Power Metal Resources (LSE:POW) shot up by 12% on Wednesday after revealing its entry into the booming uranium market.
The £26.5 million explorer—which is exposed to many different metal projects worldwide—has claimed 100% ownership of four properties prospective for the hugely in-demand metal.
The land, which comprises seven licenses, surrounds an area in the Canadian province of Saskatchewan called the Athabasca Basin that hosts some of the world’s most well-known uranium projects.
Among these are Cigar Lake, the world’s highest-grade uranium mine, and McArthur River/Key Lake, the world’s largest high-grade uranium operation. Both are owned by Cameco Corporation.
Uranium—which is predominantly used as fuel in nuclear reactors—has enjoyed a tear recently, rising by more than 40% since August to its highest price since 2014.
Aside from increasing demand for nuclear power, this has been driven by the launch of a new trust by Canadian asset manager Sprott, which has bought up around 14% of total global reactor consumption.
With supply shrinking, and the movement away from fossil fuels continuing, many are now betting that a lack of new uranium mines will see prices continue to rise well into the future.
As Power Metal put it in its release: “There has for some time been a building supply/demand dynamic in the uranium commodity market, meaning a diversified natural resource business such as Power Metal, should consider participation.”
The firm’s properties, named Clearwater, Tait Hill, Thibaut Lake, and Soaring Bay, cover a combined 109km2, were staked after detailed analysis of several geological databases. These covered everything from airborne magnetics and government bedrock mapping to public assessment report files and the mineral deposits index.
The claims have now been registered with the relevant authorities at a cost of just C$6,521, and are valid for two years with no minimum spending commitment. As the properties were acquired through staking, Power Metal will have a 100% interest with no outstanding royalties.
Beyond the soaring price of uranium—often known as yellow cake—the firm said its latest move was also intended to bolster its exposure to strategic energy metals. Indeed, the new claims now sit alongside the company’s Authier North project in Quebec, which is based immediately north of Sayona Mining’s Authier Lithium project.
Building on this, chief executive Paul Johnson said: “Power Metal has been reviewing uranium opportunities across three different continents for some time, and today we make our first important public step into the uranium commodity space.
The Properties have been selected after careful review and are strategically located where there is material evidence of uranium prospectivity as demonstrated by historic exploration reports as well as through various uranium focused government databases.
The acquisition of these uranium properties through staking represents an important building block in Power Canada's growing strategic energy metal business.”
Wednesday’s uranium update comes just a day after Power Metal revealed that it had identified a large-scale gold-in-soil anomaly at another of its projects—Tati in Botswana.
The anomaly was confirmed by laboratory assay testing results of samples collecting from exploration, with grades hitting up to 26.5 grams per tonne.
Exploration will now continue at pace with the focus of identifying targets for drilling, which is expected to begin by the end of the month.
Author: Daniel Flynn
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