Firestone leads in Alberta uranium hunt

A young prospector stopped by the Vancouver, British Columbia, offices of Firestone Ventures Inc. last winter, enthusiastically promoting a diamond property he had explored in Alberta.

But Lori Walton, Firestone's president and chief executive, looked past recent hoopla over evidence of kimberlites in Alberta. With rare insight, she snatched up something else in the young man's portfolio.

"I took a look at his uranium property in southern Alberta and liked what I saw," said Walton in a recent interview.

The longtime geologist had been watching a steady climb in uranium prices in recent years, a trend that continues today. Uranium's spot price soared past $33.50 per pound in late November, up from $20.20 a year ago and $7.10 five years ago.

Analysts say a global supply gap that's expected to widen as nuclear energy regains prominence is the culprit. The world's 435 nuclear reactors currently need about 160 million to 180 million pounds of uranium per year, but world uranium production totals only 100 million pounds. Demand is expected to further increase as at least 50 new reactors come on stream in China, Taiwan, Russia, India, Brazil and Eastern Europe. Even with the sharp increase in price, world uranium production is only expected to reach 115 million pounds annually by 2010, they add.

Canada world leader in uranium

While Canada is a world leader in uranium production, Alberta may come up with its own need for "yellowcake." The possibility of using nuclear power to extract oil from the province's extensive tar sands was studied two years ago, but the feasibility of such a project would depend on the price of oil and gas as well as the price of uranium.

"A small reactor might be the way to go, but like everything else, these ideas and perceptions evolve over time," Walton said.

In May, Firestone bought 100 percent interest in the prospector's 22,316-acre Alberta Sun property for $10,000 and a 2 percent net smelter royalty. Alberta Sun is located 30 kilometers south of Fort Macleod.

The company also expanded its position, obtaining additional mining permits that bring to 110,000 acres its total uranium claims in southern Alberta.

"We've gone out and done a little prospecting and found features that tell us we're on the right track," Walton said.

Walton's interest in uranium dates back to the 1970s.

"The last time uranium prices were high was in the 1970s. In 1981, the price dropped and all exploration ceased. The Alberta government put out an excellent report (Alberta Geological Survey Open File Report 1994-8) in 1994, but people were distracted by gold and diamonds," she said.

Many promising areas in southern Alberta, like the Alberta Sun project area, were never advanced by follow-up work or drilling, Walton said. "Most of the attention has been on the Athabasca Basin in northeastern Alberta."

Alberta relatively unexplored

Still, most of Alberta, including the Athabasca Basin which stretches east across the border into Saskatchewan, is relatively unexplored for uranium, said Reg Olson, mineral deposits section leader for the Alberta Geological Survey.

"There is at least a small uranium discovery (perhaps a few million in-place pounds) at a location near Maybelle River within the Athabasca Basin," he said. "As well, there recently has been potentially important uranium deposits discovered in westernmost Saskatchewan at a locale named Shea Creek, which is just a little south of the now-closed Cluff Lake uranium mine. The Maybelle deposit is currently being explored by Cogema Resources, which is the operator on behalf of a joint venture.

"Having said there has been relatively little exploration of the Athabasca Basin within Alberta, the entire western portion of the basin was staked during 2005," he added.

The government's report on southern Alberta outlined promising results of early exploration of that area. "At one occurrence, anomalous radioactivity is up to 2,000 cps (SRAT SPP2N), and a rock sample assays greater than 2,000 parts per million uranium, 13 ppm molybdenum, 78 ppm vanadium and 4 ppm selenium (anomaly 82H-23)," the report said. "Upriver about 5 km there is a second occurrence with anomalous radioactivity up to 900 cps and a rock sample that assays 85 ppm uranium (anomaly 82H-21; Ibid). Follow-up work was recommended for this area, but was never done."

In a roundabout way, the report is actually responsible for the surge of interest in Alberta's uranium prospects, Olson said.

"Lester VanHill, a young Alberta-based geological technologist-prospector came into our offices last year just before Christmas to ask me if there was any publicly available information about uranium that he might read and follow-up on.

I referred him to OFR 1994-08, and specifically mentioned a reported uranium occurrence along the Waterton River in southern Alberta that had been discovered during the early 1980s (the tail end of the last uranium 'rush' in Canada, but never followed up on," he recalled.

"Lester subsequently staked this locale, and shopped it around to several junior exploration companies.

Firestone was the company that optioned the property from him.

As a result of this staking, and Lester speaking to various other companies, a staking rush started during early 2005."

A half dozen juniors staked

A half dozen juniors, including Marum Resources Inc., Sandswamp Exploration Ltd. and North American Gem Inc., grabbed some 4,000 square kilometers in claims running south of Calgary to the Montana border and east toward Cypress Hills.

When the Alberta Sun prospect came across her desk, Walton recognized an opportunity.

"Nowadays, a lot of people don't have experience in looking for uranium," she said. "I looked for uranium when I was a student at the University of Alberta around the Baker Lake area."

Drawing on those early skills, Walton led Firestone to confirm the government's findings in initial field work this summer. "Composite grab samples of isolated organic debris material returned up to 7,640 ppm uranium, or 0.901 percent U3O8," Firestone reported. "Grab rock samples from a second area 40 kilometers southeast returned 57 to 150 ppm uranium. Elevated vanadium, molybdenum, arsenic, and lead values in addition to hematite, carbonaceous material and green shale units were noted at both localities and are important indicators of sandstone-hosted uranium."

Firestone spent $125,000 on an aggressive exploration program, with sampling, prospecting and mapping, followed by airborne geophysics and drilling.

Low-grade uranium at Alberta Sun

The geological target for the Alberta Sun uranium project was sandstone-hosted or "roll-front" uranium. In these deposits, uranium is spectacled throughout the rock and tends to occur in small quantities at low-grades. However, they account for 13 percent of global uranium production.

"Much of the uranium in the world comes from high-grade deposits so concentrated they may need robots to actually mine it," Walton said. "That's the case in northern Saskatchewan."

Because deposits seen in southern Alberta occur in low concentrations, Walton believes Firestone's Alberta Sun may be amenable to low-cost and environment-friendly injection-solution or ISL mining methods, which involve drilling holes in the ground and injecting water, oxygen and a little baking soda into the formation.

"It dissolves the uranium out of the rocks and then we can pump it out of the ground," she said. Examples of successful ISL uranium mines include Cameco's Crow Butte mine in Nebraska and the Smith Ranch-Highland mine in Wyoming.

Firestone, which owns five other mine projects including a zinc property in Guatemala, is currently preparing a drill program for Alberta Sun in 2006 with the help of Apex Geoscience Ltd., an Edmonton-based consulting firm. Michael Dufresne, a principal of Apex, co-authored OFR 1994-08.