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The Dangers Of A Bullish Oil Market

Geopolitical tensions continue to threaten…

Uranium’s Big Prize

Uranium’s Big Prize

Sixteen hours on airplanes yesterday gave me the chance to finish reviewing a lot of uranium material. (For those of you finding the uranium theme long-in-the-tooth, we will get back to regularly scheduled programming this week, I promise.)

Most of my latest research focused on uranium's big prize. Unconformity-style (sometimes half-truthfully called basin-style) deposits.

The mining business often falls victim to "Holy Grail-ism". We get fixated on the largest, richest and most valuable deposits. What if we found the next Carlin Trend? Or the next Voisey's Bay?

But for most metals, the chances of finding another super-giant look-alike are slim. There's simply too big a bell-curve out in nature to hope you will land on the upper tail. And too many people who've been looking for "the mother lode" for a long time.
But in uranium, focusing on the top deposits is more defensible.

As I've mentioned in the past, unconformity-style deposits are by far the most productive in the uranium space. They can grade orders of magnitude higher than the world's other major uranium mines. And these deposits currently produce about 20% of global yellowcake supply.

Clearly, unconformity-hosted uranium is the target in the U industry. And yet, there has been surprisingly little work globally on finding new deposits.

Here's what we know about these giants. (Keeping in mind this is a very general profile, given most of our study comes from Canada's Athabasca Basin, with some contribution from the Thelon Basin, northern Canada, and the Kombolgie Basin in Australia's Northern Territory.)

Unconformity deposits tend to occur in places where very old rocks (greater than 2.5 billion years, called Archean) are overlain by moderately old rocks (between 2.5 billion and 600 million years old, called Proterozoic).

The contact between these two rock packages is called an unconformity. And this contact is generally where uranium mineralization is found (sometimes a few hundred meters above or below).

The reason for this bonanza probably has to do with something called "the Great Oxidation Event (GOE)".

Prior to about 2.5 billion years ago, very little oxygen persisted in Earth's atmosphere. Oxygen-producing organisms did exist, but most of the oxygen they pumped out was absorbed by organic matter and iron.

Then around 2.5 billion years, something changed. The Earth's surface could no longer absorb oxygen. So oxygen gas began building up in the skies.

The appearance of an oxygen-rich atmosphere changed the behaviour of minerals on the Earth's surface. Especially uranium.

U has two main chemical forms (bear with me, this is going somewhere beyond a chemistry lesson). Hexavalent uranium, which dissolves easily in water. And tetravalent uranium, which is largely insoluble and usually remains in mineral form.

Prior to the Great Oxidation Event, the lack of oxygen in the air meant most uranium on the Earth's surface was tetravalent. Not easily dissolved.

But after the GOE, an abundance of oxygen led to the formation of soluble hexavalent uranium.

Here's the big takeaway. The basins I described above provided a meeting of these two "geochemical worlds". Older rocks on the bottom formed during a time when uranium was mostly insoluble. Most of the original U was still bound up in the rock, little having been washed away by water.

This is where the overlying younger rocks come in. In many cases, water flowed through these younger rocks. Carrying large amounts of the oxygen now available in the atmosphere. Where these oxygen-rich fluids came in contact with uranium in the older rocks, they dissolved it. Large amounts of uranium thus built up in the water.

These uranium-rich waters flowed through the rock until they hit "reducing fronts". Pockets of older rock that oxygen still hadn't reached. These reducing fronts caused a chemical change, turning soluble hexavalent uranium back into insoluble tetravalent uranium.

No longer being soluble, uranium was dumped as minerals. Leading to the formation of big pockets of uranium mineralization. The kind found today at deposits like McArthur River and Jabiluka.

Chemistry was the key to the richest uranium deposits on the planet. The kind that would be worth billions as a new discovery today.

The most interesting thing is, there are hundreds of basins worldwide where the right kind of rocks are found to host unconformity uranium. And yet we've discovered major deposits in only a handful.

This is probably a function of exploration (or lack of it). One of the challenges of these deposits is they tend to occur in small pods (often just tens of meters wide), below hundreds of meters of basin sediments. Truly a "needle in haystack" target if you're poking drillholes from the surface trying to find one.

This has deterred exploration. Any manager proposing to blindly drill a hundred basins around the planet with the hope of hitting a tiny (though incredibly valuable) deposit, would be fired on sight.

So exploration work has stagnated. Uranium majors like Cameco have looked at a few basins, such as the Keweenawan in Michigan. But (as far as I can tell) a wide-reaching evaluation of potential unconformity-hosting areas has never been undertaken.

I propose to do so. And after the research of the last few weeks, I have some ideas about how it could be done relatively cheaply and quickly.

This will be the "crown jewel" project I have been promising over the past months. The one I believe will generate some important and concrete exploration and development projects, the kind many of us are interested in from an investment and discovery perspective.

I've already run on too long today, so I'll leave it to tomorrow to give an overview of this "World High-Grade U" project in earnest. Tune in then. It will be one of the most important letters this year.

By. Dave Forest of Notela Resources

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