| Fifty years ago, uranium fever hit Wall Street. It | | | | “The conductor's profile response indicates |
| was then just a few years after a Navajo | | | | a deep and in places, broad source.” |
| shepherd in New Mexico, by the name of Paddy | | | | Virtually all the significant unconformity uranium |
| Martinez, discovered “yellow rocks” | | | | deposits known in the Athabasca Basin are |
| on his property, mistaking them at first for gold. | | | | directly associated with fault structures associated |
| An avalanche of 1950s dollars (more valuable than | | | | with graphitic conductors. Deposits such as Key |
| the ones we have today) poured into mutual | | | | Lake, Cigar Lake and McArthur River were found |
| funds and uranium mining stocks, sending their | | | | by drilling electromagnetic conductors located |
| values to astronomical levels. Get ready for | | | | within magnetic lows. |
| déjà vu all over again, as Yogi | | | | In an interview with Jody Dahrouge, of |
| Berra once said. Trend spotter, James Dines, | | | | Edmonton-based Dahrouge Geological Consulting |
| editor of The Dines Letter, believes uranium | | | | Ltd, he told StockInterview.com, “Early |
| mining stocks could become just as hot, or | | | | indications are that this conductor is similar with |
| hotter, than the Internet stocks of the 1990s. | | | | other known uranium deposits, graphitic |
| (Editor’s note: interviewed James Dines on | | | | conductors with magnetic lows.” On a scale |
| July 20, 2004, when he forecast a “buying | | | | of one to ten, Dahrouge rated the Davy Lake |
| panic in uranium.” Since then, spot uranium | | | | conductor a ten. “It is a long conductor, cut |
| (U3 08) prices have nearly doubled. Over the past | | | | by structures, with deep depth and associated by |
| 35 years, Dines has successfully predicted mega | | | | a late fault,” explained Dahrouge. “It |
| trends in gold, internet, palladium and uranium price | | | | is a high quality conductor that continues to depth, |
| movements). And now investors are chasing | | | | and it is typical of those occurring that are |
| uranium mining stocks again. | | | | associated with known uranium deposits.” |
| A look at industry leader, Cameco (NYSE: CCJ), | | | | Dahrouge described how the MegaTem II airborne |
| which money manager Robert Mitchell called the | | | | geophysical survey was able to pinpoint the |
| “Saudi Arabia of uranium,” shows a | | | | conductor as shallow as 600 meters and running |
| three-year gain of more than 700 percent. Over | | | | deep to 1200 meters. Dahrouge made |
| the past few years, Australian-traded Paladin | | | | comparisons to other uranium deposits in the |
| Resources, skyrocketed from under a dime to | | | | Athabasca Basin. “The Sue Deposit near |
| over $2/share (A$). A recent Forbes magazine | | | | McLean Lake is associated with an |
| cover story, entitled Going Nuclear, analyzed | | | | electromagnetic conductor that is approximately |
| uranium’s recent price surge, “One | | | | 2.6 kilometers long,” he said. “Based |
| reason the price of uranium should keep escalating | | | | on our work at Waterbury Lake, we identified an |
| is that producers are only starting to ramp up to | | | | 8 kilometers long conductor associated with the |
| meet the strong demand. Utilities globally need 180 | | | | Midwest Deposit(s). The 'P2' conductor at |
| million pounds of uranium annually, but at this point | | | | McArthur River is approximately 13 kilometers |
| a mere 108 million pounds are coming out of the | | | | long. This feature was first identified in 1984, by a |
| ground.” | | | | ground Deep EM Survey. The Shea Creek |
| Why the sudden jump? A Morgan Stanley | | | | deposits, located south of Cluff Lake, are |
| institutional report, published in December 2004, | | | | associated with an approximately 25 kilometers |
| explained that through the 1990s, uranium oxide | | | | long conductor, known as the Saskatoon Lake |
| prices stayed low because surplus uranium came | | | | Conductor.” Dahrouge added, “These |
| into the market from weapons decommissioning. | | | | deposits are located at depths similar to what we |
| That surplus inventory worked its way through | | | | expect at Davy Lake.” |
| the market. The Morgan Stanley analyst forecast | | | | What is probably most significant is |
| a “deep supply-side shortage” of | | | | Strathmore’s gamble, by exploring away |
| uranium, citing that new mining production | | | | from the eastern parts of the Athabasca Basin, |
| hasn’t yet come online to remedy the | | | | some 300 kilometers from the eastern |
| deficit. In the year-ago forecast, the uranium | | | | Athabasca Basin, where the major discoveries |
| deficit was expected to grow to nearly 20 million | | | | have been made. “It was virtually |
| pounds this year (from a surplus of 6 million | | | | unexplored,” Dahrouge said with excitement |
| pounds in 2003), and then leap to a peak deficit | | | | in his voice. “It’s really virgin |
| of more than 35 million pounds in 2006. Deficits in | | | | ground.” While there is ample evidence |
| excess of 30 million pounds were also anticipated | | | | suggesting multiple uranium deposits in the |
| for 2007 and 2008. According to the Morgan | | | | Athabasca Basin, other junior exploration |
| Stanley analyst, $50/pound may be possible in the | | | | companies are looking at the shallow parts of the |
| spot price for uranium oxide, known in the trade | | | | eastern basin, which may not likely yield economic |
| as “yellowcake.” | | | | uranium ore. One pundit acidly questioned some of |
| Mining Newsletters Favor Strathmore Minerals | | | | the current exploration activity in the Athabasca |
| What’s that mean for uranium stocks? | | | | region, “Are they really re-flying old ground |
| Higher prices should be anticipated as more | | | | that’s already been flown a hundred times, |
| investors, mutual funds and hedge funds search | | | | or are they just releasing old data to save |
| out the best returns. While the lion’s share | | | | money?” Dahrouge pointed out that the |
| of investment dollars is likely to chase | | | | uranium appears to be running deeper for many |
| Cameco’s price higher, the robust | | | | of the newer discoveries, as he believes the |
| percentage gains in that stock may have already | | | | Davy Lake property might hold true for |
| peaked. Generally, new money searches for | | | | Strathmore Minerals in the north central part of |
| well-capitalized junior mining stocks with solid | | | | the Athabasca Basin. |
| uranium projects in their portfolio. One of those | | | | Important features in many Athabascan uranium |
| most frequently recommended among mining | | | | deposits are the cross-cutting fault zones. |
| newsletter writers is Strathmore Minerals Corp, | | | | Dahrouge confirmed the Davy Lake conductor |
| trading on the Toronto Venture Exchange (ticker | | | | has cross-cutting fault zones with a sinistral |
| symbol STM.V). Prominent among | | | | (left-sided) fault about halfway along its length. |
| Strathmore’s projects are in-situ leach | | | | According to Dahrouge, there is also a |
| mining operations proposed for Wyoming and | | | | “conductor extension which crosses the |
| New Mexico, plus an aggressive exploration | | | | fault from west to east and ‘flows’ |
| program in the world’s richest uranium | | | | out into a small, sub-circular magnetic low.” |
| areas, Saskatchewan’s Athabasca Basin | | | | As with many of the Athabascan uranium |
| (home to uranium mining giant, Cameco). | | | | deposits, which tend to be found between |
| In September, letter writer Lawrence Roulston of | | | | overlying sedimentary units and underlying |
| Resource Opportunities recommended | | | | basement rocks, the Davy Lake conductor fits |
| Canadian-based Strathmore Minerals (TSX-V: | | | | the bill. Strathmore Mineral’s president, |
| STM), writing, “The company is | | | | David Miller, told StockInterview.com, “the |
| systematically adding value to the projects most | | | | 50-plus kilometer geophysical anomaly appears to |
| likely to be significant in the near term, especially | | | | indicate a basement conductor.” However, |
| those with near-term production potential.” | | | | Mr. Miller tempered the exhilaration in the air, |
| Also in September, Resource World contributing | | | | “A geophysical anomaly does not make an |
| editor, Alf Stewart, wrote, “The two | | | | ore body. These exciting initial results will be |
| deposits Strathmore is developing were | | | | followed up with infill geophysical lines, followed by |
| ‘cherry picked’ from the inventory | | | | ground geophysics, followed by shallow drilling, |
| of Kerr McGee, largest private explorer of | | | | looking for alteration. When we have narrowed |
| uranium prior to that industry grinding to a halt in | | | | the target to drill, we will pull in the big rigs and |
| the early 1980s. As these properties are largely | | | | test the conductor at the unconformity.” |
| drilled off, Strathmore may be considered more | | | | Dahrouge remains excited about the Davy Lake |
| of a uranium development company than an | | | | conductor, and said, “Clearly this represents |
| explorer.” This past June, money manager | | | | an excellent exploration target for unconformity |
| Adrian Day recommended uranium stocks in his | | | | type uranium deposits. |
| research report, writing, “So I am focusing | | | | What does all that mean? It could explain why |
| on four main areas in uranium, with one or two | | | | Strathmore Minerals might well be on the road to |
| buys in each… top exploration companies | | | | a world-class uranium discovery as further |
| that have the goods and are likely to bring | | | | exploration more clearly defines how valuable |
| properties into production. Strathmore Minerals, | | | | those newly discovered conductors might |
| with technically strong management, lots of | | | | become. Meanwhile, Strathmore’s New |
| properties, and a strong balance sheet, is arguably | | | | Mexico and Wyoming properties (amounting to |
| the best.” | | | | potentially several million pounds of uranium |
| New Uranium Discovery in the Athabasca Basin? | | | | resource) are in the preparatory phase of the |
| Here’s one of the stronger reasons why | | | | permitting process. As the spot uranium price |
| investors might anticipate a strong rally in | | | | inches forward to the widely accepted short-term |
| Strathmore’s share price over the coming | | | | target above $40/pound, several of Strathmore |
| twelve months: In a November 16th news release | | | | Mineral’s properties may become instantly |
| ([ Strathmore Minerals announced a discrete | | | | more valuable to a utility company who will |
| conductor, more than 30 miles long, after | | | | someday need the company’s uranium |
| completing an airborne geophysical survey on the | | | | oxide to fuel their nuclear reactor. |
| company’s Davy Lake property, in the | | | | COPYRIGHT © 2007 by StockInterview, Inc. |
| north central portion of the Athabasca Basin. | | | | ALL RIGHTS RESERVED. |
| According to the company’s news release, | | | | |