IsoEnergy's Hurricane: A Major New Uranium Discovery In The Making

IsoEnergy's Hurricane: A Major New Uranium Discovery In The Making

IsoEnergy (TSXV: ISO) just pulled two ultra high-grade intercepts at its Larocque East project in the eastern Athabasca Basin, confirming that the Hurricane zone is a major new uranium discovery.

Yesterday at market open, IsoEnergy (TSXV: ISO) reported assay results from two very impressive drill holes. The holes tested around the west end of the Hurricane zone at its Larocque East project in Saskatchewan. And they hit very high-grade uranium.

Hole 34: 33.9% U3O8 over 8.5 metres, including 57.1% U3O8 over 5 metres
Hole 32A: 19.6% U3O8 over 8.5 metres, including 63.6% U3O8 over 2.5 metres

These are very impressive results. Let me give you some context.

If IsoEnergy were drilling for gold, an equivalent result hole 34 would be 360 g/t gold over 8.5 metres. If the company were drilling for copper, this result would translate as 325% copper over 8.5 metres. In silver terms, it stacks up as 32,000 g/t silver over 8.5 metres.

This is super high-grade stuff. Hurricane holes 32A and 34 are two of the best holes drilled by a junior explorer into any kind of deposit in the last year.

I know what you're likely thinking: "It's uranium. No one cares about uranium." Yes, it's uranium – but that means there are two reasons investors should care about IsoEnergy.

A uranium bull market is coming. The fundamentals are clear. The price has been too low for too long, which has created a supply gap and a dearth of build-ready projects. The world keeps building nuclear reactors and reactors cannot run out of fuel. At some point in the next two years, the crisis will arrive: utilities rushing to sign new supply contracts will find there isn't enough fuel to go around and the price of uranium will spike.
A standout discovery performs no matter the uranium market. NexGen Energy is the obvious example. NexGen discovered the Arrow deposit in 2016, in the darkest depths of the uranium bear market, but the stock gained 700% while they delineated that impressive asset. Today the market is much stronger, holding sideways until the surge, which means ISO could do the same or better if Hurricane develops into a discovery of that caliber.

There's a big 'if' in that last sentence: if Hurricane develops into a discovery of that caliber. It's too early to know whether Hurricane has the scale – but it might – and today's news shows it has the grade.

If Hurricane is indeed developing into a major uranium discovery – what might that mean for IsoEnergy's share price in the near term? Let's go back to early days at Arrow. Nexgen's share price ran 300% in the first months of 2016 as drilling started to demonstrate the deposit's high grade. Here are the cream-of-the-crop results from those months:

36 metres of 10.1% U3O8 including 3.5 metres of 52.3% U3O8
10.5 metres of 8.5% U3O8
78 metres of 10% U3O8, including 12 metres of 38.3% U3O8

The data fed into a maiden resource estimate in March 2016 that totaled 202 million inferred lbs. grading 2.6% U3O8.

For comparison's sake, let me refresh the results IsoEnergy put out this morning:

Hole 34: 33.9% U3O8 over 8.5 metres, including 57.1% U3O8 over 5 metres
Hole 32A: 19.6% U3O8 over 8.5 metres, including 63.6% U3O8 over 2.5 metres

The grades are pretty darn similar!

These discoveries are different, primarily in that Arrow is a basement-hosted deposit while Hurricane is a classic Athabasca Basin zone, with mineralization at the unconformity (contact) between the basement metasediments and the Athabasca sandstones that fill the basin.

But there's a reason investors and miners love the Athabasca Basin: its uranium deposits are richer than those found anywhere else on the planet. Most of those deposits have been unconformity deposits, like the zone developing at Hurricane. And when uranium mineralization is this intense, a small deposit can carry a lot of uranium.

That matters to ISO for a few reasons. First, ISO has already tracked mineralization at Hurricane along 550 metres of strike length. Along that length the zone averages 40 metres wide and 5 metres thick. Many of the best deposits in the Athabasca started at this scale and are similar in other ways: depth (Hurricane averages 325 metres depth), geology, and the same evidence of more to come.

What's the average grade at this point? The drill holes are spaced too far apart as yet to say – but the zone has returned results not dissimilar to those from early days at Arrow. Prior to the new results from holes 32A and 34, Hurricane drilling returned:

5.5 metres of 7.1% U3O8, including 24% U3O8 over 1.5 metres
7 metres of 5.4% U3O8, including 15.9% U3O8 over 2 metres
10.5 metres of 1.6% U3O8, including 12.6% U3O8 over 1 metre

To anyone who is paying attention, ISO is on its way towards delineating millions of pounds of uranium in a new, high-grade discovery. And drills continue to turn right now, growing the zone.

It's also important to realize that ISO doesn't need a lot of room to define a valuable resource. That matters because the Hurricane zone is near the edge of the Larocque East property. But the 550 metres of strike length to date are all within the property and there's still about 50 metres to chase the uber high grade results from holes 32A and 34 to the west (and an Athabasca Basin uranium deposit can host a lot of pound of U3O8 in just 50 metres of strike length).

And there's a strategic aspect to this situation as well. The ground just across the property line is co-owned by Orano and Cameco. Those are the two most important uranium players in Canada. So, while it would have been nice for ISO to own more ground, there's clear opportunity in making a major uranium discovery that likely spills onto ground these players already own!

Last but not least, west isn't the only direction that matters. There's good reason to think Hurricane continues to the east, where there's a strong geophysical anomaly and drills have returned all the right signs.

I invested in NexGen in 2015. I put money in when Arrow was about as defined as Hurricane is today. For half a year I listened to all manner of naysayers knock the stock, arguing that the uranium market was too weak to support a discovery, the NexGen team were yahoos who didn't know how to explore the Athabasca, the discovery was too small, the grades couldn't be that good across any real scale, and so on.

And then I watched as my stock went up 700%.

I can't say IsoEnergy is on the same path…but it might be.

And that's outside of any lift from the uranium market.

When uranium does go into a bull run, ISO is the only uranium junior with an exciting new discovery. That means Hurricane will attract attention from across the uranium spectrum as it develops.

And uranium will enter a bull market sometime in the near to medium term. When it does, the small group of active uranium stocks with real projects will get outsized attention – and generate ridiculous returns.

So those are the two reasons I am invested in IsoEnergy today:

These latest holes confirm that Hurricane is a very real, exciting, high-grade uranium discovery of the kind that can make a stock perform no matter what is happening in the uranium market and
Uranium will enter a bull market in the near to medium term. When it does, the small group of active uranium stocks with real projects will get outsized attention and generate ridiculous returns.

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Gwen Preston writes about investment moves in her own portfolio in the newsletters published by Maven Publishing Inc. Maven Publishing and/or Gwen Preston may participate in financings by the companies that are covered. Maven Publishing and/or Gwen Preston do not receive any cash or stock-based compensation whatsoever from companies covered in Maven publications. Maven Publishing and/or Gwen Preston may own securities of the companies covered and may make purchases and/or sales of those securities in the open market or otherwise.

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