December 17, 2013
SOURCE:[Metal Guru] - Azincourt Uranium (AAZ-TSX.V) CEO and PresidentTed O'Connor has spent the last 10 years travelling the world assessing uranium projects. He previously worked in uranium exploration and corporate development at Cameco Corporation (CCO-TSX; CCJ-NYSE) - an $8 billion company and one of the world’s largest uranium producers. The company’s chairman, Ian Stalker, is the former CEO of UraMin which was sold to Areva for $2.5Bn.
Last month Azincourt acquired a 100% interest in two properties (Macusani and Muñani) in southeastern Peru. The Macusani property is an advanced-stage project with existing resources, strong resource expansion prospects and potential low production costs.
"There are about 15 different classes of uranium deposits - but only six that can be mined economically," states O’Connor in an exclusive interview with Metal Guru, "The deposits in Peru tend to be shallow which means that exploration, capital and operating costs are significantly lower than global averages."
O’Connor’s statements were corroborated on December 5, 2013 when Macusani Yellowcake (YEL-TSX.V) published a Preliminary Economic Assessment for its uranium properties on the Macusani Plateau in Peru. Cash operating costs over entire mine life were projected to average $20.57/lb U3O8.
"The Macusani region of Peru is a rapidly emerging uranium district," states O’Connor, "Minergia put $12 million of exploration activity into the Macusani project and by 2011 they had built up a considerable resource for discovery costs of just forty cents a pound. We have acquired this resource for six cents a pound."
Azincourt’s Macusani asset has an October 2011 NI 43-101 compliant U3O8 resource of 5.7 million pounds in the measured category, 12.5 million pounds indicated, 17.4 million pounds inferred - with a cut-off of 90.72 ppm (0.18 pounds/ton).
"It isn’t just the acquisition price that makes the Macusani project exciting," states O’Connor, "It’s also about geology and economics. Mining isn’t just about grade. It’s about how much it costs to get your pounds out of the ground. In the case of Macusani, the geology gives us a real edge because this mineralization leaches well and that means low production costs."
"Based on the work by Minergia and others in the region," says O’Connor, "we believe the Macusani region has tremendous exploration up- side. There are two main affected communities in the region. They have both been supportive in allowing Minergia and Macusani Yellowcake access to do the exploration work. The government regulations in Peru adhere to global best practices, so we have had no problem operating there."
Azincourt's acquisition and development of the Peru assets are part of its strategy to acquire projects with in-ground uranium resources to capitalize on a uranium market turnaround.
The company has plans to return to active exploration on the Macusani project in 2014, and will also assess existing targets and carry out surveys and geophysics at the Muñani project.
Earlier this year, Azincourt partnered with the Athabasca Basin’s leading exploration company, Fission Uranium (FCU-TSX.V) to explore the highly prospective Patterson Lake North (PLN) property.
The Athabasca Basin in Saskatchewan is world’s largest source of high-grade uranium. There is a 2,500-3,000 meter drill program planned to start in January 2014 on PLN. About $4.7 million in exploration has been spent on the project to date. PLN is immediately adjacent to Fission Uranium’s shallow depth, high-grade uranium discovery at Patterson Lake South. Fission Uranium has amalgamated with their discovery partner at PLS and has spun out all other projects. Fission Uranium’s spin out company, Fission3.0 is the new partner and operator on this project, with the same technical and management team as Fission Uranium. Fission has made two major discoveries in the Athabasca Basin in the past 3 years and Fission’s Chief Geo, Ross McElroy has been instrumental in 4 of last 9 major discoveries there.
An exploration program is currently underway at PLN, with drilling beginning in Q1 2014.
"Drilling is at least 50% cheaper in the winter," explains O’Connor, "the frozen lakes at PLN provide great access. There is no need for helicopters. You can pull the equipment across the ice using skidders. On lakes in the summer, you have to drill from a barge, which means the hole must be vertical. But often you can get a more detailed picture of the geological structure from an inclined hole, so winter drilling on this project provides significant cost and logistical advantages."
Uranium prices have been suppressed by surplus inventories created by Japan’s 50 shut down reactors. Japan is expected to restart 10 of these reactors in 2014.
China has 28 nuclear reactors under construction, with another 49 planned and 120 proposed. Vietnam, Turkey, Indonesia, Egypt and Kazakhstan are all building their first reactors.
According to the World Nuclear Association, Global uranium demand will rise 48% by 2023.
With projects in a proven uranium district and an emerging uranium district on opposite sides of the world and a highly experienced management team, Azincourt is positioned for the impending uranium sector breakout.
The company is currently trading at .27 with a market cap of $7.6 million.
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