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Uracan Resources Drilling to Expand 40 Million Pound Uranium Resource

Uracan Resources (TSX.V:URC) is now drilling its Grandroy target in Quebec, where the company recently discovered mineralization that was ten times greater than average.

Grandroy has the ability to transform Uracan, and its stock. While the size of Uracan's Double S resource has been going straight up for 3 years - at 40 million pounds and growing - their stock price has been heading in the other direction. It has been a painful, bumpy ride for investors.

Grandroy channel samples at surface returned values up to four metres of 0.192 per cent, which is 1920 ppm, or 3.84 pounds per ton U3O8. This is ten times surface values they encountered while building their Double S deposit, which is located 7 kilometres south of Grandroy.

Uracan's Double S deposit grades 0.012%, or 120 ppm (parts per million). While that is comparatively low grade to most deposits, it is the exact same grade - and geology - that took Forsys Metals (FSY-TSX) $6.50 per share. Uracan's deposit is right at surface; as is Forsys.

So there's a lot of catch up room there for investors, seeing as Uracan trades at 25 cents.

Investors are still recognizing big uranium discoveries this year, even as the price of the physical metal has stalled at $65 for long term contracts. Look at the stock chart of Bannerman Resources (BAN-TSX), which has a deposit in Namibia, (southwest Africa) that is grading about 300 ppm. Its stock has increased 500% this year, from 20 cents to $1.00 per share - with 200 million shares out.

But the big winner this year for investors in uranium exploration companies is Extract Resources (EXT-TSX see chart avove), which has gone steadily from $1 - $10 per share this year - not many uranium investors can claim a 1000% gain this year. Extract's Rossing South deposit, also in Namibia, grades about 500 ppm, or just over 1 pound per ton.

The key takeaway point for investors is that the examples of Bannerman and Extract indicate that the market will reward Uracan with only 300 - 500 ppm in its drill holes - it does not need the 1920 ppm it received in its surface sampling.

No assay results are expected until late October.

As background, Uracan was formed in April 2006, with the former Bema Gold team on the technical side and the Endeavour Financial team on the finance side. The Bema guys (now B2 Gold) saw an opportunity to use their open pit experience in the uranium sector - as at the time, everybody else was paying big dollars for moose pasture in the Athabasca Basin of Saskatchewan, where deep but high grade targets were alluring investors.

But Grandroy could change all that. It's a drill program we will be watching closely. <

SOURCE: http://www.midasletter.com/news/09091606_Uracan-uranium-drilling-to-expand-40-million-pound-uranium-resource.php


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