Purepoint looks to win over doubting Thomases

Being one of the first juniors in a region dominated by majors can make you the envy of your competition.

But while Purepoint Uranium (PTU-V, PUMGF-O) was among the original juniors to stake claims in Saskatchewan’s renowned Athabasca basin, the company has yet to translate that early bird status into sustained market success.

Optimism over a winter drill program at the company’s Turnor Lake project fuelled a 90% jump in Purepoint’s shares in the final months of 2005, but those gains were washed away after results from the 12 exploratory drill holes were released in April. The drill holes did not intersect uranium and shares fell 16%.

Even so, Purepoint president and chief executive Chris Frostad remains bullish on Turnor Lake, and calls it the company’s priority property. The holes did return elevated radioactivity — a positive indication of nearby uranium deposition, Forstad says.

“We’re not trying to drive the drill through an orebody; that’s like blindly shooting into the woods and trying to hit a bear,” Frostad says. “We’re trying to gradually zero in on a target that would house a deposit.”

Purepoint is putting $700,000 into further drilling at the site for the third quarter of 2006. With targets a shallow 185 metres in depth, the company says it will be able to complete another 15 to 20 drill holes by summer’s end.

The company has roughly $3 million in the bank and expects to have spent the funds on exploration — with roughly half going toward its Turnor Lake and Red Willow projects — by the end of the year. Frostad says the company will likely go to the market for more funds in the coming months.

The site, 97 sq. km. in size, is located 12 km east of Cameco’s (CCO-T, CCJ-N) high-grade uranium zone at La Rocque Lake.

Purepoint was able to secure Turnor Lake along with its other properties — which extend mainly along the eastern, northern and western section of the basin — in 2002, when it was sniffing around the Athabasca basin trying to find ways to bring discovery costs down.

With uranium prices still in the tank at the time, the cost of discovery was roughly the same as the mineral’s spot price — both were sitting in the range of US$8-US$10 per lb.

Such poor economics led big players like Cogema Resources and Cameco to abandon some of their permits.

Sensing opportunity, Purepoint sifted through data compiled by the companies, and began targeting permits just before interest in uranium showed signs of renewal.

As Frostad says, the “party bus” full of other hopeful juniors was pulling into the area, but by then, Purepoint had already staked some of the prime real estate.

Purepoint currently has a 100% ownership of 2,400 sq. km. of prospective land, and much of that is in the eastern part of the basin — where most of the uranium deposits have been found.

Besides Turnor Lake, the company’s next most significant project is its 130-sq.-km Red Willow project — which, like Turnor, is located in the eastern section.

It was there that last year a ground geophysics program found an extension of a graphitic conductor previously found by Cameco to host anomalous uranium mineralization.

The new 2.5-km conductor target is located close to surface, at less than 90 metres depth; the company plans to begin drilling this winter.

Red Willow is on trend with the basin’s major mine corridor, which hosts the JEB, Midwest, Cigar Lake, McArthur River and Millennium uranium deposits.

Frostad is also upbeat about the company’s William River project in the western side of the basin. The site hosts a domed structure that lifts to near surface.

Purepoint has interpreted the magnetic contours of the dome to mean that targets may lie as close to surface as 300 metres in depth.

Frostad’s optimism for the site has been further buoyed by UEX’s (uex-t) success in the area. UEX has made three discoveries near William River.

“God bless UEC for lighting it up,” Frostad says. “They’ve had fantastic results that show that high ore grade does exist out there.”