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e-mail: debbie_lewis@canaccord.com March 6, 2006 e-mail: david_pescod@canaccord.com
“Interview with Don Moore President of Nova Uranium”
Don Moore: The Uranium history of the area starts back in
1967. It was actually prospectors who first found uranium that
ran around 2 pounds per ton. This was in an era when Elliot
Lake was operating. There were mines in Bancroft mining
Uranium from Pegmatite. A company by the name of Canadian
Johns Mansville decided that they wanted something
other than asbestos to look at, so they went into and accumulated
at very large land package in the Grenville Geological
Province to look for Uranium in Pegmatite’s along the line of
Uranium production at Bancroft.
In the midst of their staking rush another company came in
called Allied Mining and they staked a big package of the
ground in the midst of Canadian Johns Mansville. It was the
Allied Mining ground that became the ground on which our
Nova A and Nova B zones were originally discovered.
Allied Mining’s initial review of the property was based on a
series of 41 drill holes, small diameter, A core size drill holes.
They drilled off 32 ½ million tons of rock and their only assays
were of what they called Pegmatite’s. They did not assay any
other rock types.
At the end of that exercise they had 32 ½ million tons grading
0.38 pounds of Uranium, which we just called “rock”, but
the geology over this 32 ½ million tones had been established
as being various bands of rock, one of which was pegmatite,
and that is what they have assayed.
Based on that grade they eventually dropped the ground
and by 1975, the ground had come open. The Quebec Government
geologist, a gentleman by the name of L. Kish went in
and reassessed the area on his own and published a paper. It
was his assessment of the area that demonstrated the pegmatite
did not carry significant uranium, but the paragneiss rock
type did. He determined that the majority of the uranium in
that area was in the paragneiss.
In 1975 Kish published a paper to that effect and another
company called Bomet Mines then picked up the property.
Bomet Mines went back in and started to reassess the 32 ½
million tons identified by Allied Mining. On their way into the
site, they discovered what we now call our Nova ‘B’ site. They
had taken, at that time, 14 – 10 pound samples from surface.
The average was 4.85 pounds per ton and that gave them encouragement.
Continued
Nova Uranium
www.novauranium.com
Uranium
Page 2 David Pescod 780-408-1750 Debbie Lewis 780-408-1748 Sandra Wicks 780-408-1749
They drilled a few holes in the ‘new’ zone, which were encouraging,
and then they went into the area that had been drilled by
Allied Mining. Within the area of the 32 ½ million tons that Allied
Mining had drilled, Bomet set up a series of holes on 50 meter
centers to test the Kish thesis regarding the distribution of
Uranium. They drilled approximately 40 holes using rotary air
blast (RAB) drill rigs outlining 3.5 million tons within the 32.5
million and came up with an improved grade of 1 pound Uranium
per ton.
By November 1977 Bomet realized that the grade was being
understated and they went back in to take larger more representative
surface samples from around the collars of six of the drill
sites. They took 6 bulk samples over the collars of 6 different
areas and they came up with what I call a fudge factor. They
found that the bulk samples were 2.38 times what the actual
value was in that particular collar of a hole.
All of the holes averaged 1 pound and it was concluded that
the grade for the 3.5million tons was 2.4 pounds per ton. This is
one obvious leap of faith. The RAB holes indicated 1 pound and
yet they assigned 2.4 pounds to that overall area since the bulk
samples was 2.38 times what the holes were. This is a reasonable
assumption, but until we have completed our own assessment
we won’t know for sure whether that 2.4 pounds is going to
stand up.
When we start to drill we are going to be seeing how accurate
those bulk samples were verses the RAB holes. There has been
work done in Colorado using rotary air blast drills and there
have been studies on the work done. It has been documented
that RAB drilling significantly understates uranium values.
It’s not that big of leap of faith to go from 1 pound to some
number considerably bigger. Now whether that number is going
to go all the way to 2.4 pounds, we just don’t know. That’s why
we will be drilling.
David Pescod: Okay, everyone’s got Bre-X on their mind, of
course, about drilling being done decades okay……
Don: No, we aren’t at all worried about that. I am quite confident
that the one pound is going to stand up. The 1-pound from the
RAB is not going to be compromised; I don’t believe it is going
to be compromised at all. And, I think that number is going to
be something considerably bigger.
If it is 1.4 pounds I am going to point to Paladins Langer
Heinrich deposit as an analogy. If it is over 1.4 pounds we are
going to have a blast here! It is just going to be a real amazing
time that all of us are going to have with this stock.
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David Pescod 780-408-1750 Debbie Lewis 780-408-1748 Sandra Wicks 780-408-1749 Page 3
The next obvious thing is, were the Allied Mining people
right when their drilling established the geology and presence
of uranium in what they were calling pegmatite’s
through that 32 ½ million tons? Bomet extrapolated and said
okay, so this 3.5 million tons that we drilled off at 50 centers
is averaging 2.4 pounds, therefore the 32 ½ tons based on
the same rock type, same geology and the fact that the uranium
is in the Pegmatite, should extrapolate to a total of 77
million pounds, down to 100 feet.
The 100 feet comes from the RAB-drilling. The RAB drilling
was scheduled to go down to 50 meters, but every time
they hit the water table, the hole would end. . They generally
ended around 100 feet. The bottom part of numerous holes
still showed an assay. Yet the hole bottomed at say 30 – 35
meters because of water table. We don’t really know how
much more depth there is.
There were other drill logs by Allied Mining that referred
to basement granites. Yet when we look at the old logs,
they drilled through ‘basement’ granite back into paragneiss.
There is a depth potential here that we know nothing
about. This is a depth aspect that we want to test when we
get out there and that’s why the first batch of holes is going
down to 100 meters. We want to get some kind of feel for
what might below 100 feet. The extrapolation from 3 ½ million
tons to 32 ½ million tons of a grade of 2.4 pounds is
another one of the obvious extrapolations that has to be
tested.
So when you say, what can go wrong? Well, they could
have been wrong on their estimations. What are the odds
against that? Well I think that the odds that the grade is
better than one pound are excellent. Really excellent! Is it
2.4 pounds? I don’t know. . The results from our first surface
sampling program are very encouraging. Roughly 60pc
of the samples from both the Nova ’A’ and Nova ‘B’ were
over 1 pound Uranium; approximately 30pc were over 2
pounds. That’s good. We just have to drill and find out.
David: Okay. Let’s look at the worst scenario that it’s only 1
pound. How would the economics work, what would the
capital costs be, etc?
Don: I’m not informed enough to give you those answers
right now. At one pound you just need a large operation –
like 10,000 to 15,000 tons a day. It will generate positive
cash flow. At $38 uranium, one pound is a very profitable
operation. At $22 – well, you are getting right down to the
bottom end of the cut-off. But at $38, it’s a very profitable
operation.
Until there is an actual scoping study these are difficult
questions to answer. We have to get a handle on two things.
First of all, we have to get a handle on what the grade of the
Nova ‘A’ and Nova ‘B’ might be, and get a good solid handle
on it. Secondly, we have to get a handle on size.
David Pescod 780-408-1750 Debbie Lewis 780-408-1748 Sandra Wicks 780-408-1749 Page 4
We are looking at radiometrics and previous drilling that
make us think this mineralization is going to be measured
by kilometers in length rather than hundreds of meters. The
first exercise is to establish grade. We are actually starting
our drilling on the Nova B. There has never been a resource
estimate done for Nova ‘B’. In 1979, Bomet in their report
said, “it is safe to assume there is at least as much in the
(Nova) B as there is in the (Nova) A” which would imply that
we could be looking at a very, very large numbers of pounds
here. It could be comparable to what you’re seeing over at
the Langer Heinrich. That’s why this is so exciting. If this
project stands up, we are going to have a lot of fun. The
first task is to try and establish grade and the next level of
work would be to establish size.
David: You’ve also mentioned that there are 19 other occurrences?
Don: Twenty other occurrences other than the Nova. For
example, we know that the Tom Dick occurrence has had
bulk samples of 1000 pounds that have graded over 2
pounds. But we haven’t even had a person on Tom Dick yet.
The radiometrics in that area are encouraging. The Seneca
is looking interesting, the Bear looks interesting and even
the Meekos looks interesting. These are all areas that we
have to get into and establish some kind of priority for the
rest of these targets. The most obvious next priority is the
Tom Dick because of the bulk sample running over two
pounds. But we just can’t tell you enough about it right now
to know whether it’s going to hold together by the end of the
summer. With all these other occurrences, we first have to
get a handle on what we are really looking at.
David: You are in mining-friendly Quebec and close to lots
of facilities. That’s got to help the economics?
Don: Hugely! The importance of a mining-friendly Quebec
cannot be over-emphasized. Other people in the industry
who will remain nameless, but who do know what they are
talking about, have told me that the two preferred places on
the planet, or at least in North America for having Uranium
deposit would be Wyoming and Quebec,. There are places
like Saskatchewan were they are obviously operating and
doing well, but just for starting something new, Quebec and
Wyoming are apparently the two best spots to be according
to some industry experts. And we are obviously in one of
them.
David: That’s mainly regarding royalties and whether mining
is friendly or not?
David Pescod 780-408-1750 Debbie Lewis 780-408-1748 Sandra Wicks 780-408-1749 Page 5
Don: Regarding mining friendly – they are very supportive in a
wide variety of ways. The infrastructure on this particular property
is outstanding, the paved road comes up to the western edge
of our property and then it continues as a gravel road right
through the midst of the property. There is a power-line running
down through the property so some of the basic components are
there. Mont Laurier is about 60 kilometers to the south. It’s a
town that’s big enough to support any kind of a mining operation.
It’s far enough away from Mont Laurier that it is not going to interfere
with anyone. There are no cottages or anything in the
area other than black flies and mosquitoes. Not too much
swamp, but a little bit.
The Provincial incentives for mining exploration are the best in
Canada. The rules are the most reasonable. The logistical support
is great. A great place for us to be.
Bottom Line: We are quite confident with Nova A coming up with
a pound on the downside based on the RAB drilling. We don’t
see anything less than that. There is no reason to disbelieve at
this point the potential for coming to the extrapolations that
they’ve made previously based on the bulk samples. We are
looking for a pound or better in the Nova A. We are just going to
stick with one pound as a benchmark. One pound in the Nova ‘B’
and we are going to win! As we go up the grade ladder, 1.4
pounds looking like the Langer Heinrich, and see how much we
win! If it’s over that, we are going to have a blast! It’s going to
make a lot of people a lot of money!
Thanks Don! And we may have called this “the Drill Play of the Year” -
it’s because of the leverage. With only 17 million shares outstanding, if
it hits, it could be big! Just remember, not all drill plays work out, in
fact, very few do!
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