CanAlaska Uranium (CVV) - Technical Analysis

CanAlaska Uranium Ltd. is an exploration stage company engaged in the acquisition and exploration of mineral properties in Canada. The company focuses on the exploration of uranium deposits in the Athabasca Basin area of Saskatchewan and the exploration of copper and nickel within the region. 

Merlin Marr-Johnson caught up with Cory Belyk, CEO and Executive Vice President, CanAlaska Uranium, and Nathan Bridge, Vice President, Exploration CanAlaska Uranium. 

Mr. Belyk is a geologist with over 30 years of experience in exploration and mining operations, project evaluation, and business development. His depth of experience is a result of work on a global scale including Asia, Africa, Europe, North America, and Australia. He was previously employed by COGEMA (now Orano), Uranerz Exploration and Mining Ltd, and Cameco Corporation in the Athabasca Basin, Saskatchewan. His recent focus was on global activities related to Cameco’s project evaluation, business development, and international exploration activity with direct oversight and accountability for offices in Mongolia and Australia. He was a member of Cameco’s exploration management team during the recent Fox Lake and West McArthur uranium discoveries. His educational credentials include a Bachelor’s degree in Geology from the University of Saskatchewan and a Certificate of Negotiation from Harvard Law School. Mr. Belyk is a registered member of the Association of Professional Engineers and Geoscientists of Saskatchewan. 

Mr. Bridge has over 10 years of experience managing exploration, delineation, and geotechnical drilling programs at Cameco Corporation. He was a Senior Geologist on Cameco’s Fox Lake discovery team that took the deposit from the exploration stage, through discovery, and into resource definition. Nathan has spent the majority of his career exploring uranium and in 2017, he led the exploration program that discovered the 42 Zone on the company’s West McArthur project. Nathan has also managed and worked on delineation and geotechnical programs on Cameco’s Cigar Lake, Eagle Point, and Millennium deposits. He brings a very strong technical background to the CanAlaska team, focusing on exploration that is guided by geo-scientific rigour and an understanding of the key criteria for the formation and preservation of high-quality ore deposits. His educational credentials include B.Sc. and M.Sc. degrees in Geology from the University of Western Ontario. 

Company Overview

CanAlaska Uranium was founded in 1985 and is headquartered in Vancouver, Canada. The company is listed on the Toronto Stock Exchange (TSX-V: CVV), The OTC Markets (OTCQB: CVVUF), and the Frankfurt Stock Exchange (FSE: DH7N). CanAlaska West McArthur Uranium Ltd., Cree East Uranium Project Limited Partnership, Golden Fern Resources Limited, and Rise and Shine Joint Venture are the company’s subsidiaries. 

CanAlaska is a junior explorer. The company prides itself on a hybrid model of project generation and exploration. The company generates a lot of projects and explores the ones that have potential and fit its mandate. The company had a strong 2021. It was active throughout its portfolio in both the uranium and nickel space. Early last year, the company drilled the brand-new polymetallic mineralization of the Waterbury South project. During the summer, the company drilled additional high-grade mineralization at its West McArthur project, building on the 42 Zone discovery. The company has been working in this region for the past 2 years and is expanding the target area towards the southwest by 3km. The company has had significant success at west McArthur. 

The company initiated a new Joint Venture (JV) with Denison Mines for the Moon Lake South Project. Here, the company intersected 2 areas of mineralization along a 4-5km trend. Notably, the company has already identified 3 zones of mineralization at the Moon Lake South project. It has had fantastic results from the project so far. The company is currently executing deals and staking land to increase its portfolio within the project generator space in late-2021. This year, the company is looking to advance its West McArthur project. 

In 2022, CanAlaska Uranium will be working on a new project called the Key Extension project. This project is located close to the Key Lake mine. This project is the result of a deal that the company closed last year.

The West McArthur Project

Within the Athabasca Basin, CanAlaska Uranium has a Joint Venture with Cameco Corp. on the West McArthur Project. This Joint Venture has a 75%-25% ownership between CanAlaska and Cameco. The company took the project from Cameco 2 years back after Cameco had earned it under an option agreement. CanAlaska has been operating the West McArthur Project ever since. 

CanAlaska Uranium has a program planned at the West McArthur Project in 2022. Although Cameco is an active partner, it is important to note that it is not funding the project. Cameco has its own exploration ideas to target. Both companies have a strong technical relationship and regularly conduct Joint Venture technical meetings. 

The Waterbury Project

The Waterbury Project is based in the northeastern Athabasca Basin in Saskatchewan and is situated 10km from the Cigar Lake mine site. This project is 100% owned and operated by CanAlaska Uranium. The company is actively recruiting Joint Venture partners for this project. 

The Waterbury Project features 2 key zones, Waterbury East and Waterbury South. The company is presently focused on the Waterbury South claim. This project is located close to the Cigar Lake mine where Cameco is currently producing the majority of its uranium. 

CanAlaska drilled 2 holes at Waterbury South in 2021, leading to interesting results. The company intends to explore the project further in 2022. This wholly-owned asset will be funded by the company. Its team is currently on the ground at the Waterbury South project. Drill operations are expected to continue over the next 2 to 3 months. The drill results will dictate the property’s future exploration strategy. 

The Moon Lake South Project

The Moon Lake South Project is located near the Gryphon deposit, on the Wheeler River Project. CanAlaska Uranium has a 25% ownership in the Moon Lake South Project Joint Venture, while Denison Mines has a 75% earn-in. Denison Mines will propose the program and budget for the preparation of the next drill phase at this project. The project is being led by Denison Mines and the next drill phase is expected next year. CanAlaska Uranium is preparing this project for a bigger program, moving forward with drills. The company has had highly encouraging results so far. 

Notably, both companies put the project plan and hypothesis together. The 75% earn-in was a result of Denison Mines recognizing the potential of the project. CanAlaska entered a deal with Denison in 2016. Over the past few years, Denison has earned into 75% ownership and is now the project’s operator. CanAlaska is co-funding 25% of the project. The company will continue to fund the project based on exploration results. 

The Project Generation Model

CanAlaska Uranium generates projects through the analysis of underlying geology and targeting new ground. The company’s technical team is an important part of the project generation model. The team works on projects to try and define new opportunities and ideas.

The Athabasca Basin is one of the best places in the world for uranium exploration. Project generation is based on understanding the deposit formation and locating where these deposits are likely to form. The company identifies these properties and then brings in partners to help operate the project. 

The company has partnered with Cameco for its West McArthur Joint Venture in the past. It has also worked with a Korean company for its Cree East project. Finding the right partners is crucial for driving the company forward. 

The Wollaston Deposit

Within the Athabasca Basin, CanAlaska Uranium has had deposits that span various different styles and depths. The company has shallow targets in northeast Wollaston. The company is currently looking at targets that are located near the surface and hosted by basement rocks. These are unconformity deposits, and the company is essentially focused on the basement roots of the unconformity deposits. 

The company is currently targeting the basement-hosted deposits at Northeast Wollaston. These targets are driven majorly by Eagle Point, a deposit located nearby northeast Wollaston, and the Arrow deposit. The Arrow deposit is well-known within the Athabasca Basin. It is a rich deposit that features extremely-high grades. These basement targets are often under-explored. 

The unconformity target is located at mid-depth and the deeper targets are the ones that people have been chasing for the past 60 years throughout the Basin. These basement deposits are trickier to find as they are structurally controlled below the sandstone. These deposits neither have a significant alteration halo nor clean sandstone above. This leads to the formation of alteration halos. 

Once the basement targets are identified, the company can identify the locations and direction that these targets follow. These targets can be quite large and carry very high grades. Exploration of these targets can lead to significant value generation. In some areas, the company has identified material outcrops. The Key Extension properties located in the south of the Basin have significant outcrop potential. 

The company’s main focus is on the geophysical signature of the basement targets. This signature is similar to the Arrow and Eagle Point deposits. The company is also looking to identify the gravity and EM (Electromagnetic) signature that is generally associated with large basin deposits. 

In mapping, a gravity low is interpreted as the alteration of the basement rocks. Meanwhile, the EM signals assist in the imaging of the conductive host lithology. In combination, these surveys help identify ideal targets. 

Typical Athabasca deposits feature graphitic meta-sediments as conductors. CanAlaska Uranium is imaging the meta-sediment on the graphitic lithologies. These are often known to have higher malleability than the harder archaean rocks that are also located in the full press belt. As these graphitic lithologies are easier to disrupt, structural disruption occurs through the constant post-Athabasca reactivation of the lithologies. As a result, the fluids move upwards into the sandstone Basin and down into the basement-hosted deposits. 

At the company’s northeast Wollaston deposit, the Basin activity had gone down quite substantially over the past decade. This region experienced limited activity and staking. Although this time is marked by notable discoveries, only a key 10-15 companies continued operating through the challenging times. 

During this time, CanAlaska Uranium was able to amass a land portfolio in the northeast part of the Athabasca Basin, around the Eagle Point deposits. Here, the company identified an extension of the fault moving up to the northeast. The company picked up the land package as it wanted the spots that were identified through the surveys. 

The Key Extension Project

CanAlaska Uranium closed a deal on the Key Extension Project back in September 2021. The Key Lake deposits feature the Dielmann, the Gaertner, Gatz, and the BV pit. These deposits were historically mined, and over 150Mlbs of uranium was supplied from the Key Lake deposits. 

Based on the geophysical data, the company anticipates that the Lake fault trends onto the Key Extension claims. It is important to note that this area features the Wollaston-Mudjatik transition zone. These transitions are crucial structural crustal transition zones in the Athabasca Basin where the transition goes from Wollaston rocks to Mudjatik rocks. This transition zone runs through the entire eastern Athabasca all the way through Phoenix, McArthur River, up to Cigar Lake, and the Eagle Point deposits in the north. These deposits have been under exploration for decades. 

Notably, this is a large structural corridor where the 2 domains are up against one another. The company believes that the Key Lake fault trends on its property. It also has an unexplored zone on the property. The asset is located 15km from one of the earliest discoveries in the Athabasca Basin. The region does not have a sandstone cover, and the company is looking at these basement targets. It’s rare to find a project that is close to the mills in Athabasca without any drill holes. 

The Gaertner and Deillmann were the open pits that produced 150Mlbs uranium, while the BV and GAX haven’t been mined before. Both the Gaertner and Diellmann are open pits with tailings facilities for Cameco’s operations. Moving a bit further to the west, outside of the Basin, these projects have a few metres of sandstone cover. 

The basement structure intersects the unconformity where the Gaertner and Deillmann deposits are based. According to the company, these 2 deposits were the fundamental drivers in the uniformity bubble. The majority of the exploration in the Athabasca Basin has been based on a combination of Rabbit Lake in the north. However, these 2 deposits were the start of exploration in the Basin. 

At the Key Lake asset, the company is looking at deposits around Sue way. This region is expected to have less sandstone cover than Sue A and Sue B. The region features a crystalline basement along with Athabasca sandstone. The deposits are forming right where the structure hits the target. The company is seeking the basement roots that go with the unconformity bodies. 

CanAlaska Uranium has learned over the past 15 years that deposits such as Eagle Point and Arrow can go down up to 1km below the unconformity. The Athabasca Basin extended 100km out of its margins at the time of ore formation, 1.6 billion years ago. 

This leads to the speculation that there is around 800m of target depth below the unconformity contact around the margins of the Basin which hasn’t been adequately explored. Based on the information on the Eagle Point and Arrow deposits over the last 10-15 years, the company has strategically selected areas outside the Basin margins that fit the model for its northeast Wollaston Key extension project. 

In addition to these targets, the company also has Cree East, a mid-tier target along with deeper ones at McArthur. CanAlaska uranium has 4 ongoing drill programs on uranium and 2 on nickel. 

Waterbury South

At the Waterbury South, CanAlaska Uranium’s team filled 2 holes in the project and intersected polymetallic mineralization, a common occurrence in these deposits. The classic large unconformity deposits such as Cigar Lake, Midwest, and Fox Lake have a lot of nickel associated with them. As these deposits are forming, the nickel comes along with uranium fluid, leading to the formation of nickel sulphides. The nickel sulphides are typically found along the fringes of the deposits. These deposits can feature 400ppm (parts per million) uranium along with 2% nickel along the fringes. 

For instance, IsoEnergy Ltd made a recent discovery at the Hurricane zone in the eastern part of the Basin. According to the press release, the company found 2%-3% nickel within the zone. These results have reiterated CanAlaska’s prediction that a similar system exists at its deposit. 

CanAlaska Uranium has observed zonation of the metals. The company has initiated a program to find out more about its placement in the system. The company’s team is working to determine the direction to proceed in for these chemically controlled deposits. The depth of the unconformity is fairly shallow, between 200m-300m across the property. It features a limited sandstone cover that has led to the generation of alteration halos. These halos provide the company with a medium to vector on, allowing for efficient target testing. 

The company has had the case off the overburden located on the top of the deposit. It plans to carry out diamond drilling here from the top to the bottom. As the Athabasca Basin was originally a red bed of sandstone, the term bleaching is commonly associated with the alterations. 

The bleaching process essentially removes the digenetic hematite that is a result of secondary processes. Once the faults interact with the unconformity, the fluids are expelled through the sandstone base. This development is picked up by the ground prep signature from these alteration events that are pre and post-mineralization. Here, bleaching is a common occurrence. 

The company is excited about the pyrite alteration where the fluids are a result of the mineralizing process. The sandstone can be bleached without the presence of mineralized fluids, however, the presence of pyrite is similar to a chemical reaction that is responsible for the formation of uranium deposits. The presence of grey pyrite throughout the sandstone strongly indicates that these fluids have the potential to host uranium. 

The Athabasca Basin features polymetallic mineralization as well, but since the uranium grades are so significant, they dominate the system. This is the reason why the other metals aren’t mined as the companies are focused on uranium. 

Drill Operations

CanAlaska Uranium is currently drilling the Waterbury South deposit. It is looking to determine its position within the system. These polymetallic systems in half of the Athabasca deposits such as the Cigar Lake and the Key Lake deposits feature an average nickel grade of 2.5% along with significant arsenic presence. This feature is also found in the Midwest deposit. Half of these deposits have alteration systems that are visually similar to Waterbury South. 

The company anticipates that its asset is in a really large mineralizing event. It is looking to determine the right direction to proceed in order to find the uranium. The company is looking to find the uranium associated with the nickel, arsenic, and cobalt presence that it had already intersected in 2021. The first step of the program is to determine the structural orientation of the deposit and understand its complexities and directions. 

The company is looking to put in 2 fences of holes with 2 holes on each section. As the region features multiple structures, the company is looking to determine the right structure to step out. The step-out intervals are expected to be either 50m-100m. However, the intervals will be dictated based on the results obtained from the first hole. It is looking to identify the direction in which the fault is progressing to understand the orientation of the structure. Notably, these deposits do not form without the presence of big faults. 

CanAlaska Uranium had the first discovery hole in 2021. The first hole is planned to be on top of it as the company is currently testing the structure at the unconformity. The company found a hit at the basement and as a result, it is testing the region as this is the ideal target for these unconformity deposits. Based on the results, the company will plan to move outwards on strike in this area. The company hit the structure 80m below the unconformity. It is looking to carry out extensive testing which would help pinpoint the ideal direction for further exploration. 

CanAlaska Uranium is taking a result-driven approach for this zone. It is fully permitted. The company can potentially drill over 40 holes if interesting mineralization is identified. However, currently, it is focused on a few holes to better understand the structure. The key drivers for this drill program will be the size changes of the fault, the upgrading of grades in either west or east direction, and alteration identification.

The company is looking to conclude at least 2 fences before the beginning of April when it would have to halt drill operations for a period of 2 months. The results will help the company develop a future strategy. 

The Manibridge Nickel Project

CanAlaska Uranium’s Manibridge Project is currently under option. The company has significant landholding on the Thompson Nickel belt that includes the Manibridge deposit. 

The Manibridge Mine is a historical producer. This project is currently subject to a $4M earn-in with Metal Energy. Notably, Metal Energy is buying in for up to 100% of the project. This could lead to royalty at the back end if the project advances. 

As per the agreement between the companies, CanAlaska Uranium will be the operator for the program in Q1 2022. The scope of this program is driven by Metal Energy’s goals. The focus is to confirm the historic drilling around the deposit, understand the controls, and advance it to be 43-101 compliant.

CanAlaska Uranium has carried out 3D modelling for the area, leading to a better understanding of some of the controls of the deposits. As Metal Energy is the key driver of this program, the operations past Q1 will be dependent on the company’s focus. 

The agreement between the 2 companies is based on a mix of cash and shares in 3 stages. During the first stage, Metal Energy will spend $500,000 in the ground. The next stage will be a $1.5M earn-in or about 80%. To attain full ownership with CanAlaska getting the royalty, Metal Energy will need to spend over $4M. 

CanAlaska Uranium prefers to put money into the ground as this provides the shareholders an opportunity to get the discovery. It provides cash to cover some of the costs and some shares for the upside. The company’s strategy is to get exploration done on the ground while being back-stopped with either royalties or residual interest or both. This leads to new discoveries. The company’s approach is to get money on the ground for exploration instead of opting for limited money or shares. 

Key Strategy and Highlights

CanAlaska Uranium has a $42M current market cap. The company’s portfolio features 4 projects at Cree East, West McArthur, Waterbury South, and Moon Lake South that are responding to active exploration. Each of these projects has responded to the company’s exploration efforts in the past few years. These results are unmatched in the Athabasca Basin, even among the Majors. 

The new projects the company has acquired are focused on the models that have been previously overlooked such as the Cree Extension and northeast Wollaston. It is looking for basement models that haven’t been properly tested in the past. From a project generation perspective, the company’s assets have a significant upside volume. 

The company has strategically positioned its shareholders with assets so that upon discovery, they have the potential to be mined and processed in the mill, leading to value creation. The company’s projects are built around the uranium space and are situated around the critical infrastructure owned by Orano and Cameco in the Eastern Athabasca Basin. 

CanAlaska Uranium has been highly strategic in its positioning within Eastern Athabasca. The company is looking to drive the value in the next cycle where its project’s evaluation is expected to be significantly higher than some of its peers.

During the low period in uranium, the company developed a robust nickel portfolio at the Thompson Nickel Belt, the fifth-largest nickel belt in the world. The company has successfully built a portfolio of exploration properties on the Thompson Belt that is second only to Vale’s operations. 

CanAlaska Uranium is focused on uranium and the project generator model works towards the electrification of the planet. Nuclear energy is a large component in achieving clean energy generation. At the same time, the company seeks to monetize its nickel assets for its shareholders. 

As per the company, the minimum economic size of an Athabasca-style deposit is estimated at 100Mlb for a tier-1 asset. The company’s deposits are located close to the mills and infrastructure which is a major advantage. These deposits include the Key Lake Mill, the McArthur mine, The Cigar mine, the McClean Lake and mill, Eagle Point, and the Rabbit Lake operation. 

The company anticipates that it will continue to produce from Eastern Athabasca and provide mill feed when the assets of other companies are exhausted. 

CanAlaska Uranium is aiming at a $30-$35/lb break-even costs for its deposits in the Athabasca Basin. To reach this number, the company would need a 100Mlb deposit along with a presence in and around the infrastructure. 

Due to close proximity to the infrastructure, the company will be able to feed the mills for majors once the mines run out of supply. For instance, the company’s partnership with Cameco at West McArthur has indications of a large system and is located next door to Cameco’s mine which will run out in 15 years. 

‍To find out more, go to the CanAlaska Uranium website