How to get rich by discovering a uranium mine with your dad
[Editor's note: Fission Uranium sent us another version of how PLS was discovered. The company's version is appended below this post, which was submitted by CEO.ca.]
Father and son Ben and Garrett Ainsworth may have lead Alpha Minerals and JV partner Fission Energy to the radioactive mother lode on a new frontier in the Athabasca region of northern Saskatchewan.
Not long ago, Alpha Minerals, formerly ESO Uranium, was a dog of a stock. Trading at just $.02 last October, chances of being able to finance for the Southwest-Athabasca-Region focused uranium explorer looked slim. Backed against a wall, management had no choice but to roll back shares 10:1 and change its name in hopes of triggering a fresh start.
Then something spectacular happened. Just days after the rollback, Alpha announced Discovery Hole 22 hit anomalous radioactivity over 21 meters. Further exploration holes intersected more mineralization. Today, shares in Alpha are trading over $3.80 — providing an almost 20-fold return to investors in under five months. Good dog.
How exactly the discovery happened is one of those crazy stories that’ll take its place in mining legend.
Five years ago, current Alpha Minerals CEO Ben Ainsworth was working as VP of Exploration for Hathor Exploration — the last Athabasca-Basin-focused uranium junior to be taken out by a major. Meanwhile, his son Garrett, then 28, was toiling away for ESO.
Without money for field work, Garrett turned to searching through the Saskatchewan Mineral Assessment Database for potential finds. And in May 2008, when he was leafing through a 1977 CanOxy (now Nexen) report, something jumped off the page. A CanOxy geologist had identified radioactive anomalies near Patterson Lake, but wrote them off as likely caused by “exotic soils in the till.”
It was just a notation, but it was enough for the younger Ainsworth to head to the Southwestern Athabasca Region to stake the claims that would eventually yield a discovery.
At the PDAC conference in Toronto last week, I had the opportunity to have dinner with the elder Ainsworth, Ben, who told me I had to meet his son Garrett to hear how his discovery came to be.
I connected with Garrett in Vancouver this past Monday. He told me the amazing tale behind the find.
A Five-Year Overnight Success
Garrett Ainsworth had found in that old report what he believed to be an exceptional lead to the next great Athabasca uranium discovery. He wanted to pursue it right away, but dry exploration capital markets forced him to sit on his hands for more than two years.
“We knew there was something radioactive there, but we didn’t get back to do any work until June 2011,” he told me. “I was tossing and turning in my sleep every night for two years! Finally, the first day we went to investigate some of the anomalies, we came across three pitchblende (read: uranium) boulders!”
“We knew the boulders hadn’t come from very far, otherwise they would have eroded. By looking at them, it was game on, and just a matter of tracking down the bedrock source. I was there with an ice expert and everything he was saying was really positive. The ice direction made us look to the northeast.”
“That led us down the road of geophysics. For uranium, what we’re looking for is low resistivity, the blue stuff, which represents that it’s highly conductive. That’s the type of rock you want to have for the host rock for a uranium deposit.”
“Dark blue is always good. The fact that we have this, just up ice from our boulder field, was just wow. If you take the middle point of the boulder field and follow the ice direction, it takes you right there. And we haven’t put any holes into it yet. I think this is the bedrock source. The geophysics was very bullish.”
“Unfortunately, the market didn’t care, and over summer 2012, our share price dropped from $.05 to $.02. We didn’t have any money, so Dad stepped up and did our first payment on the drill program out of his own pocket.”
The elder Ainsworth loaned the company $550,000, banking on his gut feeling about the project, and his son’s instincts. This bridge financing led to Discovery Hole 22 coming in with over 21 meters of mineralization. And finally, the market responded.
Perhaps there were so few believers in Alpha’s story pre-discovery because the project is located several hundred kilometers from the east side of the Athabasca Basin, where most major uranium discoveries have occurred.
But as we learned during our time with exploration legend Dave Lowell, who told us discoveries can often be the result of “ignoring existing dogmas,” playing it safe by going the traditional route is no way to get ahead. “Some people are so against the west side of the basin,” Garrett said. “That’s why it’s so sweet we found something there.”
The next Hathor?
After Discovery Hole 22, it wasn’t long before comparisons were drawn between Alpha and Hathor Exploration, a 2011 stock we recommended less than a month before Cameco and Rio Tinto engaged in a bidding war for the company. Hathor eventually sold to Rio for $635 million.
Although Alpha holds only a 50% interest in the Patterson Lake project, with a market cap today of just over $72 million, it’s not difficult to see the potential upside at Patterson Lake South.
When I pointed out that it cost some $100 million to delineate Hathor’s roughrider project, Garrett responded, “This is going to be a lot cheaper, because the deposit is shallower. We’re hitting mineralization at 60 meters, and I think they were at 250 meters, so we can bang off holes way faster than others in the basin. Plus, we’re right by the highway and close to electricity. And Patterson Lake is also shallow — just three to eight meters deep — so we can still be very cautious from an environmental standpoint.”
In all fairness, it’s probably too early to draw comparisons to Hathor, seeing as Alpha has yet to find the bedrock source of its deposit. While the intersections it has been hitting are of ore grades and width, there’s little certainty about its eventual size and scale.
But you can take Mike Gunning’s new role as Alpha’s Chairman and Lead Technical Advisor as one vote of confidence. Gunning, among the most respected figures in Canada’s uranium business, was CEO of Hathor and helped negotiate its eventual sale.
Uranium expert Marin Katusa, Chief Energy Analyst at Casey Research, provided another check mark for Alpha. "PLS has all the makings of a major, high-grade, economic uranium discovery in the Athabasca Region. A major grassroots discovery like PLS is very rare,” he told us.
Economic geologist Brent Cook (who owns shares in Fission Energy, Alpha’s JV partner on PLS) called the project “a relatively low-risk speculation on a potentially significant discovery located within a known uranium district.”
Where the Alpha share price will go from here, only time will tell. There’s certainly potential for huge gains, but with the vagaries of the market, future dilution, and project consolidation uncertainties, how it will all pan out is still very much in the air.
One thing’s for sure: the PLS discovery was no miracle. It was the result of a methodical, well-executed exploration program. The elder Ainsworth, who played a key role in both Hathor’s and Alpha’s success, will no doubt go down as one of mining’s greats. As for his son Ben, he’s just getting started.
For more on this story, check out Alpha's website.
As of this writing, the author has no position in any of the stocks mentioned in this column. This is subject to change in the future. All information presented is believed to be reliable at the time of publishing. Nothing in this article should be construed as advice or a solicitation to trade any securities.
[Editor's note: Appended version of how PLS was discovered written by Fission Uranium.]
How Fission’s PLS was Discovered
Patterson Lake South (PLS) is host to one of the most spectacular uranium discoveries in the last four decades. Shallow, high-grade, large and rapidly growing, the discovery has won multiple industry awards for the technical team that masterminded it. That team was led by Ross McElroy, President, COO and Chief Geologist for Fission Energy (now Fission Uranium Corp).
Initially, Fission Energy Corp and ESO Uranium Corp independently staked 2 small mineral claims each in the PLS area. In January 2009, the two companies decided to form a joint venture adding their respective mineral claims to the joint venture and staking more ground. Initially the operatorship of the project was set up on an alternating schedule of every two years, with Fission taking the first rotation of operator from Jan 2009 to Dec 2010. ESO’s technical team consisted of one geologist: Garret Ainsworth. Fission Energy’s multi-discipline team was comprised of highly experienced geologists, geochemists, geophysicists, survey experts and a variety of technicians.
The land on which the discovery of the Triple R deposit was made was actually not part of the original ground staked by either company. In the process of evaluating and prioritizing the PLS land package, all 4 of the original claims put into the PLS joint venture were subsequently dropped and returned to the crown. Instead, analysis conducted by the Fission team identified adjacent ground that, the JV staked after convincing the Saskatchewan government to release it (as it was originally set aside for coal exploration).
The first big breakthrough came when an airborne survey (that was designed by Fission Energy and Special Projects Inc.) was conducted and analysis by the Fission and SPI team showed a number of very strong anomalies that were interpreted as boulders or outcroppings of uranium. The survey findings were presented sent by Fission to Alpha Minerals (who had operatorship at that time). Garret Ainsworth went into the field and confirmed the presence of uranium boulders at the locations identified by Fission.
When Fission Energy resumed operatorship in January 2012, they began the highly challenging task of tracking the source of the high-grade uranium boulder field. Fission’s geologists, geochemists and geophysicists, went to work and enlisted the help of a experts in glaciology to help determine the direction of glacial transport from where it was located on surface to its in-situ origin. The Fission team tracked the source about 3 km up ice and on November 5, 2012, the drill program led and operated by Fission, hit high-grade mineralization in basement rocks with hole PLS12-022.
Where are they now?
Due to subsequent corporate events that took place, the operatorship never did rotate back to ESO Uranium. In the months that followed the discovery hole, with Fission as operator, the mineralization in the discovery area grew rapidly in size and grade. Fission Energy sold its Waterbury Lake project to Denison Mines and spun out a new company: Fission Uranium which took with it the 50% stake in PLS. Then in August, 2013, Fission CEO, Dev Randhawa, was approached by some of Alpha’s largest shareholders with the request that Fission take over Alpha as they felt the Fission team should retain operatorship of the project ongoing and that would only happen if Fission has 100% ownership. Fission made Alpha Minerals an offer and then on December 9, 2013 Fission and Alpha closed their respected plans of arrangement.
To date, Fission Uranium’s team has won the industry’s top awards, including: The Northern Miner’s Mining Persons of the Year 2013, PDAC Bill Dennis Award 2014, EY Entrepreneur of the Year award (finalists) 2014 and The Mining Journal’s Excellence Award 2015. PLS is now host to the Triple R deposit – the largest undeveloped deposit in the Athabasca Basin.