Kivalliq Energy’s (TSXV: KIV; US-OTC: KVLQF) hunt for another high-grade uranium deposit at its Angilak property, 350 km west of Rankin Inlet, Nunavut, may well be over, with new assay results that have transformed the company’s Dipole prospect into a discovery.
The first drill holes at the prospect hit mineralized shear zones between 15 to 110 metres deep across a 150-metre strike length at surface, with assays returning 2.3% uranium oxide (U3O8) over 1.3 metres, and from 0.14 to 0.2% U3O8 over 2.1 to 8 metres wide.
Jim Paterson, CEO and director of Kivalliq, says the discovery is identical to the company’s Lac 50 deposit, located 25 km northeast, and is “proof-of-concept” that there’s a district-scale opportunity across the 1,000-square-foot property.
“The purpose of the program was to prove that there’s a much bigger picture at play here,” he tells The Northern Miner at the company’s headquarters in Vancouver. “And we’re getting to the point now where we can call it a district.”
Kivalliq has spent the past few years fine-tuning its exploration criteria by studying the geophysical and geochemical signatures at its Lac 50 deposit, with the hope that it will flag other deposits hidden beneath the northern landscape.
Lac 50 — which is one of the highest-grade uranium resources in the world, outside the prolific Athabasca basin — has an inferred resource of 43.3 million lb. U3O8 at 0.7% U3O8 in 2.8 million tonnes, using a 0.2% U3O8 cut-off.
“We wanted to figure out how to explore for these things,” Paterson says. “So we took what we learned and applied it elsewhere across the property, and found that Dipole lit up as a big high-priority target.”
The nine-hole, maiden drill program centred on a 2 km long, low-frequency electromagnetic survey anomaly that coincides with an open-ended, 3.4 km long uranium-in-soil anomaly.
“When you’re this far north you need to build pounds — but it’s the type of pounds that’s important,” Paterson says. “We’re after shallow, high-grade material over broad intervals that can be amendable to starter open pits, and Dipole fits the bill.”
Drilling at Dipole has outlined a 25- to 48-metre-wide zone of stacked mineralized shear zones cross-cutting a hematite-carbonate and chlorite altered graphitic tuffs of Archean age.
Joining the round-table discussion, Jeff Ward, president of Kivalliq, reckons the deposit model is identical to the structurally controlled, basement-hosted deposits beneath Saskatchewan’s Athabasca basin, such as Cameco’s (TSX: CCO; NYSE: CCJ) Eagle Point mine, or Fission Uranium’s (TSX: FCU; US-OTC: FCUUF) Triple R deposit.
Indicated resources at Triple R add up to 2.3 million tonnes at 1.6% U3O8 for 79.6 million lb. U3O8, with an inferred resource of 901,000 tonnes at 1.3% U3O8 for 25.8 million lb. U3O8. The high-grade core of the deposit has 110,000 tonnes at 18.2% U3O8.
“We’re looking at similar roots of a major plumbing system,” Ward says. “Only here the overlying basin material has mostly eroded away, so we don’t see the unconformity-hosted style of deposits, just what’s in the basement.”
A company technical report suggests that mineralization at Lac 50 could also be related to magmatism at uranium-rich iron-oxide-copper-gold deposits that is similar to BHP Billiton’s Olympic Dam deposit in South Australia.
Paterson adds that although the company can expand the resource at Lac 50, it will instead explore its greenfield targets, which would return “the most bang for your buck.”
He says that “in these market conditions you have to be careful about how you spend money, and you want to hit your highest priority targets, and explore the upside. When the market turns, we can raise the capital to pound resource drilling into Lac 50, Dipole or elsewhere.”
Kivalliq is also eyeing another attractive target called RIB, just south of Dipole, which bears a similar 3.6 km long uranium-in-soil anomaly along a geophysical trend, and some historic drilling that returned 0.1% U3O8 over 9 metres.
Both Dipole and RIB will be the focus of next year’s drilling campaign, along with some following up at the company’s other uranium projects, such as Hatchet Lake and Genesis in northeastern Saskatchewan.
“We’ve taken advantage of the downturn to pick up high-quality uranium exploration assets in Canada, and when the market turns around, we think the value of those assets will increase,” he says.
Encouraged by the company’s first-ever drill program at Angilak, Cantor Fitzgerald analyst Rob Chang has issued a “buy” rating on the stock and a 15¢ price target.
Kivalliq shares have traded within a 52-week range of 6¢ to 22¢, and last closed at 8¢. There are 216.8 million shares outstanding for a $18.4-million market capitalization.
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