Featured Company / CanAlaska Uranium

The world needs more electricity. According to the World Nuclear Association, electricity demand is growing about twice as fast as overall energy use and is likely to rise by more than half by 2040. Catalysts abound, led by emerging economies, including India, with hundreds of millions of people still in the dark and only a tiny minority with modern conveniences like air conditioning.

To that point, the International Energy Administration (IEA) forecast A/C to be a driver in energy demand for decades to come. The IEA has made the near-mind-boggling forecast that 10 new air conditioners will be sold every second for the next 30 years.

The challenge globally is finding an affordable, efficient – and, of course, environmentally friendly – solution. The politically correct answer is to look to an all-renewable energy model, but the simple fact is that, while admirable regarding climate change, it is not economically possible. Coal is incessantly criticized for how dirty it is, but more than 1/3 of the world’s energy still comes from coal because it is inexpensive and readily available.

The immediate answer is nuclear power, a process of splitting uranium atoms (called “fission”) that generates large amounts of heat. The heat is used to make steam, which subsequently spins turbines to create electricity.

Clean Power, Clear Benefits

With 447 reactors already in service, all-encompassing data is well documented. It is evident that countries are leaning on nuclear to meet upcoming demand, including a stunning 441 new reactors proposed or planned. As of May 2020, there were 54 nuclear reactors under construction worldwide. China, a country enthralled in pollution crisis, is the most ambitious with 11 nuclear reactors under construction currently. In India, 7 nuclear reactors are being built. Russia, the UAE and South Korea, each have four under construction.

Unfortunately, people tend to leap right to solar or wind when conjuring up thoughts of “green” energy, but the argument certainly can be made for nuclear as well. For starters, nuclear is a zero-emissions energy source. From a footprint perspective, nuclear reactors take up far less ground than a wind farm or solar panels to generate an equal amount of electricity. Thirdly, generating nuclear energy creates almost no waste.

The primary reason nuclear is excluded by many as a green energy is because it is not “renewable,” meaning that it can’t replenish itself like the wind or sun does. Uranium is considered a finite resource.

Surging Uranium Prices

Uranium is different than other commodities insomuch that it doesn’t trade on an open market. Buyers and sellers negotiate supply contracts privately with prices published by independent market consultants. For the second half of 2019 and through March 2020, U3O8, triuranium octoxide (the most common stable form of uranium oxide) sold around $24-$25 per pound before taking off to $33.40/pound as of late June.

Uranium deposits are scattered across the world, with a handful of companies regularly holding the top spots for production. Kazatomprom, the state-owned uranium production company of Kazakhstan, is widely regarded as the Saudi Aramco of uranium production, with all its production coming from its home country. Second billing goes to Saskatoon, Saskatchewan-based Cameco (NYSE:CCJ) (TSX:CCO), which has ownership in a mine in Kazakhstan with Kazatomprom, two operations in the U.S. and two operating uranium mines (Cigar Lake and McArthur River) and two mills (Rabbit Lake and Key Lake) in Canada’s Athabasca Basin. Soft U3O8 spot prices in 2018 caused Cameco to shutter its McArthur River mine and nearby Key Lake mill. Cigar Lake was temporarily closed in March due to Covid-19.

CanAlaska: A Top Player in the Saudi Arabia of Uranium

Uranium exploration and discovery in the Athabasca Basin in Saskatchewan have helped earn the region a nickname as “the Saudi Arabia of Uranium”. Dips in U3O8 prices provided an opportunity for CanAlaska Uranium (TSX-Venture:CVV) (OTCQB:CVVUF) to establish one of the most dominate land positions in the Athabasca Basin region, with exploration interests in approximately 214,000 hectares (530,000 acres). CanAlaska's strategic holdings have attracted major international mining companies like KORES and KEPCO, Mitsubishi, and partnerships in projects with Cameco (West McArthur project), Denison Mines (NYSE American:DNN) (TSX:DML) (Moon project) and Northern Uranium (NW Manitoba project).

CanAlaska management has amassed an impressive collection of properties running from the southwest to the northeast within the eastern Athabasca Basin that are on trend with existing uranium mines and deposits. At the southwest end is Cameco’s Key Lake Mill, which is in need of a new discovery to provide feed. In the northeast is Cameco’s Rabbit Lake Mill which is currently sitting idle without a source of new feed.

The West McArthur JV with Cameco is a new high-grade (>5%) uranium discovery adjacent to Cameco’s Fox Lake deposit (contains 68 million pounds @ 7.99% U3O8) and only 12 kilometers from Cameco’s high-grade McArthur River uranium mine with its haul road to the Key Lake Mill. The “Grid 5” discovery at the property has the potential to be a Tier 1 deposit like Cigar Lake or McArthur River based upon current exploration results with uranium, multi-element and clay halos extending to near surface.

Denison recently completed work to earn a 75% stake at Moon, a project adjacent to Denison's Crawford Lake property. Recently, 126 kilometers of Step-wise Moving Loop (SWML) electromagnetic survey was undertaken to define the 5 kilometer-long ground expression of the CR-3 conductor. In 2016, the first drill hole into this horizon successfully intercepted uranium mineralization at the unconformity and this new SWML survey further refines three target areas along the trend that have yet to be drill-tested.

At the Cree East project, the Zone B target is very large, with alteration halos which reach surface approximately 400 metres above the unconformity. Work here is early and the ideal target has not yet been intersected along a 4-kilometer trend which have major fault offsets of at least 60 metres at the unconformity. Multiple drill holes at Zone A also provide a strong indication of several uranium targets within faulted and altered sandstone and basement. $23 million has already been invested at Cree East that has been used to identify nine zones of uranium mineralization. CanAlaska took 100% ownership of the Cree East project in 2017 by buying out the Korean partner.

In May, the company staked four large targets (dubbed Burrill, Kingston, Watson and Warren) to the northeast of the Eagle Point, Collins Bay and Rabbit Lake uranium deposits. CanAlaska management interprets the structural complexity of these projects is similar to characteristics of known orebodies along the Collins Bay fault. The Colins Bay and Maguire faults are interpreted to pass through these project areas.

Believe it or Not…More Than Uranium

The uranium properties of CanAlaska alone are enough to be considered potential company makers, but that isn’t all that is in the company’s portfolio. There are also diamond projects in the Athabasca Basin to the west of the uranium projects and nickel properties in Manitoba’s prolific Thompson Nickel Belt, fifth largest sulphide nickel belt in the world, to the northeast.

In May, CanAlaska entered into an option agreement with Fjordland Exploration ("FEX"), which allows FEX to earn up to an 80% interest in CanAlaska's 100%-owned North Thompson Nickel Project for exploration expenditures of $9M, 8.5M common FEX shares, and other considerations.

Chance to Grow Long Legs

For a company with a market capitalization of only about C$8.5 million (US$6.3 million), there is a strong case to be made that CanAlaska is undervalued given all of its assets and the future of uranium supply. Consider that to meet the growing demand for sustainable energy, the world will need nuclear to provide at least 25% of electricity by 2050 as part of a clean and reliable low-carbon mix. Achieving this means nuclear generation must triple globally by 2050.

Finding and developing new uranium deposits is part-in-parcel to achieving these goals. For its part, CanAlaska positioned itself in one of the most uranium-rich parts of the world with a clear strategy to build value and capitalize on the pending opportunity.

Management has systematically checked all the boxes to assemble a portfolio of uranium properties throughout a strategic corridor spanning eastern Saskatchewan into Manitoba, not to mention diamond and nickel projects. As a project generator, CanAlaska is always looking for partners to help advance these projects and realize their discovery potential.