Canadian exploration firm North Shore Uranium Ltd. (NSU:TSX)) — formerly Clover Leaf Capital Corp. — is scouring its holdings on the eastern margin of Saskatchewan's Athabasca Basin for uranium deposits. This week, it announced that it had compiled enough data to begin a targeted drill program.
The firm is exploring two properties about 90 kilometers from each other, Falcon (55,699 hectares) and West Bear (11,104 hectares). It is reported by Reuters to be evaluating opportunities to increase its portfolio of properties in the region. It currently retains an option to acquire 100% undivided interest in 11 claims that form approximately 77% of the Falcon Property.
The Catalyst: Virgin Drill Program Announced
On February 28, North Shore Uranium announced that it had "further refined its targeting criteria, and the drill program is set to commence in mid-March."
As reported on December 19 last year, "Falcon is a highly prospective uranium exploration property with a limited exploration history in a part of the Athabasca Basin region that is seeing increased exploration activity and recent discoveries."
"Reinterpretation of electromagnetic data complemented by geophysical data acquired in 2022 has allowed the company to identify high priority uranium targets in areas where there has been no previous drilling."
The company intends to drill test up to three targets along a robust, northeast-trending electromagnetic (EM) conductor system at the southern end of the property. TerraLogic Exploration Inc. will manage the drill program, with field preparations underway. Condor Consulting is assisting with geophysical interpretation.
North Shore Uranium is in the final stages of ranking and prioritizing drill targets for the March program. Over 20 potential targets have already been identified, and drill collar locations are being refined for the three lead candidates for drilling.
Sites are being prioritized based on several factors:
- Strength and character of the EM conductor
- EM conductor plate models generated using EMIT Maxwell software
- Evaluation of airborne gravity gradient and radiometric data acquired in 2022
- The presence of potential basement-hosted structures
- Interpreted bedrock geology
- Ground conditions
North Shore Uranium President and CEO Brooke Clements proclaimed, "We are excited to be preparing to commence our first drill program where we aim to test priority targets on the Falcon Property. This is only the beginning of our exploration plans at Falcon as we have identified multiple high-quality target zones spread across the Property that require evaluation and drilling."
"Since January, the uranium spot price has consistently been around US$100/lb. for the first time since 2007, focusing more attention on the uranium exploration sector and new discoveries. Saskatchewan's Athabasca Basin is a tier-one jurisdiction for discovering new mineable high-grade uranium deposits."
Why this Sector? The Energy of Tomorrow
Uranium is an essential form of nuclear fuel. Natural uranium found in the Earth's crust is a mixture of two isotopes, with Uranium-235, which is ideal for use in nuclear reactors, making up only about 0.7% of the total mineral weight.
Under certain conditions, Uranium-235 can readily be split, yielding a lot of energy. It is, therefore, said to be "fissile," from which we derive the term "nuclear fission."
According to a joint report by the Nuclear Energy Agency (NEA) and the International Atomic Energy Agency (IAEA), global uranium output in 2020 met nearly 90% of world reactor demand, dropping from 95% in 2017. Excess government and commercial inventories covered the remaining demand.
Existing world reactor requirements up to 2040 are projected to consume about 87% of the total 2019 identified resource base of 6,147,800 tonnes, creating tight market conditions.
The outlook around the nuclear and uranium mining industries has changed significantly over the past several years. It continues to improve thanks to three primary trends: decarbonization/clean energy, electrification, and energy security/independence.
Current global geopolitical unrest has only grown demand for uranium against a strained supply side further tightened by new financial entities sequestering material out of the market.
As the world transitions from carbon-intensive sources of electricity to carbon-free ones, many nations aim to be carbon-neutral by 2050. Countries are rethinking nuclear as the only viable energy source providing baseload, emissions-free, affordable, and scalable power.
Stockhead reported on December 4 that uranium prices reached a 15-year high and commented, "With inflation, experts think higher prices will be necessary to incentivize new producers."
"The existing uranium supply shortage will only get worse in the coming years, and anybody who makes a new discovery in uranium, especially in Saskatchewan's world-class Athabasca Basin, will be well-positioned to capitalize," explains CEO Clements. His assessment matches Katus Research's statement, "The World Nuclear Association is predicting nearly a 100% increase in uranium demand by 2040 … the run on the uranium bank has begun."
McAlinden Research opines that government demand for new nuclear facilities is behind the price spike. Since the war in Ukraine began, many nations have shifted toward nuclear to stop supporting Russia via purchases of natural gas and other fossil fuels.
Why This Company? Promising Property in the Right Place
Clements says that the Athabasca Basin is the "best jurisdiction in the world for uranium exploration and mining" and describes his firm as "a new fresh face" with "ambitious plans" and "a dynamic and experienced team."
He says North Shore Uranium's drill program commencing in Q1 2024 offers "great potential for a new uranium discovery." The company's stock has traded off since completing its qualifying transaction and concurrent financing on October 31.
As we reported on January 2, North Shore's planned 2023-2024 exploration program at Falcon will consist of three parts. The company will continue interpreting historical and new geophysical and geological data, enabling it to prioritize targets for more detailed exploration.
Clements commented at the time, "It's a great time to be exploring for uranium in the Athabasca basin, a Tier 1 jurisdiction for uranium exploration, development, and mining. The uranium spot price has recently surged past US$85 per pound, the highest we've seen in more than 15 years. We have identified a number of high-priority targets on our Falcon property and are excited to move forward."
The beauty of North Shore's Falcon property is its high prospectivity. The claim has a limited exploration history and is located in an area of the Athabasca basin that's home to other massive deposits. For investors, this makes it a safe and potentially lucrative gamble.
Both Baselode Energy Corp. and 92 Energy Ltd. made significant grassroots uranium discoveries some 40 kilometers north in 2021, demonstrating the area's potential. Fixed-wing gravity-magnetic-radiometric surveys in 2022 covered more than 80% of Falcon and are now complete. Added to previously compiled information and recently acquired geophysical data, they will allow the company to identify priority targets that have yet to be drill-tested.
Clements "believe[s] that the uranium sector is poised for significant growth in the next decade and it is at the beginning of an upward trend."
He says, "The world needs to increase its efforts to address climate change," and "Replacing electricity that comes from the burning of fossil fuels with electricity from nuclear power plants is the way to do that on a big scale, and more people are starting to realize and accept that."
"Our two properties at the eastern margin of the Athabasca basin are near the only two active uranium mills in Canada and proximal to two of three [major] recent discoveries."
"We see a lot of upside in the uranium exploration sector, especially in the Athabasca Basin," he concludes. "With a valuation below ten million Canadian dollars and an attractive share structure, we believe that we are an attractive option to participate in the growing uranium exploration sector, which appears to be at the beginning of a strong cycle."
Why now? Pre-Drilling Investing Can Reap Rewards
As a nascent company, North Shore Uranium is planning a "high-quality marketing campaign where we aim to introduce ourselves to the public. With the help of Streetwise and others, we think more people will get excited about the story and that this will generate interest in the market."
Technical Analyst Clive Maund is already interested, writing on February 5 that "Technically, this looks like an excellent point at which to pick up North Shore Uranium Ltd. stock," suggesting interested buyers "drill down swiftly and succinctly into the fundamentals to see why North Shore is such a good investment."
According to Maund, "Having now gotten over Fukushima, the nuclear power industry is in growth mode and is deemed to be of critical importance in meeting CO2 emission reduction goals with the recent COP28 declaration to triple nuclear power by 2050."
"The uranium price has surpassed its 2007 highs and is in a vigorous uptrend, and this is reflected in the powerful bull markets that we are seeing in big uranium stocks like Cameco Corp., and we are now seeing increased ‘trickledown' into the mid-cap and smaller stocks."
Maund explains that "North Shore's exploration properties are situated in the prolific Athabasca basin in Saskatchewan, Canada, which is home to the world's highest-grade uranium deposits that provide over 20% of the world's uranium supply."
"Whilst North Shore's Falcon claims are technically just outside the perimeter boundary of the Athabasca basin … new exploration methods and technical developments have yielded multiple significant discoveries on and near the perimeter of the basin where there is the advantage of much less overburden than exists towards the center of the basin."
"North Shore's exploration claims are close to properties where mines have already been constructed and are in operation," he continues, "such as Cigar Lake, McCarther River, McClean Lake, and Key Lake, this last one being very close to the company's Falcon claim and big names in the industry are working these mines such as Cameco, Denison Mines Corp., NexGen Energy Ltd., and Rio Tinto Plc. Since they are in the same belt along the east side of the Athabasca basin, the prospects for significant discoveries on North Shore's claims are clearly very good."
"Lastly," he concludes, "we have an important catalyst that is likely to get the stock moving, which is the fact that the company will be starting a drilling program this Spring. North Shore has been granted its Falcon claim by prospect generator Skyharbour Resources Ltd., which has many other claims in the area and adjacent to Falcon, in return for a stake in the outcome of its exploration activity."
"North Shore Uranium is therefore rated an Immediate Strong Speculative Buy."
Ownership and Share Structure
Reuters provided a breakdown of the company's ownership and share structure, where management and insiders own approximately 2.47% of the company. According to Reuters, President and CEO Jordan P. Trimble owns 1.54% of the company with 2.79 million shares, Director David Daniel Cates owns 0.70% of the company with 1.27 million shares, and Chairman of the Board James Gaydon Pettit owns 0.23% of the company with 0.42 million shares.
Skyharbour reports that institutional investors own approximately 19.84% of the company, as Alps Advisors, Inc., owns 8.28% of the company with 14.99 million shares, Mirae Asset Global Investments (U.S.A) L.L.C. owns 4.83% of the company with 8.76 million shares, Sprott Asset Management L.P. owns 2.74% of the company with 4.96 million shares, M.M.C.A.P. Asset Management owns 2.02% of the company with 3.66 million shares, Incrementum AG owns 1.30% of the company with 2.36 million shares, Vident Investment Advisory, L.L.C. owns 0.34% of the company with 0.61 million shares, and DWS Investment GmbH owns 0.33% of the company with 0.60 million shares.
According to Refinitiv, there are 181.16 million shares outstanding with 176.36 million free float traded shares, while the company has a market cap of CA$101.5 and trades in the 52-week period between CA$0.32 and CA$0.64.
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