Uranium Resources plc - Coverage Initiation & 2011 Drilling Update
Uranium Resources plc (URA)
Price: 2p Recommendation: Speculative Buy Market Cap: ?12.3m
Drilling Update at Mtonya Prospect in Tanzania
? Completed 4,580m (15 holes) of the 6,850m 2011 Diamond drilling programme at the Mtonya project in southern Tanzania.
? Complete assays have been received for 7 holes out of the 15 completed.
? First assay results include significant intercepts as follows:
Hole
| From (m) | To (m) | Length (m) | U3O8 (ppm) |
DH014 | 262.9 | 265.7 | 2.8 | 127 |
DH023 | 215.6 | 218.4 | 2.8 | 123 |
DH035 | 219.8 | 222.1 | 2.3 | 149 |
DH015 And Incl. | 32.1 39 39 | 33.0 45.0 40.7 | 0.9 6.0 1.7 | 136 561 1,897 |
DH034 | 37.2 | 38.2 | 1.0 | 1,079 |
? The drilling results from holes 14, 23 and 35 prove the company's exploration model and confirm the occurrence of multiple uranium roll-fronts at depth.
? The 2011 drilling programme continues on a wide-spaced grid with a focus on establishing the magnitude and geometry of roll-fronts while generating targets for resource-definition aircore drilling.
Comment
The 2011 programme is designed to test the company's proprietary model of extensive roll-front mineralisation at depth, identify a significant sandstone-hosted roll-front uranium deposit amenable to in-situ recovery and extend the near-surface uranium mineralisation. There are main two points to be taken from this announcement:
? Further high-grade, near-surface uranium has been defined in a region adjacent to Mantra's 100Mlb U3O8 Mkuju River Project in Southern Tanzania. This provides further evidence of the fertility of the region. However, it should be noted that these results are likely to represent pods of uranium above the water table rather than the roll-front style the company is targeting.
? Geological and mineralogical intersections from drill core in holes DH014, 023 and 035 support the company's geological model. Whilst the uranium intersections are not currently economic, the presence of other elements coincident with the correct geology supports the company's roll-front model. The results from the drilling provide strong evidence that the wide-spaced drilling (average of 300m centres for holes compared to Mantra's 15 x 50m spacing) has intersected the fringes of roll-front uranium mineralisation.
The company intends to define uranium deposits that are amenable to in-situ leach mining. In-situ recovery techniques are common in Kazakhstan and North America. They involve pumping a weakly acidic solution down into the uranium host unit, where the uranium will dissolve into the solution. The pregnant solution is then pumped back to surface. In order for this process to work, the host should ideally be a porous sandstone that is sealed by an impermeable base and ceiling so the porous host acts as a conduit for the solution to flow through. Initial indications are that the Mtonya geology looks set to support this process.
Drilling continues at Mtonya and we look forward to the next batch of results before the end of the year. The company is also looking at securing a Reverse Circulation drill rig that will greatly speed up the drilling progress (currently being undertaken by slower Diamond drilling techniques).
Recommendation
We initiate Uranium Resources as a SPECULATIVE BUY. We are optimistic that further targeted drilling based on the knowledge gained from the recently completed drilling will return economic grades and widths of uranium in an area with strong potential for in-situ uranium extraction.
Duncan Hughes, +44 (0)20 7634 4775
duncan.hughes@ambrian.com
Ambrian acts as Nomad and Broker to this company
Metals & Mining Research
Duncan Hughes, +44 (0)20 7634 4775
duncan.hughes@ambrian.com
Adam Kiley, +44 (0)20 7634 4777
adam.kiley@ambrian.com
Nick Mellor, +44 (0)20 7634 4762
nick.mellor@ambrian.com