Crossy, your FDC.v
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Market Outlook February 7, 2006
by James Finch
Forum to Drill Cameco’s Costigan Lake property in March
A news release issued yesterday by Forum Development Corp (TSX: FDC) piqued my curiosity because it made no sense.
CEO Richard Mazur announced his company had acquired Cameco’s (NYSE: CCJ: TSE: CCO) 65-percent interest in the 743-hectare Costigan Lake property for C$22,975. FDC’s Investor Relations head, Doug Fosbrooke, fielded numerous curiosity calls about the company’s acquisition. Many were puzzled as we were. FDC shares ticked up a penny, closing at C$0.46/share, trading 396,300 shares. It was well above the 60-day average about 100,000 shares trading. Fosbrooke told Market Outlook, “If we had paid Cameco $300,000 for it and given them 5 million shares, who knows what would have happened?”
Mazur explained Cameco had approached Forum at the end of October, “We did not solicit them. They came to us and offered it to us.” His team had been working on this acquisition since November. In fact, Forum had been offered another Cameco property that did not meet its criteria and rejected it. On the Costigan Lake property, Mazur was apprehensive during negotiations, after completing due diligence on the property. After asking the Cameco team what the terms were, he remembered, “My jaw dropped when they told “just cover the payments.” Bewildered, Mazur asked, “No back in? Nothing else?” The response? “You know what? We offered it to you guys first because we want the right technical people to do the work on this. We hope you find a mine. And when you do, we’ll get the uranium in our mill. That’s all we care about.”
Mazur and his chief geologist, Dr. Boen Tan, were delighted about the property’s early clues. Mazur explained, “About 23 holes were drilled, where the drill intercepted 0.43 percent over 0.36 meters. What’s more important about it is that there is a lot of clay alteration associated with this. It’s in the metapelite package. This is very similar to how Millennium was discovered. They had one drill hole that had a sniff of uranium mineralization over a small interval, but it had the alteration. Cameco kept following the alteration until they hit the Millennium ore body. They didn’t know that 25 years ago. We know that now. We have the benefit of this recent knowledge. We are going to follow up on that drill intercept. We have the right rocks, graphitic metapelites. We have the right horizon that actually goes up to the old Key Lake Mine. There’s damned good structure on the property.”
Another surprise is that Forum has already planned out the winter exploration. Mazur said, “While we’ve been putting this together, we have been in the background doing a lot of planning. We want to get the work done during this winter season. We have a geophysical crew lined up. They are going into the field in a week’s time. We are negotiating with a drill company right now, and they will have a drill in the vicinity. We’re going to tag onto a drilling project they should be finishing around mid March.” Fosbrooke added, “They’re drilling for International Uranium Corporation (TSE: IUC).”
Asked to confirm if the company would drill in March, Mazur responded, “We’re going to start drilling next month. It’s a go. We’re just going through the permitting hoops.”
A final surprise is that Dr. Tan, who helped discover the Gaertner and Deilmann deposits in the Key Lake area, as a uranium project geologist for Uranerz in the 1970s (and who also worked as a senior geologist for Uranerz in the Athabasca Basin from 1980 through 1998, will be the drill geologist. He asked Mazur, “When can we drill? I would like to sit on the drill and drill this and be there.” The drill program will be a short-hole program of six to eight holes of about 150 meters each with a minimum of 1,000 meters, and depending upon results could go to 1,500 meters.
Part of the acquisition requirements is that Forum must complete a large amount of exploration work very quickly. Doug Fosbrooke said, “We are looking in the neighborhood of $300,000 that we will be spending on it.” Mazur added, “This was a strong endorsement by Cameco of the quality of our team. There are more surprises to come. We are developing a good relationship with Cameco.” |
