Abbastar Uranium
Abbastar Uranium Corp is exploring for near surface, low grade, large tonnage uranium deposits in Canada. On February 13, 2007 Abbastar entered into an option agreement with Entourage Mining Ltd. to acquire up to 70% of Entourage’s interest in the Doran property situated in Costebelle Township, on the north shore of the Gulf of St. Lawrence in south-eastern Quebec. A provincial highway and hydroelectric lines run through the property providing excellent project economics.
Entourage Mining and Abbastar Uranium: Exploring For Near Surface Rossing Type Bulk Tonnage Uranium Deposit
The last few years since 2004 are characterized by booming capital markets across continents, emerging economic powers such as China, Russia’s resurgence on the back of its oil wealth and extended buoyancy of commodity prices. While almost all commodities have recorded impressive gains, nothing is more spectacular than those recorded by Uranium. During 2007 alone Uranium has gained a remarkable 80% and is now trading at an all time high US$135/lb. This follows gains of 75% and 100% recorded by uranium in 2005 and 2006 respectively. So what drives uranium prices and who are yet to benefit from this unprecedented ascend?
Much of the increase in uranium prices can be attributable to recent environmental concerns over thermal power generation using coal and fossil fuels. The need to reduce the consumption of fossil fuels has heightened the demand for alternative energy minerals such as uranium. The predominant use of uranium today is power generation and currently represents approximately
20% of world’s electricity. As attempts to increase nuclear power in the energy equation gather pace, uranium has become a very sought after metal. This prompts us to take a closer look at companies with exposure to uranium.
According to the Ux Consulting Company and Australian Uranium Association, current uranium demand is expected to continue as more and more countries move towards nuclear power generation. Against this backdrop it is hardly surprising that uranium prices have been on the rise and there is great optimism for companies with exposure to uranium assets.
This optimism bodes well for companies such as US listed Entourage Mining Ltd. ("Entourage" or the "Company) (OTCBB: ETGMF) and Abbastar Uranium (“Abbastar”) (TSX.V: ABA). Entourage’s Doran project is a promising uranium prospect located in eastern Quebec, north of the Gulf of St. Lawrence, on provincial highway 138 about 25 kilometres west of Aguanish, and approximately 85 kilometres east of Havre St. Pierre.
It is improving fundamentals such as rising uranium prices and the growing demand for fossil fuel alternatives that strengthen the investment case of Entourage, as its Doran property certainly exposure to uranium. Entourage has already undertaken considerable development activities at Doran with encouraging drill results in 48 drill holes. Valuations are expected to improve on the back of its continued development endeavours and potentially an improved resource categorization.
Resource estimates on the Doran prospect by Quebec government sources add further confidence to Entourage. In 1978, The Quebec Ministry of Natural Resources estimated the Doran deposit to contain 10.89 million tonnes of ore grading 0.025% (one-half pound) U3O8. The property is underlain by four major rock types: augen gneiss, granite gneiss, pegmatitic granite and gabbro and the uranium bearing formations consist of low-grade pegmatite dykes and sills like structures in both the augen gneiss and granite gneiss. There are several exploration and development programs similar to those of Entourage currently underway in the region.
Entourage management has been sharp with the management of financial resources as well. In an attempt to accelerate the development of Doran property, Entourage has entered into an option agreement with Abbastar Uranium Corporation, a TSX Venture Company based in Vancouver, British Columbia. Abbastar may earn up to 70% interest in the Doran uranium prospect. Terms of the option agreement include a one-time payment of $100,000 on filing of the agreement and the expenditure of a minimum of $5 million over 4 years on the Doran property. The agreement with Abbastar eliminates Entourage’s financial commitment during this period while ensuring continued exploration progress.
Pursuant to this agreement, Entourage and Abbastar have commenced drilling on the "L" anomaly at Doran Prospect. Previous rock saw channel sampling of the "L" anomaly by the Company during the 2006 exploration season has returned surface uranium mineralisation up to 1.556lb/short ton (0.0778%) U3O8 (sample L-13, 3 meter width) and a total of five samples ranging from 1.10lb/short ton (0.055%) U3O8 to 1.556lb/ short ton (0.0778%) U3O8. To date the Companies have reported on four drill holes and results of 28 additional holes from the 2007 campaign are pending.
In addition to Entourage’s exposure to uranium, mining friendly regulatory environment in Quebec further support Entourage’s investment case. Quebec was ranked fifth most attractive mining destinations in the world respectively during the 2006 Fraser Institute survey. These rankings are awarded both due to Quebec’s rich mineral reserves, attractive geology and mining friendly policies. This decreases Entourage risk profile considerably, and assures its ability to move forward with little bureaucratic hindrances. The Fraser Institute is an independent public policy organization based in Canada.
There is not enough uranium capacity to feed existing power plants and the need to develop new uranium deposits is more crucial than ever before. Due to low uranium prices in the 1980s and 1990s, little exploration occurred and no new mines of appreciable size were built outside Canada for the last 25 years. Future uranium is likely to come from deposits such as Doran and the market is likely to be dominated by smaller players such as Entourage and Abbastar. With current high prices supporting project economics of even lower grades, Doran’s prospects to host an economic mine appear to be even more promising. Entourage appears to be a story that has not received enough investor attention.
Please find as a link the 43-101 report filed on May 2, 2007 which can be downloaded from Sedar.
http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00005442 .
A link to Entourage PowerPoint presentation;
www.entouragemining.com/i/pdf/Doran-PP.pdf
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