|Strathmore sees plenty more potential at Roca Honda|
by Karl Loomes
At their Annual General Meeting (AGM) last week, Strathmore Minerals Corp (TSX: STM, OTC: STHJF) confirmed the latest N 43-101 compliant resource update for their flagship Roca Honda Uranium Project, based on data collected since May 2008.
The report includes updates for extensive permitting activities, and details on the commencement of a phased feasibility study. In addition, the report confirmed mineral resource figures previously collected and concluded that “there is very good potential to drill additional uranium mineralisation”, a further signal the Strathmore are on good course to develop one of the best and highest grade uranium deposits in the United States.
Strathmore Minerals is a Canadian based resource company, specialising in the development of uranium deposits in the United States, often through a joint venture partner. The company has market capitalisation of C$49.2 million, with C$10.5 million in cash and with C$9.1 million in working capital. The company’s key assets include their two primary uranium deposits; Roca Honda and Gas Hills, as well as nine other projects spread throughout the United States, with a combines total NI 43-101 compliant resource estimate of 36.2 million pounds of measured and indicated resource, and 21.4 million of inferred resource.
The Roca Honda Uranium Project is a joint venture between Strathmore (60%) and Sumitomo (40%), located in McKinley County, in the Grants Mineral Belt of North West New Mexico. The property is around 16 miles northeast of Grants, and 23 miles away from Milan, New Mexico, via the New Mexico Highway 605. In addition to this paved highway, ranch and dirt roads offer access across the property, although because of disuse, most of these require 4-wheel drive at the moment, and will need some maintenance going forward. The project is seen as a “company maker” my Strathmore, suggesting it has the potential to be “one of the largest and highest grade proposed uranium mines in US in over 30 years”. The property totals 1,840 acres and consists of 63 unpatented mining claims totalling approximately 1,200 acres, and an adjoining New Mexico State General Mining lease totalling 640 acres.
The uranium mineralization occurs as uranium – humate – cemented sandstone, are irregular in shape and range from a few feet in width and length to bodies several tens or hundreds of feet long. The latest NI 43-101 resource estimate on the property has confirmed the historical numbers for Section 9 and Section 10 of the property, which were compiled by the previous owners Kerr – McGee, and updated by its successor, Rio Algom in 1995. For Sections 9 and 10, considering a cut off GT (i.e. grade multiplied by minimum depth) of 0.6 (0.1% triuranium octoxide x 6 feet), the report shows a measured resource of 1.3 million tonnes, grading 0.23% triuranium octoxide (U3O8), for a resource of over 6 million pounds of U3O8. The report showed an indicated resource of 2.5 million tonnes grading 0.23% U3O8, for an indicated resource of 11.5 million pounds of U3O8. In addition to this, and again considering a cut off GT of 0.6, the report showed an inferred resource of 4.5 million tonnes grading 0.17% U3O8, for a resource of 15.8 million pounds of U3O8.
Kerr-McGee had previous compiled reserve estimates for Section 16 of the property, although this could not be confirmed as NI 43-101 compliant due to the lack of necessary documentation, the author of the latest report did not that in his opinion, the resource estimate for Section 16 could in fact double. The original estimates showed 197,000 tonnes of resource in the section, at an average grade of 0.23% U3O8, for a total of 886,621 pounds U3O8. Prior to entering the joint venture with Strathmore, Sumitomo also independently prepared a resource estimate of the Roca Honda property, using geostatistical mining software. Again this is not considered NI 43-101 compliant. Considering a cut off GT of 0.6, this estimate showed a total of 7.4 million tonnes of resource, averaging a grade 0.25% U3O8, for a contained total of 36.2 million pounds of U3O8.
During the first quarter of this year, Strathmore underwent costs of around C$408,000 at the Roca Honda property, the majority of which was on the feasibility study (C$132,000) and permits and regulatory requirements (C$105,000). To date, the company has spent around C$12.4 million on exploration costs for the property. This latest report suggests that Phase 1 or the recommended continued exploration and development of the property will cost in the region of U$2.7 million (US$2.6 million) over the next 12 months.
Going forward, Strathmore have contracted SWRP to prepare a phased feasibility study, which will include a mineral reserve estimate or a revised mineral resource estimate using underground mining methods. The results of this report are expected in August 2011. This study will consider revising the current mineral resource estimate, and will require using cut off factors not only as before, but also with an additional cut off levels of a minimum mining thickness of 6 feet, and an increase in the lower grade cut off to reflect estimated underground mining costs.
This latest report shows the potential for the Roca Honda Project and the added value it could bring to Strathmore as exploration and development continues. With the phased feasibility study underway, as well as ongoing exploration activities to extend current resource estimates, there is a lot of potential for buoyant newsflow for Strathmore over the next year or so.