Opportunity Snapshot
Energy demand is expected to rise 57% by 2030. To meet the critical imperatives of securing reliable, large-scale energy supply and addressing climate change, nations worldwide are increasingly embracing clean, emissions-free nuclear power. Today 439 nuclear reactors in 31 countries generate more than 16% of the world’s electricity supply. Worldwide 35 new plants are under construction, 91 are planned, 228 are proposed, and existing plants are significantly expanding capacity, according to the World Nuclear Association.
This resurgence and growth of nuclear power as a sustainable component of the global energy mix is driving the market for uranium, the fuel for nuclear reactors, sharply upward. With prices rising and demand exploding, the development of known uranium deposits has become increasingly profitable.
Bancroft Uranium Inc. is a growing mining company engaged in the exploration and development of previously identified but undeveloped uranium properties. The company has acquired an extensive regional play of more than 9,000 acres in Ontario, Canada, that are prospective for uranium and is actively exploring the Monmouth Uranium Project.
Uranium was discovered at the Monmouth Uranium Project in the early 1950s.
With the price of uranium less than $10 per pound at that time, the resource
was never exploited. Previous operators of the Monmouth prospect conducted drilling
and estimated the property contained a resource of 2 million tons containing
0.045% or 0.9 pounds per ton, which would equal 1,800,000 pounds of U3O8. At
today’s $65 per pound uranium spot price, these historical reserves are
worth approximately $117,000,000.
Key Investment Highlights
Bancroft Uranium has assembled a portfolio of high potential uranium properties
including the historically defined but undeveloped Monmouth Uranium Deposit.
In the late 1960’s a 44-hole drill program was completed at the Monmouth
project for previous owner Northern Nuclear. In 1968 an engineering report by
S.W. Evans was filed as a listing prospectus to the Toronto Stock Exchange for
Northern Nuclear. The report estimated from drill results the potential of 2
million tons containing 0.045% (0.9 pounds per ton), or 1,800,000 pounds of
U3O8.
At today’s price the potential uranium resource is worth approximately
$117,000,000.
According to the company the Monmouth deposit is close to processing facilities
and amenable to low cost mining, crushing, and gravity separation, enabling
relatively low production costs.
Nuclear energy produces 19.4 percent of the United States’ electricity
(Nuclear Energy Institute, 2008).
The Department of Energy’s Annual Energy Outlook 2008 projects a net
increase of approximately 19 gigawatts of nuclear capacity coming online through
2030.
The World Nuclear Association asserts nuclear power, which produces no greenhouse
gas emissions, is the most environmentally benign way of producing electricity
on a large scale. Without nuclear most of the world would have to rely almost
entirely on fossil fuels for base-load electricity production. Nuclear power
has a key role to play in reducing greenhouse gases, as every 22 tonnes of uranium
(26 t U3O8) used saves one million tonnes of carbon dioxide relative to coal.
Bancroft Uranium has engaged environmental consulting firm Earth Tech Canada
to identify how its activities could impact the environment, minimize this impact
through ecologically sensitive exploration, development and production techniques,
and comply with all environmental laws and regulations.
The company has 2,700 acres under lease on the Monmouth Project plus additional
claims totaling 6,300 acres in two other uranium districts in Ontario.
Bancroft, Ontario, known as "the Mineral Capital of Canada" (Bancroft
& District Chamber of Commerce), is home to four mines that produced a total
of 14,862,653 pounds U3O8 between 1956 and 1982.
The price of uranium remains high at $65 per pound as of April 23, 2008. Uranium
generated an 1108% increase in 7 years, from $7.45 per pound in September 2000
to $90 in September 2007, and subsequently hit an all-time high of $138.
Lehman Brothers asserts demand spikes caused by initial core requirements and
greater need for reloading fuel due to extensions in the operating life of nuclear
plants worldwide will likely lead to further increases in spot prices, predicting
prices will continue to rise to $164-$170 by 2009.
The company has engaged Greenspirit Strategies Ltd. for public and media relations.
Greenspirit works with leading organizations in forestry, biotechnology, aquaculture,
plastics and mining, developing sustainability messaging and communications
programs in the areas of natural resources, biodiversity, energy and climate
change.
Former Greenpeace President and co-founder Dr. Patrick Moore has joined Bancroft’s
advisory board. Dr. Moore is the head of Greenspirit Strategies and has been
a leader in the international environmental field for more than 35 years.
On November 30, 2007, Bancroft closed a $3.0 million financing to fund exploration
activities.
Revenue Generators
High Potential Uranium Projects
Bancroft controls an extensive regional play totaling over 9,000 acres of mineral claims in Ontario, Canada prospective for uranium.
Monmouth Uranium Deposit
The Monmouth Project is located in central Ontario, Canada, 2 hours north of
Toronto and close to uranium production facilities operated by Cameco Corporation
at Port Hope and Blind River. Previous operators estimated a uranium resource
of 2 million tons containing 0.045% or 0.9 pounds per ton which would equal
1,800,000 pounds U3O8.
Summary
• 1,800,000 pounds uranium based on historical calculation in limited
1969 work program
• At current prices ($65 on April 23, 2008), the potential resource base
is worth an estimated $117 million
• Limited drilling is required for 43-101 Compliance – expected
in Q2 ‘08
• $500,000 2007 program, 19 additional surface trenches, detailed channel
saw sampled, 125 miles of cut grid
• 1500 foot strike length of U308 bearing skarn now extended
• Uranium horizon between 15 to 35 feet thick
History
Uranium was discovered at Monmouth in the early 1950s when uranium was less
than $10.00 per pound. The operators at that time conducted surface trenching
across approximately 1,000 feet that showed grades 0.14% U3O8 (2.8 lbs per ton)
over 35 trenches and had limited follow-up drilling.
The Monmouth project was initially drilled during a program completed in the late 1960s to a total of 44 drill holes. Drilling was concentrated in rocks that contain uranium crystals in a limestone skarn. In 1968, an engineering report by S.W. Evans was filed as a listing prospectus to the Toronto Stock Exchange for Northern Nuclear, the owner at that time. The report estimated from drill results the potential of 2 million tons containing 0.045% (0.9 pounds per ton) or 1,800,000 pounds of U3O8.
Geology
The geology at Monmouth is comprised of uranium crystals disseminated in an
altered limestone (skarn) with a thickness of 15-60 feet. This skarn horizon
has been mapped for a length of 6,000 feet. Only 1,500 feet of the strike length
has been explored to some detail. All historical drill holes cut uranium mineralization
ranging from 1/10 pound to over 6 pounds of uranium per ton.
The deposit is open along strike to the northeast and southwest and down dip to the southeast.
Current Drilling Programs
Bancroft Uranium commenced a surface diamond drilling program on February 25th,
2008 to drill in areas that returned historic drill results from the 1968 program.
This drilling is the start of a process aimed at bringing the historical work
into modern N.I. Policy 43-101 compliance, a recognized world mining standard.
The company reports that once the drill program is complete, engineers will
undertake a geological report which will ultimately lead to a uranium resource
calculation of the in-situ tons and contained pounds of uranium.
Bancroft is currently receiving initial assay results from the start of the drill program and expects to report drill results shortly.
The company asserts that once final 43-101 reporting is received it will be in a position to implement recommendations and move forward with planning for future work towards pre-feasibility studies that will be required prior to determining whether Monmouth represents a viable commercial uranium deposit.
In conjunction with the drilling results, Bancroft expects to report on a metallurgical study currently underway with the processing of a test sample of the Monmouth rock with SGS Mineral Services Laboratory located in Lakefield, Ontario.
Project Advantages
• Proximity to infrastructure
• Location in a historic mining district
• Amenable to open pit mining
• 1970 metallurgical test shows 80 plus percent recovery by simple gravity
separation
• Nearby CAMECO facilities in either Port Hope or Blind River, Ontario
identified by the company as potential purchasers for uranium
• Produced yellow cake can be shipped to CAMECO facilities at Blind River
in under 2 hours
Additional Projects
The company has staked two additional uranium projects in Ontario, at Long Lac
and in the prolific Elliot Lake Uranium camp.
The Elliot Lake property is located approximately one half mile to the west of the past producing Pronto Mine. Between 1955-59 it produced 2.1 million tons averaging approximately 2.3 lbs/ton U308.
Canada’s Rich Uranium Resource
According to the World Nuclear Association Canada produces about one third of the world's uranium mine output, much of it from two new mines. (Canada's Uranium Production & Nuclear Power, March 2008)
Canada is the world's largest producer of uranium. In 2004 production at 13,676
tonnes of uranium oxide concentrate (11,597 tonnes U) was about 30% of total
world production. Its value was about C$800 million.
Canada's known uranium resources (Reasonably Assured Resources plus Inferred
Resources to US$ 130/kgU) are 524,000 tonnes of U3O8 (444,000 tU, 9% of world
total).
History
In Canada uranium ores first came to public attention in the early 1930s when
the Eldorado Gold Mining Company began operations at Port Radium, Northwest
Territories, to recover radium. Deposits around the Bancroft, Ontario, area
were discovered by the early 1950s, and the first discovery in Ontario's Elliot
Lake region was in 1953. The northern Saskatchewan uranium province was also
discovered in the 1950s and Eldorado Nuclear began mining at Beaverlodge in
1953.
This first phase of Canadian uranium production peaked in 1959 when more than 12,000 tonnes of uranium was produced. The uranium yielded C$330 million in export revenue, more than for any other mineral export from Canada that year. However, this period marked the end of cost-plus production for export, and over the next few years the number of mines declined to four. Uranium production in the Bancroft area and at Beaverlodge, Sk, ceased in 1982 and the last of the labour-intensive, lower-grade Elliot Lake mines closed in 1996.
Area Mines
McArthur River has enormous high-grade (23%) reserves at a depth of 600 metres.
It opened at the end of 1999. Remote-control raise-boring methods are used for
mining and the ore is trucked 80 km south to the modified Key Lake mill, where
it is blended with "special waste rock" to produce 8500 t/yr of U3O8.
Mining is constrained by licensed capacity, and a planned increase to 10,000
t/yr is under review by government agencies and expected to be implemented in
2009. Tailings are deposited in a mined-out pit. Cameco is the operator and
majority owner, with Areva (30.2%) as partner.
The McClean Lake mine commenced operation in mid 1999. It was producing about 2500 t/yr U3O8 (2120 tU) from 2.4% ore but has been relicensed for 3640 t/yr. It has new plant and other infrastructure and uses the first mined-out pit for tailings disposal (the ore having been stockpiled). Production in 2006 was down due to lower grades. Expansion of the mill to prepare for Cigar Lake ore will be complete in 2007. McClean Lake involves three open pits and later will become an underground mine. It is owned by Areva Resources (70%, also operator), in joint venture with Denison Energy (22.5%) and OURD (7.5%).
Cigar Lake will be a 450 m deep underground mine in poor ground conditions,
using ground freezing and high-pressure water jets for excavation of ore. High-grade
ore slurry from remote mining will be trucked for toll treatment at Areva's
expanded McClean Lake mill, 70 km northeast, for the first two years. The average
feed grade will be 20.7% U3O8.
Major Market Opportunity
--World Nuclear Association
Rising Energy Requirements Driving Increasing Demand for Nuclear Power
Higher fossil fuel prices, energy security concerns, and environmental considerations are expected to improve the prospects for new nuclear power capacity in many parts of the world, according to the DoE. Electricity generation from nuclear power is projected to increase from 2,619 billion kilowatthours in 2004 to 2,972 billion kilowatthours in 2015 and 3,619 billion kilowatthours in 2030. The DoE predicts the world’s total installed nuclear capacity will rise from 368 gigawatts in 2004 to 481 gigawatts in 2030.
In the United States, the Department of Energy projects nuclear generating capacity will increase from 100.2 gigawatts in 2006 to 114.9 gigawatts in 2030. The increase includes 17 gigawatts of capacity at newly built nuclear power plants (33 percent more than in the 2007 projections) and 2.7 gigawatts expected from uprates of existing plants, partially offset by 4.5 gigawatts of retirements. (Energy Information Administration, “Annual Energy Outlook”, March 2008).
-- Department of Energy, Fiscal Year 2009 Congressional Budget Request for the Office of Nuclear Energy, February 2008
Rising Demand for Uranium
The World Nuclear Association reports the world’s nuclear reactors currently consume approximately 66,500 tU/yr. A new reactor takes a first fill of uranium of around 600 tonnes, then consumes 200 tonnes per year.
As of April 1, 2008, 439 nuclear power plants with an installed electric net capacity of about 372 GW were in operation in 31 countries. Worldwide 35 new plants are under construction, 91 are planned, and 228 are proposed. The quantity of uranium required for 2008 is estimated at 64,615 tonnes. (World Nuclear Association, “World Nuclear Power Reactors and Uranium Requirements”, 20 March 2008)
Demand for uranium is directly linked to the level of electricity generated by nuclear power plants. As more reactors are built and the capacity of existing reactors is increased, the need for fuel will continue to rise. In the US alone five requests for combined construction/operating licenses were filed with the Nuclear Regulatory Commission in late 2007 and up to 27 more are expected by 2010. And all of the 104 operating US units are expected to run for 60 years, rather than the 40 years initially licensed, and most are being uprated, some by more than 100 MW. (Platts Insight, “Uranium and the Nuclear Renaissance”, February 2008)
In 2006, uranium production was an estimated 103 million lbs, or 46,720 tonnes, while consumption was 177,000 lbs, or just over 80,000 tonnes. In 2007, uranium demand was about 183 million lbs and production was about 117 million, according to Alice Wong, a vice president at Cameco Corp. "Since 1985 uranium consumption has exceeded mine production, and you can see it increasing by wider margins. So you're looking at 20 years, or better, of consumption exceeding mine production," Wong said. (Reuters, “Nuclear energy renaissance ignites uranium boom”, Mar 27, 2007)
The OECD Nuclear Energy Agency and the International Atomic Energy Agency's latest (2005) Red Book predicted that primary uranium production could satisfy projected world uranium requirements by 2010 only if all expansions and mine openings proceeded as planned and production were maintained at full capability. Secondary sources, such as ex-weapons and government stockpile material, are expected to dwindle, particularly after 2015, it said.
Increasing Demand Fuels Uranium Prices & Profits for Producers
Uranium hit an all-time high of $138 per pound in June 2007, up from just $7
in 2000. Prices are now stabilizing at $65 and are still historically high as
of April 23, 2008.
Many industry watchers see the recent sell-off and correction in uranium spot prices as an opportunity for investors. According to the Midas Letter’s April 13, 2008 article, it’s a buying opportunity for the quality deals with good grades and pounds in the ground, experienced management, and properties that are close to infrastructure but away from populations with a tradition of eco-opposition.
From the April 14, 2008 Global Asset Strategist entitled, “Uranium: Not Over Yet”: “After the fierce decline in 2007 and the smaller selloff this year, uranium is forming a bottom here. The potential increases in supply have already been priced into the market, while many risks to production are being discounted. The current lull in the market has allowed the spot price to drift lower. Uranium only needs a buyer to step in to turn the trend around.”
Despite the sluggishness in the market, the uranium bull is far from over. There are five major reasons why uranium will continue to appreciate in price: The developing world will demand more energy; peak oil is pushing the world to look for alternatives to petroleum; environmental pressures are making nuclear power more attractive; supply is not easy to increase; and uranium is still a very cheap fuel.
In 2001, a pound of uranium was about $7. That's incredible when you realize that one ton of uranium is the energy equivalent of 16,000 tons of coal or 80,000 barrels of oil. This makes uranium about 60 times cheaper than oil at the current prices.
Fund manager David Coates at CQS New City Investment Managers Ltd sees uranium as an energy source, rather than a metal, and argues that the valuation gap between oil and uranium will shrink as governments turn to low-carbon emission energy sources in the future.
Spot uranium prices could ease further short term after falling around 25 percent this year, but are likely to stabilize fairly soon as utilities and producers return to the market, analysts say. (Reuters, “Uranium near floor after this year's collapse”, April 23, 2008)
Leadership
Paul Leslie Hammond, B.A., C.A., CEO & President
Mr. Les Hammond has had extensive experience in international corporate finance
related to mergers and acquisitions and has dealt with the major capital markets
in New York, London and Toronto. He is a graduate of Simon Fraser University
and a Chartered Accountant. He has held Chairman, Director, President and Chief
Executive Officer positions in various companies, several listed on NASDAQ and
the Toronto Stock Exchange. He has held senior executive operating positions
in telecommunications, computer retailing, real estate development, financial
services, brewery operations, transportation and mining. These projects were
conducted in Europe, North and Central America, the United Kingdom, Western
Africa, New Zealand, South East Asia and China.
For the past 15 years Mr. Hammond has acted as an investment banker assisting companies with acquisitions, financing, sales and distribution, turnarounds, improvement of management depth, corporate governance and reporting and compliance issues.
David Naylor, CFO & Secretary Treasurer
Mr. David Naylor is a financial management professional with extensive accounting
expertise and proven ability to improve management practices. His career includes
eleven years leading a large media publishing company through a period of change.
He has held the position of CFO and/or Secretary Treasurer for varied natural
resource juniors as well as technology sector companies. From September 2002
until October 2003 he was employed by the British Columbia, Canada Ministry
of Provincial Revenue based in Victoria, BC. From October 2003 until the present,
he has served as a director and CFO of several listed public companies. Mr.
Naylor is a Certified Management Accountant (CMA) with over twenty years of
experience.
Investment Conclusion
Bancroft Uranium is building on a successful exploration drilling program conducted on its Monmouth Uranium Project in the 1960’s. In 1968 previous owners estimated reserves of 1,800,000 pounds of U3O8. The deposit was never exploited due to low uranium prices. Today nuclear power generation is on the rise, sending uranium demand and prices to new heights and making uranium production economically advantageous. Bancroft Uranium is conducting a drilling program to confirm and expand the historically identified uranium resource at Monmouth, which at today’s prices could be worth approximately $117,000,000 or more, if uranium prices continue to move higher with increasing demand.
With Bancroft Uranium, investors can participate in the growing market for
uranium with a proven team of resource industry experts focused on profitable
development of a portfolio of high potential uranium projects.