Baselode Energy (TSX-V: FIND) - Making Smart Uranium Discoveries

Baselode Energy Corp. (formerly Rider Investment Capital Corp.) is a fully-funded uranium exploration company looking for the next world-class deposit in the Athabasca Basin area of northern Saskatchewan, Canada. The company is focused on discovering near-surface, basement-hosted, high-grade uranium orebodies outside of the Athabasca Basin. The company has utilized innovative and well-understood geophysical methods to map deep structural controls in order to identify shallow targets for diamond drilling. By doing so, the company can make a discovery that could go into production at an expedited rate.

Merlin-Marr Johnson caught up with James Sykes, CEO, and Director, Baselode Energy. James brings over a decade of Athabasca Basin uranium exploration and discovery experience to the team, most notably from prominent roles for NexGen’s Arrow deposit and having provided invaluable work on Hathor’s Roughrider deposits. Over the past 10 years, he has been directly and indirectly involved in the discovery of over 500Mlbs of U3O8 (Triuranium Octoxide) in the Athabasca Basin. His education credentials include a B.Sc. degree in Geology.

Company Overview

Baselode Energy Corp. currently controls 100% rights to surface exploration on 71,821 hectares in the Athabasca Basin area in northern Saskatchewan, Canada. The company has 2 high-potential projects in the Athabasca Basin area, which account for roughly 20 percent of global annual uranium production. The company is exploring basement-hosted deposits outside of the traditional “unconformity-controlled” uranium deposits, with an emphasis on avoiding sandstone cover, and instead focusing on near-surface, structurally-controlled mineralization that could be mined easier than deposits that lie underneath the sandstone cover. The company was founded in 2018 and is headquartered in Toronto, Canada. It is listed on the Toronto Stock Exchange (TSX-V: FIND) and the OTC Markets (OTCQB: BSENF).

Baselode Energy had a strong 2022, drilling over 22,000m while simultaneously advancing the ACKIO uranium discovery. Notably, the discovery led to high-grade mineralization starting at around 25m beneath the surface. It is important to note that this is one of the most significant discoveries made in the Athabasca Basin over the past 40 years. The company intends to continue the exploration programs in 2023.

In recent times, the uranium space and the investment market, in general, have seen a downturn, affecting share prices across the mining industry. At the same time, the spot prices and contract prices for uranium have been trending upwards. Uranium spot prices are currently at $50 per pound, while old contract pricing is around $50-$55. The prices for newer contracts are between $50-$75. Notably, back in August, Denison Mines sold around 40,000 pounds of uranium at $75 per pound. Based on the fundamentals, the uranium space is getting better with time.

Financing Considerations

In early August, the company decided to pull the plug on the diamond drill program after completing 22,000m of drilling, which was substantially more than the planned 10,000m. The results were highly encouraging. Each time the company put out news flow in relation to the drill results, it received little-to-no attention from the market. The company continued to put out great drill hole intercepts and shallow mineralization results.

Baselode Energy realized it was expending a lot of funds while losing market cap value. It has two types of funds available in Canada, the first is flow-through dollars which can only be spent on drilling and not for G&A (General and Administrative Expenses). The second type of funds is the hard dollars which are needed for the G&A in order to keep the business afloat.

The company was out of flow-through funds and if it continued to burn through the hard dollars, eventually it would lose the capacity to continue running operations in the future. In order to preserve the hard dollars, the company decided to stop the diamond drilling after reaching a satisfactory point. Notably, the company continued to publish drill results throughout August all the way to November.

Through drill operations, Baselode Energy successfully defined mineralization over a 375m deep and 175m wide strike length. It found multiple zones of mineralization with varying depths ranging from 25m to 300m below the surface. This also led to a slight change in the definition of the controlling structure. The company now has a structural model in place that fits really well with the mineralization. It intends to start proving the model, which may lead to hitting more mineralization.

The deposit’s mineralization has vertical kind of tabular features. It is a large blanket-like interconnected structure with higher-grade material near the surface. There are a number of different high-grade pods that are all mantled within a lower-grade envelope. Interestingly, even the lower-grade envelope looks highly encouraging. The envelope features grades between 500ppm-2000ppm (parts per million), while across the high-grade zone, the grades exceed 5000ppm, going over 10,000ppm in 1% of the results.

According to the company, the buying and selling of shares do not seem to have a discernible pattern. However, the sales in the last month correlate with the financings announced by Baselode Energy. In October, the company’s stock was floating around 65-70 cents. The financing was announced on 31st October through charity flow-through funds.

A charity flow though is different from a regular flow through funds as it features two additional components. Charity flow through funding enables a company to have shares in the market at higher price levels, which means that the company can issue shares at a higher price. In Saskatchewan, the company is getting a 60% premium at its share price, which is quite substantial. The company launched the charity flow through when it was trading at 60 cents. Here, the financing share price was about 98 cents, a 60% gain which helps avoid dilution.

Charity flow-through features a backend purchaser, that gets the share at a lower price, which is usually the market pricing. The backend price for Baselode energy was 60 cents. At the time, the current paper holders began selling the shares to bring the price down to the back-end purchase price in order to either get back in or gain additional exposure to the company.

Yesterday, the company announced that it had a $3M bought deal placement. Since the share prices were lower when the announcement was made, the backend purchases were also lower, leading to a further drop in the share price. The $3M deal has a half warrant. The funds were raised out of Canada as it’s the only place that allows for charity flow-through funding. Baselode Energy has a $45M current market cap along with 86M outstanding shares, giving it plenty of headroom for future growth.

For commercial production, there’s a misconception that a company needs 200 million pounds for an underground mine or 50 million pounds for an open-pit mine. Taking the Athabasca Basin as an example, taking into consideration the historical mining operation and recent open-pit mines, it’s evident that the resource isn’t necessarily 50 million pounds. These pounds are needed only if a company is looking to build a mill along with an open-pit operation.

Baselode Energy isn’t looking to build a mill, instead, it is seeking a potential toll milling agreement with the mills in Saskatchewan. This would result in substantial cost savings. The company is still in its early stage as it has only had 1 year of aggressive drilling so far.

Targets 2022 and Beyond

In 2023, Baselode Energy has plans to drill at the Catharsis Project, moving away from ACKIO for the time being. This decision is largely based on logistics. The ACKIO asset has a lot of future potential and the company is confident that the project is going to be built as the next mine in the Athabasca Basin.

The winter season is the main reason for a focus shift. During this time, the weather is significantly more colder, requiring drills and camps to be warmed, which is achieved through fuel. The fuel is transported using a helicopter, which is both cumbersome and expensive. Furthermore, the winter season has fewer daylight hours which limits the amount of time the helicopter can operate, and as a result, it requires additional trips due to the increased workload.

The Catharsis project is ideal for winter operations as it’s located on the road up to the Key Lake mill that runs right through the project. The company’s camp will be built right off the road. The target areas are 1km-5km off the road. The roads are highly accessible, enabling the company to carry out operations at Catharsis during the winter season.

Baselode Energy will start off the winter season with the Catharsis project, which has a lower per-meter cost. The company is looking to make a discovery at the Catharsis Project. Working on the ACKIO asset during the summertime will be significantly more economical.

So far, the company has had great success with its drill programs. The ACKIO asset was discovered on the first drill program. The company also discovered a series of lesser-known radioactive pegmatites at Beckett Lake, which is quite a voluminous area.

In 2021, the company took an off-uranium approach while drilling the last hole. It analyzed the hole using a VTEM conductor, which led to the discovery of sulphide mineralization. So far, the company has achieved success in every drilling program and target area, and it is confident that the Catharsis Project will also provide encouraging results.

The stack GIS anomalies at the Catharsis asset lines up perfectly. The target areas were defined through electromagnetic and gravity surveys. Theoretically, Catharsis shouldn’t contain sandstone, however, the topography suggests that there’s a good chance that some of the little valleys would feature sandstone. This opens up the possibility for unconformity mineralization which would be shallower than basement-hosted mineralization. The sandstone presence is expected to be remnants.

Typically, unconformity deposits feature higher grades with more concentrated uranium. Based on the targets, the company anticipates that the deposit may feature basement-hosted mineralization. Interestingly, one of the targets looks almost identical to the target that led to the discovery of the Arrow deposit. The Arrow deposit had a nice mag trend coming through. It had two conductors on the overlap along with a gravity low in the middle. In January 2023, the company intends to determine the deposit’s core. The targets here are relatively shallow at about 200m-250m depth.

In recent times, there has been an increase in the number of contracts that are being signed in the uranium space. The company anticipates that the 2023 contract prices would be higher which would help incentivize uranium mining. Several countries are now ramping up nuclear power generation capacity to meet the world’s electrification goals. A lot of countries in Europe are now leaning towards nuclear energy along with Canada and the US. There’s a strong focus on SMRs (Small Modular Reactors) to ramp up nuclear energy fleets and power generation capacity.

Baselode Energy is gearing up for a strong 2023. It has high-prospect targets that need to be drilled. The ACKIO project has some zones that require drilling. The company anticipates that these zones will yield better results than what has been seen so far. The company also has plans to drill new targets on the Hook Project.

To find out more, go to the Baselode Energy website