Azincourt Energy (TSX-V: AAZ)(OTC: AZURF) CEO Alex Klenman on Vectoring-in on Uranium Mineralization at the Flagship East Preston Project in Canada’s Prolific Athabasca Basin
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president & CEO of Azincourt Energy — Mr. Alex Klenman. Alex, how are you today?
Alex Klenman: I'm great, Gerardo. It's always great to get on the line with you and talk deals. And really excited about Azincourt… so happy it's something you want to cover and we're happy to be involved.
Gerardo Del Real: Well, listen, it's a story that we definitely want to help tell for two reasons. One, I'm extremely bullish on the uranium space. I think we're in the early stages of what's going to be a phenomenal bull cycle. And two, it appears, and it's early, — I'll preface my statement by saying that it's early — but it appears you may be onto a significant discovery.
I would love for you to provide the context and introduce the company a bit. And tell us why you're involved because I know you're selective as well.
Alex Klenman: Yeah, I had some success in the uranium space as an investor back around 2010-11 and that was really my introduction to the space. I missed the big run in 2007-08. But in 2010-11, pre-Fukushima, the market was crazy. We had US$75 [per pound uranium] spot. Market caps exploded and a lot of money was made.
And so I wanted to get into the space from a management side and from a professional side and did so in 2017. I was already a shareholder of Azincourt; at the time it was called Azincourt Uranium. And I knew some people involved, and they invited me in and I've been there ever since.
We're an exploration and development company. We stuck to our guns in the bear when spot was US$20/lb, US$22/lb. And we earned the majority interest of the East Preston Project from the great partner, Skyharbour Resources, whom I know you know well. And they helped us achieve in a bear market.
The majority of our East Preston Project — which is in the western Athabasca surrounded by billions of dollars in market cap — we have Orano directly to the east of us… we've got NexGen just to the north of us. There's several billion dollars right there in market cap.
And you've got others in the area. You've got Cameco and you've got Fission. You've got others. So we're in a really good spot and beginning to bear fruit with our long-term exploration of East Preston.
Gerardo Del Real: Excellent! Let's talk about why I say you may be onto a discovery of significance. Care to provide the context there?
Alex Klenman: Absolutely. So over the last several years, we've done everything we needed to do on essentially virgin ground. We've done a number of geophysical surveys. We've done a number of ground surveys. We've been able to delineate almost 30 kilometers of conductive trend, which is really the first order of criteria for basement-hosted uranium deposits.
So we've got the lengthy trends, which give you the first targeting. We've gone in now over the last few years and done limited drilling. And everything we're doing is incrementally pointing us towards discovery. Last year, we began to run into elevated uranium at 2X to 3X background for the first time — and that was good.
And now this year, we're halfway through our biggest drill program to-date. It's a 6,000 meter program targeting several zones of interest. And we're beginning to see, in one of the zones in particular, very strong alteration. And a lot of big discoveries have been made by chasing alterations in the basin. Millennium, Key Lake, and McArthur River were all discovered through various methods of chasing the alteration. So alteration is critical. It's typically the halo around a deposit, or mineralization, so we're running into that.
Hematite is the main giver that we're seeing at this point… and that’s good. And now we're beginning to see the clay. The clay you typically find closer to the mineralization. And we're getting up to 10X background radioactivity now in a couple of the holes.
So these are things that when, from a geological standpoint, you know you're getting closer to the goal, and that is significant, or impactful, mineralization. And we're seeing all of the indicators, and it's really a step forward — a big step forward.
I mean, the alteration zone that we're running into here is about 800 meters at current pace. And there are these hematite alteration zones that are over a hundred meters thick in the drill holes… and combine that with the radioactivity and, now, the beginnings of the clay.
I mean, last year, if we ran into significant mineralization, we would've probably been shocked at that development just simply because it would've been an extreme bit of luck. But at this point, if we run into it tomorrow, let's say, we won't be shocked because we're seeing the right environment for it to happen. So very exciting for sure!
Gerardo Del Real: Now, this alteration zone that you're talking about, it's important because this plays a critical, critical part in locating those specific areas along the conductor trends, right, where these massive deposits have been discovered?
Alex Klenman: Absolutely. I mean, that's what I mean by saying if we had run into that mineralization prior to this development, it would've been like, well, whoa, that doesn't make a lot of sense! We'd be happy, but how can you run into it without seeing the alteration? Now we're seeing the alteration. And really, this is a very logical, methodical way to vector-in to deposition. And so we're happy.
We're obviously seeing all of the things we need to see. Now look, 10X background radioactivity, there are other radioactive elements in the area. We know that. You get thorium, typically, that gives you a bump and potassium and things like that. So with what we're seeing with 10X background, we are of the opinion that you simply are not going to get that much of a bump from thorium, for example.
So we do expect to see mineralization in the assay results; to what degree and what value is yet to be determined. But we've moved several drill pads into this giving zone, the K-Zone. We've gone deeper in several holes. And you don't typically move your drill pads into areas and drill deeper for negative reasons — so this is a good sign.
And we're probably going to spend a little bit more money than we initially thought as well… so that's always good. It's a good thing to happen as well.
Gerardo Del Real: You mentioned the billion dollar market caps of several companies. Where is Azincourt today just to give people some perspective there?
Alex Klenman: We're in that C$30 to C$40 million range. We've got a lot of stock out. It's the one thing that North American investors; funny, when I talk to the Australian funds, they kind of laugh when I sheepishly talk about how much stock we have out. They don't seem to mind and neither do the funds.
A good point here to make to your listeners and your audience is that Azincourt has yet to make the big discovery. Yet, we have over twenty institutional funds that have invested in the deal. And I think that's a validation not only of the sector, as you mentioned… the beginning of a bull… but also the prospectivity of East Preston. And they don't typically like to take on risk — and yet, here we are!
We haven't run into the hole that changes that risk factor yet. We're really close. But we've been able to raise almost C$15 million in the last 18 months. And I think that has a lot to do with the validity of the projects we have, particularly East Preston — and that's a good sign.
So the retail investor knows that the due diligence that the funds do is very intense, and very strong, and very detailed. And we survived that. I think it would be hard to find another company at our stage of development with this level of institutional support.
Gerardo Del Real: How's the treasury looking? You mentioned additional drilling; you mentioned drilling deeper. How’s that looking?
Alex Klenman: We've got north of C$10 million in the bank; probably around C$11 million at this point. We have an active partner in Skyharbour who will pick up some of the cost of that overage. It's funny, a lot of retail investors are worried; we've had a couple of drill programs. Two out of the last three that we've done — which were small programs but late starts — the early onset of spring has caused us to fail twice out of three times early in the program.
So this year, we're extremely well funded… we’ve got a big running start on the program. And now we're running into, forget about the warmth, we've run into extreme cold. Extreme cold has increased the cost of doing business where we are. So we've had increased fuel costs and road maintenance and things like that. So it's funny, everybody always says, let's hope it's super cold! Well, when it's -50 degrees — equipment tends to give you problems!
Gerardo Del Real: Alex, before I let you go, we talked about the treasury; we talked about the institutional holdings; we talked about the potential for a significant discovery here. Tell me a bit about the team. And then, tell me when you think you'll have assays in-hand so that we're chatting about something more tangible, right?
Alex Klenman: Yeah, you bet. One last thought before we go to that is we do have a second project called Hatchet Lake. I urge anybody who has an interest in us to look at our website and learn about Hatchet Lake too. It's a second project we have in the northeastern side of the basin, and we'll be doing at least a minimum million dollar drill program there as well in the coming 12 months — so lots of drilling!
In terms of personnel, we brought a geologist onboard in late-2020 named Trevor Perkins. And Trevor is our VP Exploration. He's made several impactful discoveries, most notably the northern extension at McArthur River; 110 million pounds [U3O8]. So he knows how to make a discovery. And this is the first big kick at the can that he's had with us.
He did oversee last year's program. And again, we started to see really good incremental improvements. And this year, we're beginning to see exceptional improvements. So I'm happy to have Trevor running the drill program. He's the main guy; happy that he's involved. And you love to have a guy who's been there, done that. And that's good; that's what we have with Trevor.
And in terms of our treasury, again, plenty of money. We can handle the overages without problems. We've got lots of warrants that are pretty much in-the-money at this point. But we also have the funds… and the funds are willing to keep funding us because they have an idea that they want to be involved with discovery. Discovery in a bull market — I don't think there's anything like it!
Funny, if you asked me, would we like a drill-hit today? I'd say, yes, we'd love to see that big mineralized run today. But in the back of my mind, would I rather see uranium at US$80/lb, US$90/lb, US$100/lb spot? Yeah, probably! So we're drilling but we're heading into a great run, and we're happy that things are going the way they're going.
Gerardo Del Real: Well, I think US$85/lb, US$90/lb spot price is going to be conservative here in the midterm. I think you are hitting the sweet spot of the cycle if you're able to prove up a discovery. And you know I love a good exploration story, and I love me a discovery — which is why I reached out.
Thanks, Alex, for coming on… looking forward to having you back on!
Alex Klenman: Yeah, appreciate it, Gerardo, as always! And if anybody needs more details on what we do, visit the website or give me a call directly. Thank you.
Gerardo Del Real: Awesome. Thank you, Alex. Appreciate it!Click here to see more from Azincourt Energy