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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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We Haven't Seen This in Uranium For Years

A subtle, but very encouraging event happened in the uranium space this week.

One that most investors missed completely. But which could signal better days coming for this long-struggling sector.

That's a joint venture deal for uranium exploration. Struck by one of the world's biggest players in the industry: France's Areva.

The deal comes in Australia. Where junior uranium firm Toro Energy announced earlier this week that Areva will farm into a large package of exploration lands as an investor and potential partner.

Related: Three Things To Know About The India-Australia Uranium Deal

Under the agreement with Toro, Areva will spend A$500,000 in order to earn a 51% interest in nearly 2,300 square kilometres of exploration ground in Australia's Northern Territory. The uranium major will then have the option to spend an additional A$1.5 million to earn a total of 80% interest in the tenements.

The most notable thing about this deal is... the fact that it happened at all. Joint venture activity in the uranium space has been completely dead for years--a consequence of depressed prices slowing exploration activity across the entire sector.

The majors in the industry have been especially quiet. Mainly exiting projects, rather than signing up new ventures.

But the Toro-Areva joint venture shows that the big players are starting to think about new deposits once again. Looking around the world for what's going to come next in the business.

The fact that Areva's mangers are willing to allocated dollars (albeit a very small amount) to new projects is very encouraging. Also notable is the nature of the Toro project itself. Which is a completely new conceptual target within the proven uranium district of the Northern Territory.

The joint venture lands are located in the Wiso Basin--a stretch of sedimentary rocks that has seen very little exploration.

Related: ‘Moderate Iran’ Still Only After One Thing

Toro worked up prospects here based on an airborne electromagnetic survey over the area. Which revealed locations of possible "paleochannels"--the kind known to host big uranium deposits elsewhere in this part of the world.

The completely virgin geology here--and the associated potential for big discoveries--may be what got Areva interested. Suggesting that explorers today might be best served by working up new concepts. Rather than trotting old and "tired" prospects.

We'll see if this deal is a one-off or the start of a trend toward increased exploration activity for Areva (and other players in the uranium space). Watch for other deals coming from the company.

Here's to getting out in the field,

Dave Forest

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