How to discover uranium in Canada

EPISODE 9. Anthony Milewski and Christian Purefoy are joined by special guest Dev Randhawa, CEO and Chairman of F3 Uranium, to talk about the new nuclear energy renaissance, especially with. new demand coming online from AI and data centres, so the question is: how to discover more uranium?

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Transcript

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Ladies and gentlemen, welcome to this small nuclear modular reactor of mining podcasts. That's right. We're talking uranium on Boom, Bust and BS. Today we have a fantastic guest. So, you know, it's not often that we get a talk with someone who has been responsible, along with this team, for multiple uranium discoveries in the Athabasca spanning decades. And, you know, in light of what's happened in the last 48 hours here, we had a uranium deal where Sprott raised$100 million or went out to raise 100, They've raised $200m. You know, clearly big excitement. We've got, you know, the nuclear tape, as it were, globally is becoming more interesting. You know, we've got the greenies wanting uranium now. We've got the left, we’ve got right. So it's kind of this renaissance for nuclear and uranium. And there's not a lot of guys that we could have down here that could tell us how they found it, where they found it, and where they're going to find it. So, Dev Randhawa, excited to have you on today. Appreciate your time. And, you know, tell us a little bit about your history and your history of discovery in the basin. Well, thank you for having me on. You know, also, like, I think I love what you guys are doing and all the different things you guys write about You know, they’re on the money. And so thanks for having me on. Well, you know, for me, it's really been a question of talking to people and bringing people on. So when I first, you know, this was going to sound crazy, but in 1995, some guy and my friend phoned me up and said, I met these two old guys in the elevator and they're looking for a shell for uranium. And I'm not kidding you. I'm embarrassed to tell you that. I said, Well, don't we have enough bombs? You know, that was how ignorant I was of the industry and and really, Anthony, that's what it was like from 96 til for almost ten years, I would say I was always educating people that, you know, we were producing. Our demand keeps going higher and we keep producing less and less. And so that's how much little I knew. But there was a guy named Rick Rule that I met, and he would really he really pushed me because he was a fan. There were these two started IUC, international Uranium. If you remember, IUC, that’s what it was, which then merged with Denison. You know, if you remember the old saying you don't need to be the smartest guy in the room but know who the guy is and hang out with him. And so Lucas and Rex, this was the right direction. So it's really hard playing, you know, for a long time. But and then we had, you know, the fire at Ranger and then the flood at Cigar. That's what ignited the whole industry. And again, you know, some guy calls me and says. I want you meet somebody owns about 5% of your stock and I walk in the room is Eric Sprott. And, you know, it was a bit disarming he says, you know, I don't think you know what you're doing, but I like the fact you want to buy everything so we’ll back you, and you know and he said what do you think uranium is going to do? And I said, I think it's going to go to 40. And he said, no it’s going over 100. And then I realized then, you know, again, he's smarter than me. Listen to the guy. So, you know, we were able to build this company Strathmore from 1.8 million all the way up to a half a billion. And but as you remember, you know, the financial crisis, everything happened eventually prior to that, though. Funny we talk about SPUT SPUT was a brainchild of Peter Grosskopf you know, he took it from Denison and brought it in house to Sprott, made it very aggressive. I believe that the single most important thing that happened in the uranium industry in terms of the spot price and so Peter, at the time back in 2006-7, was the head of Cormark Securities or Sprott Securities and said, let's spin out. And he's one that said, look, you're going to get zero credit for exploration. Let's start a new company called Fission Energy, which we did. And obviously Fission Energy went on to, you know, produce $1.5 billion dollars worth of market cap, whereas the U.S. was, you know, they went in the tank and they had to sell to Energy Fuels, which some of those projects are still around. So we were able to, you know, we go that far back and then the Fission Energy became F1. We made a discovery with the help of the Korean KEPCO utility. We made a discovery next to Hathor. We sold that to Lucas, and we took the west side of the basin, what was left, which nobody believed in. And that's the key thing. Nobody believed there was any uranium on the west side. Two, that there was no uranium except at the unconformity. And thirdly, all uranium had to be inside the basin Well, Arrow and Triple R are not in the Basin. They are not there. Hold on, just for our viewers... Yes. So, you know, Dev is talking about the Athabasca Athabasca Basin, which as you know, arguably the most important Basin in the world outside of Kazakhstan because it sits in Canada and correct me if I'm wrong, Dev, but all major Canadian uranium deposits, companies and players are sitting in the Athabasca Basin. Is that right? All of them. All of them because the grades yeah, the grades are the reason the Athabasca grades are over 2%. Quebec is a bandit, BC is bandit. They might change now, but even if they do, their grades are point one. They're more like Namibia and places like that. So you so you know one of the interesting things that you've done and I'd like you to walk us through it is you had the Athabasca Basin and everyone said, no, no, the uranium only is hosted here on this side of it, on this part. And what you and your team have done successfully now, I think maybe four different times. I don't you'll have to correct me how many discoveries you have. Four or five. What you've done is you've gone and you use technology and you've kind of always been on the forefront of that technology, whether it was chasing boulders or now I think you're using drones to go out and test these theories. So walk us through like what you know, what was a boulder discovery? What does that mean? You think about, you know, a lot of the people watching don’t know. Forgive me for that. Well, the Athabasca is the middle of Canada, right there the Athabasca Basin is very unique. And what they have is mostly uranium like Cigar Lake, McArthur is where they call the “unconformity”/ Just a fancy word for where this milkshake sandstone hits rock right where the two meet. The contact point is called the Unconformity. That's all it. This just a name for it. But the way it's done is that as the uranium comes up and almost percolates, it gets, you know, higher, higher grade through the solution system. So everything up to that point. So it's kind of fair to say. Is it fair to say that as it comes out, this unconformity kind of captures the uranium? Yeah. Yeah. And focuses it in this layer? Is that a fair way to think about it? Exactly. And that's where it collects. It will collect in that it will have almost like a mushroom. If you look at them, a lot of deposits are like they pop up there And then they are literally like, we've talked about pearls on a necklace, right? And etc.. So so everybody thought all the uranium was always going to be in the in the east, right? Cigar Lake, MacArthur. That's where they are going to be. And you have to be at this unconformity and you have to be inside this magical line, right? Well, you know, Ray and Ross had come from the diamond industry and what they used to do in the diamond industry was take choppers and put sensors underneath to sense garnets. If they found the garnets, we knew that there was kimberlite nearby. Then they would go that way. We did the opposite. We said, what's the best indicator for uranium? Other uranium. So where were the outcrops of uranium that were popping up, or would we find boulders somewhere? Sure enough, name is fellow name is Kye from Calgary. And a small plane. He went tree tops, which is dangerous, but he did. And then we found the boulders on this side of the road, which eventually led, we hired a glacier geologist, who followed it up and made the discovery on a Triple R, and of course, a year later, Lee and the boys made a much bigger discovery over there on their land, some land that I think Patricio had. And he they all put together at one time. So that that thinking that's what takes different. Why do small guys beat the...... why does David beat Goliath? Smart, quicker. And so that's what we've done. And so we've made that discovery. So F1 was Fission Energy. We sold that to Denison. F2 was a Triple R, which recently sold to Paladin, and then we took some other assets and began a company called F3. And that's what we're talking about today. In F3, we've got JR Zone, which is at some super grade up to like, you know, we've had I think four and a half meters of 50% uranium, you know, and just for the people watching, I mean, 50% uranium, do you have to wear special clothes or special equipment to deal with that? Uranium is very stable. It's only if you started inhaling it. You know, there was a there's actually Eric Sprott who sent me a link once of a guy who went around campus eating uranium in front of them because it's when you, if you were to cut it up and put it through your nose, that's the problem. It’s actually very stable form. But yeah, we absolutely, you know, take all the protection. One thing about being in Saskatchewan, it's had 70 years uranium. There are so many rules to follow, protocols, and it makes it so straightforward. So F3 has got the JR Zone we need to grow it, obviously. We don't know if we got 15, 20 or 30 million pounds. We're going to do a PA next year, maybe this year, depending on the timing and but then recently, about a month ago, we halfway between us and Arrow, we roughly found another discovery called the Broach, and we found 30 metres of mineralization some high spikes in there. So it's a brand new area with lots and it's bigger than the J.R. Zone already. So but we've got to get some assays and numbers from there. So F3, you know, we've got over$20 million in the bank. We're well funded. We're owned 7% by Denison Mines and we've also Sprott owns about 7% of us to the funds, but also Rick is on his own now. As you know, Rick Rule, so we’re well-funded and we've got a very good technical team and discoveries matter. You know, Anthony, if you look at stocks that make the biggest runs, it's discoveries, right? And if I might, just at that point, you’re almost making it sound quite easy finding these things. You've made so many discoveries and it really isn't, is it? It’s worht noting, just to take a minute here, that most people don't find anything. Actually, you know, most people raise money, they go out, they drill, they shoot whatever they're going to do, and they don't find anything at all. And I would say one of the companies you founded even recently was taken over, Fission Uranium,. was purchased, which I think is huge for investors. And so it really is worth noting that you're making it sound like anyone can just roll up to the Basin. But actually, you know, one of the things you've done is had a huge amount of success in using these geological techniques and these techniques, as you're saying, you know, looking for boulders, which is a pretty I think it's pretty unique. I'm not aware of anyone else who's had that much success making discoveries. I think in that in that same vein, are you taking advantage of new technology? Like, you know, I know you've been using drones. Is that. Yeah, we we haven't found anything yet that way. The idea of using AI was to go through old data and and see if something's been missed. You know, you saw that LinkedIn crazy gold deal in Spain that someone had dropped and found out through LinkedIn you know just somebody forgotten about it and you've obviously based those and those guys, you know, really to re-discover deposits that people are forgotten about. You know, Athabasca has two problems. One, it's so heavily staked, it's insane. Number two, information is very poor. That's been our struggle is, you know, if the drill hole information they tell you is not where they actually put the hole in you're you know you're chasing the wind so that would be like a coordinate for a hole. And you guys would show up there and it might not be there. Exactly. And so that's been a problem with, you know, so I don't know if people did that on purpose. Anthony, You know, I know that in the U.S., in Canada, when you do the work, you have to register it right with the government. And so if you want this land, you can go back in because it's all the work that's been done on it. You assume,that's accurate. In the U.S. they will purposely break up all the floor. So you have to restart again. Right. It's very rare, it happens from time to time. Kerr-McGee, you know, kept the data and then gave it to university. We have that in one of our companies, Strathmore, where we found Kerr-McGee is all information and the land was unstaked and we grabbed it. But that's rare. But in Canada, I was we were hoping that information would be a tiny bit more accurate though, because if you're in Namibia, whether you're 50 meters off, it just doesn't matter because everything's on the surface. It's a low grade near the surface. The problem with the Athabasca is you can literally be five meters off 15, 20 feet away from there and have no ideas here because it's very potty, you know, and it's not widely disseminated. So that's why data in Saskatchewan is so crucial. You know, maybe we were better to apply that data to Namibia. I don't know. That's something interesting. Yeah. What are your future plans here? I mean, the company has obviously had a great run here. You keep producing these great results and what do you what do you think it looks like here over the next year or two, especially with a pretty positive uranium market? yeah. I mean, exactly. So we've got the J.R. Zone we want to continue to. Money is still scarce. We're not going to. So we're we're still trying to figure out where the end of that tail is. That will continue with J.R. but also here. But what we’re more excited about is Broach because we think it was land we got for free. We swapped it with somebody and there's a huge mud layer which is making it hard to detect the conductor. So we're learning about it as we go, We should have some news out shortly about what we're learning. And so our focus is the Broach, definitely. But here's a funny thing, though. You know, Anthony, you've hit it, we can do all the right things, but if the overall market is not on our side it doesn't matter. The day we Christmas, this Christmas year, we put out that results four and a half meters, 50%. Our stock went down 5% because when you're in a bad market, people see opportunities to sell, not buy. So this is news by SPUT had more impact on us than a drill hole which is sad but that's the state of the market. Yeah but but it is true though because the the unfortunate you know a better than most you've been you've been involved, been part of the investing in the field that spot price people are fixated on it people are completely fixated on it You know they'll see announcement of matter with Constellation. You'll see Microsoft, Three Mile Island and they'll go they just a light blue of cloud. They don't see that. Like they say in the Prairies You see the storm coming? Well, the storm's coming. The you know, I think was Rachel from Cameco that said, between now and 2035 or 40, there's 3.5 billion pounds uncontracted. Can you believe that we're talking the next ten, 15 years. Can you give us some insights to that, Dev? I mean you've seen so many of these milestones. What does that what does that number actually mean? Well, the market's only 200 million, right? We need about 200 million or roughly maybe 190, because she is a bit opaque and we're producing 140, 150. That's it. Every year we've got a deficit and it's comes through different sources. There are, you know, Olympic Dam doesn't run a uranium mine, but they had a side product and it pumps into it. But we have a deficit. So think about it. You got most is, you’ve got two prices, the spot price and the long term, the one that matters the most is long term because that's where utilities contract at. And but what impacts the spot price is not financial players like Sprott, they're the ones in there buying it out. That has huge impact. It cleans up this uranium that keeps dropping into it, so it's very important. You only have a 200 million, you know, you've got billions of pounds uncontracted and the other one that people maybe didn’t catch was the Chinese finally have an SMR going To me that was a great piece announced last week I think they're going to have one SMR, a small little reactor, is going to be a provide electricity for 500,000 homes. Okay. Now, that's a little worrisome for me as a North American. What happens if they win the race to the SMRs? They could also win the race to AI because all the ground work for everyone watching and an SMR is a small modular reactor. And correct me if I'm wrong, I think what that means is that it's much faster the permitting and they're building it in a single place and then they move. It would actually be in. So and correct me if I'm wrong, I think it means it takes years and years off, you know, order one and then it's there in half the time or whatever. Yeah. It's exactly and it's modular. So if it's working they can build another one to add on to it so they can actually build. And it's big for people like in the North Sea who are using diesel. Well if they had one. Or, all the heavy oil out of Alberta, one reactor and they wouldn't have to use any more diesel. Right. And so the Chinese have produced their first functioning SMR small modular reactor. Now, companies like Facebook, Meta, are saying, if we're going to be part of this race. What's the big roadblock? Power. Computing power. We already have we already got pressure from electric vehicles, cryptocurrencies, heavy computer power Now you've got you know, AI. So we need a lot of energy. And the reality is people are waking up you know we've you and I have always and the industry has always known that renewables won't work because they're not baseload. You can't crank them up and down. You can't tell the sun to shine in the evening, you can't tell the wind where doesn't want to blow

And we use our power typically from 5: 21:07

00 at night until 8:00 at night. So we need baseload power that's clean.

There's only one, only one: 21:13

nuclear. and people realizing it now. So you're seeing even Germany switching over. You know, what a disaster there. They're the California of Europe. Right. Stupidity when it comes to power. But even California has realized, we can't have brownouts. And, you know, those who work in South Africa know all about brownouts. There's just no power and people need us. So I think it's a perfect storm for uranium and for investors. Yeah, they should own some Cameco maybe a developer like NexGen, you know, and but they need to need to have in your portfolio some exploration stocks because we can double and triple. Cameco will go up 10-20% but it’s not going to triple over over discovery That's why you want junior stocks like us and you want to bet on people. In real estate. it's always going to be location location. When it comes to junior stocks, it's all about management. They can attract capital. They can assess this, if it’s a a good property or not. And that's that's why that's how you invest when it comes to junior companies. I think that's actually a great place to end here. And a great, great well said. It's all about the people. And, you know, Dev and his team have had success across decades, including multiple discoveries, multiple companies. and you know, they're on to something in the Athabasca with this new company. So I really appreciate you coming on today. It was fantastic to have you. And let's do it again in a couple of months and get an update. Yeah, hopefully we got some good news coming out of our drilling to confirm this is a discovery. So we're excited the next couple of weeks. Great. Thanks a lot to do this again.