discovery in the world at the time. I was the company secretary for corporate affairs for the company. I was with them from just after they made the discovery, all the way through to the sale process. I was heavily involved in that process with CGNCP, and prior to that I was a corporate lawyer.
Matthew Gordon: Okay. We forgive you. Tell us about the rest of the team; who's active?
Siobhan Lancaster: We've obviously got Steve Blower, who's ex-IsoEnergy. He's on the board. He's absolutely fantastic and has had his hand in many, many different discoveries in the Basin. Kanan has just joined us. Kanan Sariogliu, who was working with Fission and part of that discovery team, so he's very familiar with base-hosted uranium discoveries. Those are the 2 technical guys that we've got and, of course, we're building that team up, that technical team in Canada at the moment. Then there's myself obviously, and we've got a great board who are very supportive, with Richard Pearce, who was previously around the traps in the last uranium boom. Matt Gauco, who assisted in putting this company together, and Olliver Kreuzer, who assisted by putting together a prospectivity study over the Athabasca Basin, which is really why we're here today talking.
Matthew Gordon: That's great. I just wanted to understand, because working in the Athabasca has its own peculiarities. You have quite a few people who obviously worked in the Athabasca Basin - that helps.
Talk to me about the business plan. You picked this up from IsoEnergy, another Aussie, Craig, is well known to us and I think Matt's the kind of conduit between you two, that's how you picked it up originally. Can you tell us what you set out to try to do? What's the business plan?
Siobhan Lancaster: There hadn't been an ASX exploration uranium listing in 10 years, so I was approached at about this time last year actually, and told, potentially, you're able to pick up these assets in the Athabasca Basin. Obviously, the Athabasca Basin has tremendous appeal for any uranium buff out there because it really is a tier 1 jurisdiction. That got me straight off the bat. I then started looking into IsoEnergy and NexGen, who, of course, had the Arrow discovery. And being in love with the previous discovery that I worked for, which was the Husab discovery, I thought: oh my God! The Arrow discovery. This beats Husab hands down. Partly I came along to put together a company that was exploring purely in the Athabasca Basin and to really get that uplift in the uranium price as well on the way through.
Our aim and our goal is to explore for basement-hosted uranium deposits. Near surface is what we're looking for. And of course, we've had that recent success with the Gemini mineralized zone, which we discovered on our fourth hole ever. So that was a pure green field exploration play.
Matthew Gordon: When I first saw this come out, I thought: oh boy, here we go. We're going to repeat what happened in the last cycle: we go from 50 companies to 500 companies. Most of which were name changes and not serious about uranium, they were just taking advantage of a situation. You have put a serious team together and you've also made a discovery, and you made it quite quickly. Was that from data that you inherited from Iso as part of that deal? How did you identify the target? How did you get lucky?
Siobhan Lancaster: We started with a prospectivity study over the Athabasca Basin, was a very technically-driven prospectivity study, and that alerted us to certain areas in the Basin that we were interested in. The Gemini Project was one of those particular areas. We liked the project so much that we pegged a whole lot of additional ground around the original asset that we picked up from Iso. That was the first thing. Then we had, obviously, historical data on the area. There had been previous historical drilling and some previous exploration, but there really hadn't been anything done since the 1970s. We saw this as a big opportunity; there were several uranium showings around, 12 km south of the Gemini mineralized zone there were radioactive boulders. There was also bog sediment sampling and lake sediment samplings between 0 and 660 PPM. For a uranium buff from Namibia, those grades seemed extraordinary to me and something that needed follow-up.
Key Lake is a mine that was originally discovered up ice from radioactive boulders and took a very similar exploration approach here. We flew a VTEM over the Gemini Project, that was really the first thing that we did as a team. 2 weeks later, we were using those results and out there drilling
Matthew Gordon: Nice. What can we expect to see from you? You raised some money a few months ago: just over AUD$7M. Your share price has popped up a bit. You're going to be able to raise cheaper money going forward, but you can only work at a certain speed when you're starting off, or can you? Now that you've made a discovery, will that give you extra impetus? Will we see more money being raised? Will you increase the drill program accordingly?
Siobhan Lancaster: Yes, that's a great question. We actually recently raised another AUD$7M, so we've got over AUD$10M in the bank, which is an extraordinary amount of money for a uranium exploration play. We will be utilizing that money and aggressively drilling the GMZ zone. We've got an initial plan of 6,600m, but we will expand that program if winter is longer and the drill results are showing up to be very good. We've got some excellent plans with the drill rig, we've got 1 drill that's going to be exclusively on the GMZ zone. Then we've got the second drill rig, which is going to be drilling near some old historical drill holes, which actually encountered alteration based on air photo liniments, way back in the day. They've just very slightly missed a conductor. 1 of those results even has low levels of uranium mineralization, so we'll be following up on that. That's on the original IsoEnergy claim, and part of our IsoEnergy heads of agreement is to drill or spend AUD$1M on exploration, so that will fulfil that head of agreement provision.
Next, we're also going to be drilling the Gemini extension zone, which we are extremely excited about. That is 1.8km along strike to the north, there is a conductor running north and low magnetics. So to us, those low magnetics can be interpreted as alteration in the ground. We're hoping to test that theory and hopefully Gemini will prove to be an extremely good area. Who knows; this could be the next Arrow or Triple R?
Matthew Gordon: It could be. I just want to talk about something you just said there, you are going to have to get used to the seasonality component here. You're an Aussie, you've got African experience. The Athabasca is slightly different. I know you have the guys in there who've worked it, but the buck stops with you. Therefore, you're going to have to get used to new data inputs, certainly in connection with the seasonality component: when you can drill, the cost of drilling up there and the nature of the drilling up there. It is a slightly new world for you as a CEOs, operating in Canada?
Siobhan Lancaster: Of course, it's a new world. This is why you hire fantastic people around you. You couldn't get better people than Steve Blower and Kanan. Kanan spent the last 8 years drilling the triple R deposit. He's extremely familiar with all of the suppliers in the Athabasca Basin. In fact, we've just hired what everyone considers to be the number 1 drilling team in the Athabasca Basin, Bryson Drillers. They're going to be coming out on site. In fact, they did a site visit with us recently when I was over in Canada. We've got an excellent team, excellent suppliers and we've got a pretty tight budget which we will manage pretty closely.
Matthew Gordon: Is this the first time you've been a CEO of a public company? I know you've had the role as company secretary, but CEO for the first time?
Siobhan Lancaster: It is my first time as CEO of a public company, yes. Not first time CEO.
Matthew Gordon: Public and private have 2 very different sets of needs, so how are you finding that? Who are you getting advice from on that front? I guess you were the person maybe issuing and proffering advice to other CEOs, but it's a slightly different seat you're sitting in now. How are you finding it.
Siobhan Lancaster: It's fantastic. I absolutely love it. I love exploration, I love the uranium market. I love what we're doing. It's a fantastic journey, and I'm really enjoying it. Honestly, who gets a discovery 4th hole in? It's just an absolutely fantastic result for the company. When we have great technical results like that, it makes it much easier.
Matthew Gordon: It does. Not many people make discoveries, let alone early on. So congratulations on that one. With regards to the ISO component, obviously, you picked it up from them. Tell me more about that deal structure. What do they own as a result? How much do you owe them? How does that play out?
Siobhan Lancaster: IsoEnergy received 16% of the company when we listed during the IPO. They're currently a 14% shareholder in the company. Our obligation was to spend AUD$1M over the IsoEnergy areas. We've almost fulfilled those commitments already and that's pretty much it. There is a 2% NSR, which is a royalty attached to the IsoEnergy areas. But that is not on the discovery area.
Matthew Gordon: Who has got that?
Siobhan Lancaster: That's IsoEnergy.
Matthew Gordon: They've kept the NSR on the property, but as you say, it's not included in the discovery area?
Siobhan Lancaster: The discovery area is actually an area that we pegged after the IsoEnergy Group agreement.
Matthew Gordon: Wow, that's quite nice. Double lucky. Well done. The timing couldn't be better for you in terms of when you're entering this space, with the interest in uranium investment. Obviously, Sprott's contribution is shedding new light on the sector, and obviously, Kazatomprom are helping along the way. I think even Yellow Cake in London as well, having this sort of financial synthetic overlay that they are able to perhaps expedite things in the space. Do you feel that you've timed it right? Or were you just looking to try and get in and let the thing play out? Did you see any of this coming?
Siobhan Lancaster: We did time this perfectly. We obviously had an internal thought process that the uranium market was about to turn. Then, of course, Sprott entered the market and completely changed the short-term dynamics of the market by whipping out all of those extra pounds of uranium. That's done a tremendous amount for the spot price; increasing it from USD$30 at the beginning of the year to $45, where it's sitting now. However, the uranium fundamentals were always there, irrespective of Sprott entering the market. It was really the supply shortfall that was fascinating to me. There's been a 10-year lack of exploration and development in the area, and eventually companies start to go through their supplies.
Then there's the demand story, with decarbonisation and electrification, you couldn't get better global trends for the uranium market. Then you add in what's happened over in Europe with the electricity crisis there. It's all just playing beautifully into the story for uranium long-term fundamentals. That's the great thing about the market: it's very much driven by supply-demand. Yes, it's a great time to be in it.
Matthew Gordon: We have a weekly energy show, but we mostly talk about uranium and nuclear on that. Obviously, all those thematics are regularly discussed and questions are thrown around. It does come back to that timing component. I think the interesting this is that the narrative has changed. The fundamentals have been there for a long time but things have been expedited by Sprott coming in and throwing a lot of money in and taking out a lot of the mobile inventory. That's all good news.
You're still a AUD$30M market cap company, right? You've just started out. You've had a good reaction from the share price. You've made a discovery, you've been able to raise money on a couple of occasions out of the gate. What next? How can you accelerate in the way that perhaps others, who have been loitering for the last 10 years waiting for something to happen, how can you beat them to the punch?
Siobhan Lancaster: From my previous experience at Extract, that went from a discovery, to a resource, to a DFS, to a mining license within a very short period of time. That was aggressive drilling that got them there essentially. I would like to repeat that process and, hopefully, drill as aggressively as we possibly can with the budget that we're able to drill with. That's the first step: defining a resource, if we're fortunate enough to have a very successful follow-up drill program at the GMZ.
Matthew Gordon: Talk to me about timing, it's always important. Some people rush into these things and try to get a resource out early, others want to drill to the edge of the envelope and prove the scale of things early on. For Australians and North Americans, it's a very different business model from that point of view. Half of your team are North American and you've got the Aussie contingent, so when you say replicate the model, what do you mean by that in terms of timing?
Siobhan Lancaster: I mean that we will drill as quickly as the seasons allow us to. If the zone only allows you to have a certain number of drill rigs, we will obviously only have that certain number of drill rigs. We will drill within the ability that we're able to drill. However, we will be as aggressive as we can for the market timing because I think what's important to look at is over the last 10 years, companies probably were acting more slowly because there wasn't something behind them to be able to really be aggressive.
Matthew Gordon: You don't have that problem though. I'm trying to understand your philosophy here, because you've got to do the drilling and you also have to play to the market. There will be new entrants coming in, lots of white noise coming down the line that you will have to contend with at some point. But for now, you've made a discovering, it looks good, and whether by luck or design, it's irrelevant: you've made a discovery whilst others are taking a lot longer and spend a lot more money to do so, so that's good news. The drill bit will hopefully continue to deliver good data for you to be able to utilize, but how do you play the market? We've seen some great Athabasca stories go from a USD$100M market cap to nearly USD$1Bn, and others go on beyond that. They've done it in different ways. They've been quite cute, they have been quite innovative, and some of them just were just all about the drilling. Then we've had others languishing because maybe the stories are tired, maybe people are not enamoured by them. They prefer the new things coming through. Where do you set yourself in there? And how do you access North American cash? There's a lot to think about with regards to how you play the market, it's not just the drilling component.
Siobhan Lancaster: There are a lot of big funds within the Australian and Asian part of the world. Of course, as you get bigger you start to do more road shows globally, because uranium is absolutely a global commodity. I've got very good connections in London, from my time at Extract. Obviously, Kalahari, which was our major shareholder then, was listed on AIM, and part of our core office was based in London in those days. So I've got some good connections in London.
As we're in the Athabasca Basin it's going to be easy to talk to investors in North America because people understand the Athabasca Basin. I think that people will follow a story if the discovery is good. That's what I hope it is. I always get go back to the example of Extract, but it did take the market a little bit of time to work out just how truly extraordinary the Husab uranium deposit was, but once they did, the market cap was USD$2Bn.
Matthew Gordon: Yes, and there continues to be some great Namibian uranium stories out there. You're in a different place now though; I think that with London and Australia, there's a certain audience for that. If you've got an African asset, both those countries understand African assets. You're in North America, have North American investors got access to your stock? Because I think that as uranium picks up again, which I suspect it will in Q1, are they going to be able to buy your stock?
Siobhan Lancaster: At this point in time, we are newly listed on the ASX, but of course, if it's appropriate down the track, we would look at whether it might be appropriate for a dual listing. Again, I go back to the story of Extract: that was dual-listed on the TSX., so it is a possibility. It is that dual structure that I'm familiar with, so it's something that's doable for sure. That's why, for example, Canaccord did our last raise, because they've got really great links into that North American market. We're trying to set ourselves up as well as we possibly can, should this be a significant discovery. But again, we need to really do the drilling this time round to know exactly where we're placed. We really won't know until the truth serum, which is the drill rig, goes into the ground and starts drilling again. At the moment, we've only got 1 hole, and of course, Base lode who are 400m away from us as, they have 3 holes. We know the system is large. We know it's a big mineralized system but we don't know much more than that.
Matthew Gordon: Will there be any teaming up with Baselode? We had James on last week. He seemed quite excited about what they've got.
Siobhan Lancaster: James is certainly excited. They're our neighbours, we've met up, and their geologists and my geologist, we're all very excited. I think Baselode has been very lucky off the back of this discovery to be able to go and pull a drill rig over and actually drill. They are very lucky to actually have had a drill rig on site at the time. I will always talk with our neighbours. Who knows? I think both of us just need to concentrate on what we're doing this time around, concentrate on the drilling and really put in a good effort to drill as much as we possibly can during this winter program.
Matthew Gordon: Okay, no running before you can walk, right?
Siobhan Lancaster: Exactly.
Matthew Gordon: Good stuff. Siobahn, I really enjoyed that chat. Nice introduction to your new story. We will be looking out for more drill results from you. Stay in touch. Let us know how you get on.
Siobhan Lancaster: Thanks. And I should say, the drill rig starts turning early to mid-January, so stay tuned.