Cameco continues to explore Athabasca Basin through CanAlaska deal

$1.9 million earn-in agreement at CanAlaska's West McArthur uranium project

Top Canadian uranium producer Cameco (TSX:CCO) has just signed an agreement with CanAlaska Uranium (TSXV:CVV) to conduct exploratory drilling at the West McArthur uranium project, 15 kilometres from its majority-owned McArthur River uranium mine.

Under the deal announced today, Cameco will pay CanAlaska $1.9 million to carry out geophysics and drilling this summer on two targets known as Grid 1 and Grid 5. The work is part of an option for Cameco to earn a 60% interest in the project. The uranium major has already spent $725,000 and has the right to earn a 30% interest if it completes a $5 million exploration program within three years. Another $500,000 payment will give Cameco the right to spend an additional $6.275 million over three years in order to earn another 30% interest and form a joint venture with CanAlaska, which holds interests in approximately 500,000 hectares in Saskatchewan's Athabasca Basin – considered to hold highly prospective geology for high-grade uranium.

The agreement builds on Cameco's interest in the Fox Lake discovery, of which Cameco owns 78% as part of the Read Lake project operated by Cameco and Areva. Fox Lake has inferred resources of about 68.1 million pounds uranium oxide (U3O8) based on 387,000 tonnes at 7.99% U308. It's clear that Cameco and CanAlaska are hoping to prove that the mineralization at Fox Lake extends to West McArthur, owned by CanAlaska Uranium after CanAlaska bought out former partner Mitsubishi’s interest in January.

CEO.ca reported:

The Fox Lake conductor trends onto CanAlaska’s property at Grid 5, according to CanAlaska CEO Peter Dasler. Dasler hopes uranium mineralization extends along the conductor or originates between the Grid 5 and Fox conductors. 2012 drilling at West McArthur identified a large alteration system that hasn’t yet been followed up on. CanAlaska is looking for a partner to help explore the property.

Added Dasler in today's press release: “In this second year of exploration by Cameco on the West McArthur property, we expect to finally close in on the source of the mineralization that we identified in past programs. Both of the target areas appear to host large mineralizing systems and it is encouraging to see the priority that Cameco's team has given this Project during challenging times. We are looking forward to the results of this significant drill program."

Cameco said it plans to spend about $36 million on 24 projects in Canada and Australia, the majority of which are at drill target stage, according to a management's discussion and analysis document quoted by CEO.ca.