Categories: Energy
Topics: General Energy

ALX Uranium (TSX-V: AL) CEO Warren Stanyer on LOI for the Close Lake Uranium Project in the Athabascan Basin: “Location, Location, Location”

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the Chairman and CEO of ALX Uranium (TSX-V: AL)(OTC: ALXEF), Mr. Warren Stanyer. How are you today?

Warren Stanyer: I'm feeling good, Gerardo. Thank you. It's been a long haul to get this deal done that we announced this morning, so it's been over a year. Sometimes the big ships move slowly.

Gerardo Del Real: Yes, sir. Let's get right into it. I know you're excited. I'm excited for you because I think 2019 is going to be a pivotal turn around year, a continuation of 2018 in the uranium space, but one that is the next step forward. I think the utilities are going to have to start coming back to the table here in the second half of this year.

You've been eyeballing this Close Lake property for quite a while. Before we get into the deal, can you tell people that are not familiar with you a little bit about ALX and a little bit about your background and your past success, so they know who they're talking with.

Warren Stanyer: Thanks, Gerardo. ALX Uranium Corp is descended from Alpha Minerals, which was the company that was a 50/50 partner with Fission Uranium at Patterson Lake. Of course Fission, you hear more about because they're the surviving company that now has complete control of the deposit. But back in 2010 when I joined ESO Uranium, that was a 50/50 deal. ESO was on its last legs. We were down to no cash. We rolled back 10 for 1 on a Friday. It was November the 2nd, 2012. And on November the 3rd, 2012, Patterson Lake was struck with its first mineralized drill hole. So funny how things go. Within about three months, I think, we had $15 million dollars in the bank. So it was like a fairy tale the way things unfolded.

In 2013, we went out and did radon in water in the wintertime on Patterson Lake and hit these incredible intersections right out of the gate in the first follow-up drilling program, because it's just a great way to find uranium in the winter because nothing's moving. The water's not moving. Everything's static. So the radon was coming up from the deposit and was easily found in the sensing equipment that's used by the contractor. So you put a drill on top of it, bang. I think it was something like 10 meters of 30% or so, can't exactly remember. Everything took off. So Fission took us out. We spun out from Alpha Minerals, which was the name change from ESO Uranium. We spun out Alpha Exploration in early 2014.

Alpha did not have the success that we were looking for out of the gate. We end up merging with Lakeland Resources in September of 2015 and that's how we got to ALX Uranium. It has been a tough haul for uranium, as everybody must know, after Fukushima, but we offered a property to Denison Mines and that's the Hook-Carter property in 2016. And for 80%, they bought into Hook-Carter an 80% interest and they paid us 7.5 million shares of Denison, which at the time was worth $4.5 million dollars. It's worth slightly more than that now, because they're trading at $0.70. They've been as high as $1.00. We have basically used that money for general administrative and also for exploration. We haven't had to go to the market very often in the last couple of years. So that's the story of how ALX came from ESO and I've been involved since 2010.

Gerardo Del Real: I was joking with you off air that between ALX and Nevada Sunrise Gold, who you also lead, you're starting to develop a pattern of finding these hidden gems and with some luck, you're going to be onto a couple of discoveries this year. Now as it relates to ALX, Close Lake isn't a new property. It's the very opposite is true, actually. This project has seen 110,000 meters in 170 drill holes of historical drilling. Some phenomenal intercepts.

Can we talk about the structure of the deal and what the next steps are, Warren?

Warren Stanyer: So the next steps are we have an initial period where we have to spend $1.25 million. And that would be on the very first drilling program that is planned and executed by Orano. Orano is a huge company based in Paris, France. They have a Canadian arm called Orano Canada Inc. based in Saskatoon. I've worked with these people all the way back to when I was with UEX Corporation when we first hit the Kianna deposit back in 2005 and that was very exciting.

Some of the same people are still there in the Saskatoon office and when I tap somebody on the shoulder and said, "Hey, what about Close Lake?" That person said, "Yeah. As a matter of fact, well, you're the first person that we'll talk to because you asked us about it." So Orano has a 74% interest. Cameco has a 15% interest. And I'll just round this a little bit. And JCU Canada, which is an arm of four major industrial companies in Japan, like the Sumitomos or the Mitsubishis. There's two others and they have JCU Canada and that goes back to 40 years ago when they first invested in uranium in Canada. So we got this property from, the knowledge of it, it is a well-kept secret and we feel very fortunate to have a chance to assist in the development of it.

Gerardo Del Real: Just to be clear, this is a letter of intent. Assuming it all goes through and you consummate the deal, I know that a reason that you are excited about this property is the fact that despite all of the historical drilling that's been done, most of that was done with widely spaced drill holes. Can you speak a bit to why that's important as far as the discovery potential that you believe still exists on this property?

Warren Stanyer: Okay, so when you look back to the original discovery hole which was Close Lake 11, CL-11 in 1985, it's approximately 1.5% over 22, 23 meters. It created a lot of excitement. People went in different directions around that hole. They did get some mineralization, which you can see in our news release. There were some follow-ups that did actually find uranium as well, but then a lot of widely spaced holes were then placed in the general area, because at the time the feeling was that in uranium, in the Athabasca, you needed one to two kilometers of strike length. And that does apply to many of the deposits that have been found, but with the discovery of Millennium, 1999, 2000, when they first started getting into some really good mineralization, they realized that it was quite tight and quite small in its footprint, although high grade and somewhere in the neighborhood of 100 million pounds now that Cameco has outlined there, but only 100 meters of strike length.

I was reminded of by one of our technical advisors, Charles Roy, who worked with Cameco in Saskatoon for many years. He's a good friend and very knowledgeable and he's excited about Close Lake, as am I, because there's room to have a deposit there that simply just wasn't found. What we learned at Patterson Lake, for example, is that you can be 10 meters away from a deposit and not see uranium more than a couple of hundred PPM. And yet at Patterson Lake, 9 meters away with our discovery hole that suddenly ran 10 meters of a couple of percent. Whatever that number was.

Gerardo Del Real: Sure.

Warren Stanyer: A very good number. So these are very discreet deposits and I feel for the joint venture after all these years with many holes, but this is the story of uranium in Saskatchewan. Wheeler River, which Denison has found Phoenix and Gryphon, that was a 30-year project. I mean, in the late 1980s, they were working there. The hit a little bit of uranium in 1988 in what they call the, you would call it the Z Zone. In Canada, we call it the Zed Zone. In the Zed Zone, there was a couple of little hits. Well, Denison went back there in 2014 and they drilled deeper to a different philosophy and that's how they found Gryphon, which is still growing. I guess they're over 50 million pounds and growing. Again, I'm not looking at all the numbers in front of me.

These are the different philosophies in place today from what people had back in the ‘70s, ‘80s, and ‘90s. So that's what we're looking forward to is doing some techniques around some of the old drill holes, looking for geophysical expressions that say, "Oh, look at this alteration zone." And I know that's how Denison found Phoenix. They followed the alteration that the geophysics outlined, so we're planning to do some of those things in conjunction with Orano. They're the operator. We have some say in the matter, in terms of airing our opinions. They're receptive and they're friends. So we look forward to a fruitful relationship.

Gerardo Del Real: Warren, I look forward to having you back on as you get closer to finalizing the deal and taking the next steps and you actually begin exploration on the property, assuming it all goes well. Thank you so much for taking the time today. Is there anything that you'd like to add?

Warren Stanyer: I guess I would like to say that our new slogan for Close Lake is location, location, location. Anyone that looks at the map can see where we're situated. We're close to Cigar Lake. We're close to McArthur River, the two richest uranium mines in the world. You can never discount that there could be other deposits of equal size and grade that are nearby that just simply haven't been found.

Gerardo Del Real: This is a very high-risk, high-reward business. I wouldn't have it any other way. It's why I'm attracted to it. There's a lot of runway in your stock. Can you share with people what the current market cap looks like?

Warren Stanyer: The current market cap is somewhere in the neighborhood of, let's see, we're at 86 million shares and we're at $0.065, so I guess around $5-6 million. On a good day, it's higher than that. But it's just the way the uranium market is right now and there's been a lot of focus on other groups, on other sectors of the public market. A bump in the uranium price would help us a lot. A trigger event of some kind. A mine that's closing. A supply issue. All of those things would help what we're doing. But in the meantime, discovery still matters and that's what we're after here.

Gerardo Del Real: Best of luck, Warren. Chat soon.

Warren Stanyer: Okay. Thanks, Gerardo. Pleasure.