It’s some of the richest mineralization on the planet.
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And it lies on the eastern rim of the Athabasca Basin of northern Saskatchewan.
That geological feature is host to the world’s highest-grade uranium deposits and is responsible for a sizable chunk of global uranium production.
With gold on a tear for much of 2020 and uranium only slowly recovering, you’d be forgiven for missing that IsoEnergy (ISO.V; ISENF.OTC) has made the richest new uranium discovery in the region (or anywhere else for that matter).
Here’s just a sample of the assays that the Hurricane zone within its Larocque East project has yielded in just this past winter and summer:
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• 8.5 meters of 19.6% U3O8, including 2.5 meters of 63.3% U3O8
• 8.5 meters of 33.9% U3O8, including 2.0 meters of 62.8% U3O8
• 5.0 meters of 48.8% U3O8, including 4.0 meters of 57.5% U3O8
If those were gold grades, they’d equate to between 7 and 17 ounces per tonne! Just taking that 5.0-meter interval of 48.8% U3O8 and a current $30/lb. U3O8 spot price, you get rock worth north of $32,000/tonne!
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As you’re about to see, while IsoEnergy’s share price has jumped on these results, it’s nowhere near its ceiling, especially given all the advantages this potential deposit offers.
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The Biggest Uranium Discovery In The Past Few Years
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With the uranium sector in a bear market since the Fukushima nuclear disaster in 2011, the universe of companies actively exploring for new deposits is tiny.
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In fact, IsoEnergy’s Hurricane target is the only bona fide uranium discovery in the past couple of years, and the company is practically alone with its ability to generate significant exploration news.
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Combined with the grades of the potential deposit developing at Hurricane, ISO is on track to benefit from an uptick in uranium prices in the next few years.
Plus, as you can see from the map below, the target lies hard against the company’s Larocque East property boundary, with the resource-hosting trend continuing onto ground owned by sector giants Cameco and Orano.
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| The trend that transects Larocque East and contains the Hurricane discovery continues on to property owned by sector heavy hitters Cameco and Orano. |
With many of the highest grades from Hurricane coming from holes drilled very near that boundary, you can bet that Cameco and Orano are watching ISO’s work closely, and no doubt pondering testing their side with the drill bit at some point.
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Possible Billion-Dollar-Plus Resource
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IsoEnergy has a drill program planned for this winter that will follow up on the good results that the current program is turning in.
And while a resource estimate is still several months away, that hasn’t stopped sector analyst Haywood Securities from putting out a guesstimate on Hurricane based on the drilling to date and the potential the target is showing as drills move south.
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| Haywood Securities estimates the high-grade, western part of the Hurricane zone at Larocque East may contain 45 million lbs. of U3O8. |
Haywood is projecting that the current mineralized footprint for the target gives it 45 million pounds of U3O8, based on average grades between 8% and 10%.
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Depending on how the remaining drilling from this year and the program planned for next year turn out, the firm sees Hurricane’s resource going as high as 65 million pounds.
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At their low-end estimate of 45 million pounds (and applying a $30/lb. uranium price) Hurricane’s top-line in situ value would be $1.35 billion!
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Hathor Takeout Highlights Potential
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Granted, that top-line number is probably an unrealistic assessment of Hurricane’s value, as you have to take the costs of extracting that resource into account.
But the experience of Hathor Exploration in 2011, during the last upcycle for uranium, provides a good template of what could happen for ISO.
Hathor drilled out a 57.9-million-pound U3O8 resource on its Roughrider deposit in the eastern Athabasca in the late ’00s and early ’10s.
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Roughrider’s resource spawned a takeover battle between Cameco and Rio Tinto, one that Rio Tinto eventually won with a C$654 million bid.
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Now the uranium market is showing signs of life again, and IsoEnergy’s Hurricane zone could well have a similar sized resource (at higher average grades).
And get this: ISO currently sports just a C$120 million market cap!
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That valuation represents a five-fold jump from ISO’s trading levels in mid-March, when Covid caused companies of all stripes to bottom out.
Since then, a revival in the overall market — and a sense that production cuts by Cameco and Kazakhstan have set the uranium sector up for a rebound — have combined with great Hurricane assays to light a fire under IsoEnergy.
Those assays are likely to continue in the coming weeks, as the visual evidence and scintillometer results from recently drilled Hole 76 suggest more high-grade results are on the way.
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| The visual evidence and scintillometer readings from recently drilled Hole 76 demonstrate the rich nature of the uranium mineralization at Hurricane. |
Note that the interval between the red lines in the image above (which denotes off-scale scintillometer readings) is pitch black. That strongly suggests this hole will deliver more high-grade uranium when it comes back from the lab.
Meanwhile, ISO’s current sideways trading action seems to offer a terrific buying opportunity.
Thanks to recent private placements, it has all the money it needs to execute on a series of drilling programs and move Hurricane towards an initial resource estimate.
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History has shown that jumping onboard a company as it approaches the release of its initial resource estimate for a discovery is one of the most lucrative times to get in.
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Boasting the only recent major uranium discovery and the status of one of the few active uranium companies generally, ISO is in an ideal position to leverage higher uranium prices in the coming year.
With a resource that could well be larger (and higher grade) than Hathor’s Roughrider deposit, an eventual takeout at multiples of IsoEnergy’s current valuation is a distinct possibility.
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