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Transcript: CanAlaska Uranium (CVV) - $3M Raise to Focus on Green Energy

April 13 2021, 16:20 GMT+01:00

CanAlaska Uranium

  • TSX-V:CVV
  • Shares Outstanding: 78.9M
  • Share price C$0.68 (13.04.2021)
  • Market Cap: C$53.5M

Interview with Cory Belyk, COO of CanAlaska Uranium Ltd (TSX-V:CVV) CanAlaska Uranium Ltd. is an exploration stage company primarily engaged in the acquisition and exploration of mineral properties in Canada.

The Company focuses on the exploration of uranium deposits in the Athabasca Basin area of Saskatchewan. The Company operates approximately 20 projects within the Athabasca basin area.

We Discuss:

  • 2:44 – Company Overview
  • 4:13 – What Has CanAlaska Done to Generate Value?
  • 7:52 – How CanAlaska Generates Market Excitement
  • 10:00 – What is the Best Use of Money?
  • 12:22 – Why Raise Only $3M?
  • 14:23 – Has CanAlaska’s Mentality Evolved with Share Price?
  • 15:49 - $65M Market Cap: Where is the Value?
  • 17:29 – Moving Uranium Projects Forward: CanAlaska’s view on Project Generators
  • 20:30 – What’re the Steps Require Before Raising Capital?
  • 22:44 – Next 12 Months: What Will CanAlaska do?
  • 25:15 – Fjordland Deal: What Does it Look Like?
  • 27:35 – 2nd Project: What Does That Deal Look Like?
  • 29:35 – Do The Uranium Deals Look the Same to Nickel Deals?
  • 31:22 – Are CanAlaska Overvalued?
  • 34:08 – Why Not Focus On Uranium?

 

Matthew Gordon: Can you kick off and give us a 1-minute overview of the projects and I'll pick it up from there.

Cory Belyk: We pride ourselves on being project generators. In the last 12-months or so, since we last talked, we've been busy during covid looking for opportunities for investors and for the company. We've been busy, both reviewing old data, when we perhaps weren't able to drill during covid, but also generating new projects in the best parts of extensions of areas around the Athabasca Basin where we have potential to make that Tier 1 discovery, particular in the Basin. We've been busy project generating. We've been busy reviewing old data, setting ourselves up for the next round of drilling. We're currently drilling up around the Cigar Lake mine right now, so we're going to have news flow coming out over the next number of months. And yes, we have not been idle during these tough times. It's been a really exciting 12-months for us.

Matthew Gordon: Most Uranium companies have almost trebled their market cap. Nickel has also been on a bit of a tear: up to $8, 3 weeks ago. That's not too shabby. And Copper, again, up around $4; it all helps. What have you been doing that's actually generating some value, or has it just been all market-driven?

Cory Belyk: Oh, not at all, because we believe we've got some of the best Nickel assets in one of the best Nickel jurisdictions on the planet, that's the Thompson Nickel belt, Manitoba, right near Vale’s operations at Thompson. Thus, being a project generator during the low times in Uranium was one of the focus is away from Uranium, but still connected to that green movement. You have to build batteries to store all of that power, so the Nickel space is a really intriguing space for us. It's in our backyard. It's in Manitoba, the neighbouring jurisdictions where Uranium assets are in Northern Saskatchewan. If you think about it, that that Nickel play is a really nice add-on to the low-carbon environment that we find ourselves moving into globally.

We continue to do deals there. We did a deal with Fiordland Exploration in the Strong Hunter area north of Thompson, which was done right around last May and Fjordland Exploration is owned by Robert Friedland and his HPX Group. That conversation really got going with Robert directly, and it resulted in a deal for us. That’s a USD$9M deal that we're trying to advance our Nickel assets north of Thompson with.

Just recently we've done a deal with another company, D block, which you've seen in the news in the last couple weeks, for the Manibridge Project. So we're going to move that forward at the same time. Therefore, we're starting to move these assets forward in the Nickel space, which has had some really exciting developments in the past 12-months.

On the Uranium front, Covid stalled us last winter, where in 2020 we chose not to go back and explore with the drill. But what we did do is we went in and revisited our key West Mcarthur project. We've been making the recent discoveries that are what we call another 42 Zone, just a few km from Cameco’s Fox Lake deposit. In the summer we went in and dis some logging, we revisited the model and we were able to accomplish opening up 3km of exploration space attached to that 42 Zone that we hadn't previously understood or realized was present. We are really excited to get back in there this year and continue to drill on that discovery.

Again, we're drilling 5-8% Uranium grades. This is exactly what we want to see for potential for Tier 1 Assets in the Athabasca Basin. It’s an exciting time for us.

Matthew Gordon: How does a company like you, with the cash you've got available, actually create a scenario which either allows for someone to come in and partner with you, or you they can farm in to, or you can start creating the value on the Uranium component yourself? I don’t know where you sit in this in this cycle. You're not going to insert yourself anywhere in this cycle, so how do you get the excitement going on the Uranium portion with no money?  

Cory Belyk: Well, we have money now, but yes, with no money how do we get it going? We get it going because we tell the story. We tell the story of not only West Mcarthur, which has been a new discovery with our partner Cameco in the last few years we've really wanted to build on to that drive, we've opened up the exploration space and now we have to get into and actually test those targets that we generated. In the last 6-months we haven’t been able to get in to Cree East, and there are incredible projects down around Key Lake that have been sitting idle close Fukushima. When Fukushima hit, the wheels stopped and we haven't got back to it. But what we see there is exactly what we're seeing at West Mcarthur: we're drilling 8% Uranium. These big systems do not occur everywhere, and we believe we've got 2 of them within our portfolio just at West Mcarthur and also Cree East.

The story is starting to get out there. The interest is coming back to the Uranium space. CanAlaska has preserved this asset portfolio from 10-years ago, really to this point for the next cycle, and we've got great assets close to the infrastructure, close to Key Lake, a close to McArthur, up around Cigar Lake where we are drilling right now on our Waterbury project. The value is sitting right there. It just hasn't been able to get, let's call it further tested due to the market. Being in the East, being around the infrastructure, having the right assets available to us at the right time at the right point of exploration that were poised for Discovery - it's right there. 

Matthew Gordon: You're not going to get into production yourself, so that's the model. What's the best use of money? What do you need to show the market, show potential strategic partners or otherwise to get them to do more than just listen to your story, and so something about it?

Cory Belyk: Do something about it, and that's critical. We've been doing something at West Mcarthur that's been a big part of our story for the last 12, 18, 24-months: we've opened up the new space, now we're telling that story and I think people are getting it. Investors are getting it.

Matthew Gordon: Tell me tell me more about that. You're opening the space – what does that mean?

Cory Belyk: If we take a step back, I always use the analogy of a tiger by the tail: the hard part is getting that first drill hole into mineralisation in the Athabasca Basin. We're talking Uranium. We've got a few of those holes already. Is it where we need to be to have the next tier-1 asset? Maybe yes, maybe no. It's going to take more drilling, that's obvious. But what we've done is we've opened up 3km of space attached to that discovery where we're getting 8% grades. We've got a large alteration system. These systems do not occur everywhere in the Athabasca Basin. When they do, you need to pay attention to them because they may indicate the presence of the McArthur/ Cigar Lake scenario - tier 1 assets in the Athabasca Basin, and that's what we're looking for.

We've opened that space. We've got to get back in there and continue to test the West Mcarthur project. Can we do that with our money? Yes, we can. We will move it forward methodically. We're financed now to do that. We have a plan in place to do that come June.

Cree East - we'd love to bring a partner in there. We own 100% of it. We don't have to own it all. We have the Koreans in, they are investing USD$20M to move those targets forward from conceptualisation through to what we actually think is discovering now in terms of low-grade mineralization, certainly the alteration. Everything we see at West McArthur is occurring at Cree East, but we haven't got back to it in 10 years. There hasn't been interest, there hasn't been money available. To bring in another partner to help us move that forward is an option we’d love to explore, we're actually exploring it right now. It's about finding the right mix of partnerships that can bring the money to the table, move the project forward and get us to that discovery, which for our shareholders is a great thing.

Matthew Gordon: These projects are getting funded on the same day. And if you are getting 8% grades, you are in the Athabasca Basin and people are excited. We've seen some great success stories from likes of the NexGens and the Isos. I guess to a lesser degree, the Fissions, where those grades are very appealing to funders, especially some of these broader funders that are walking into this space looking to invest, so why not be more aggressive? Why the caution?

Cory Belyk: We're very cautious about not diluting our shareholder base. We took a bunch of money at $0.50c, we will turn some away - no doubt. Now our stocks has risen again, maybe we'll take some more, but we're funded. for what we plan to do in 2021: that's to move West Mcarthur forward, move some of the other things we have forward. We don't need to take more money at this time, so it's about controlling dilution. We're also very cautious about not taking too much money during covid. If we take flow-through then we have to spend it than a certain amount of time. There is still risk there with covid and how that's going to shake out. Not everybody is exploring. We are, cautiously. We're just being very cautious for our shareholders. We don't need to dilute. We can move our stuff forward that we plan on moving forward with what we have in place.  

Matthew Gordon: Shareholders must be delighted at that but has your mentality evolved to take advantage of that situation? Do you feel you're still being cautious because you’ve had to be for the past few years?

Cory Belyk: We've had to be, yes, and I think our shareholders have been benefiting from that caution through that period of time. We do not want to overextend and we're approaching the entry back into what looks to be a very frothy market. The Uranium space is warming up, so we’re moving into it cautiously, not overextending, not diluting if we don't have to, but still achieving everything we I want to achieve in terms of project generation, but now moving those assets forward, whether it's us or a partnership with a new entity, which is okay. We can use other sources of money to move and do exactly what I want to do and allowing us to take what we have in our bank account already, or have raised, and do some of the other things we want to do. It's a balance but we are moving things forward. We've got new projects in the project generation space in Uranium that need some attention and warrant some attention, and that should see some work in 2021 as well.  

Matthew Gordon: How much of this USD$65M market cap do you attribute to the Uranium element, how much to Nickel and how much elsewhere? Where are people seeing the value? 

Cory Belyk: First and foremost, we are a Uranium Company; that's our love. That's our passion. That's our experience. This is where we want to be, so that is our forte. Nickel has been an add-on, I think the value that we're seeing now is really driven by the Uranium space and the assets that we have in our portfolio. Our portfolio has an array of projects: anything from an Arrow to Eagle Point analogue in the Basement, right through to a Cigar Lake analogue mid-depth in the Basin, and also deeper towards the McArthur, so we've got an array of projects that cover a spectrum of potential tier 1 discovery assets that are all moving forward at various stages. That's I think where the value of the company lies. Nickel is a nice tack-on, but that's not where we want to be. 

Matthew Gordon: What's the answer to the question?  

Cory Belyk: 100% Uranium.

Matthew Gordon: Nickel has no value as far as the market is concerned?

Cory Belyk: It has some value, but again, the bulk of it lies in Uranium. Nickel has been a nice way to generate some potential value, bringing in partners like Shortland, bringing in other partners to move the Manibridge project forward. We are using other’s money to advance those projects, retaining enough interest for our shareholders to realize the upside of any discovery, and that's where the future comes in for us. 

Matthew Gordon: You have to get the timing right here on all of this too because as you love Uranium, you should have a view on the Uranium Market at that moment, which hasn't done much. The spot price hasn't moved. No term contracts are being signed. Everyone's seeing a bump because I think there's a great expectation. How do you view it?  

Cory Belyk: No, I think it comes back to our portfolio to be honest, Matthew. Our portfolio started 15-16-years ago. We've managed to hold on to that portfolio in this low period. These projects in West Mcarthur and Cree East are the size of Greater Toronto, maybe Greater London, if you want to think of it that way. These are 30-40km in any direction, and we're looking for a football field or a soccer field or smaller, and that can contain a McArthur or a Cigar. So that takes access to land which is becoming tough. We've got the land base, and it's not just holding land for the sake of it, we're holding zones of mineralisation like West Mcarthur, high-grade mineralisation. We're holding zones of enrichment. The fingerprints, the signposts of another potential discovery at Cree East, we've managed to maintain that portfolio.

Then we've added onto it through project generation in the last 12-months with our Northeast Walston projects, which take advantage of the knowledge gained from Arrow discoveries by NexGen in the past 3-5 years. That land came open and we jumped on it because it has the right geological framework, based on our understanding and our knowledge and experience in the Uranium space to build another level of value and access to discovery for our shoulders. We're taking advantage through not only moving some of our core assets forward but also generating new projects to create additional value and opportunity for discovery.  

Matthew Gordon: You need to spend money to find your football pitch, right? I'm saying, what are those baby steps to make that happen? Do you need to get another deal done before you go and raise some capital? I.e., another farm-in deal done before you go and raise some capital? Before you try and find more assets, because that's the project-generator model, right? What does it look like for you?  

Cory Belyk: We're at the stage of trying to find partners that are aligned with CanAlaska and shareholders to move things like Cree East forward. West Mcarthur - we're in control of that project at 70%+, so there's opportunity there as well should we find the right partnership. We're constantly looking for partnerships that make sense to help move these assets, so you don't dilute our shareholders, but they still realize the upside opportunity. We're going to move some things forward as well in the absence of that. But again, we're doing it cautiously under covid, we're not blowing our brains outs on the spend. We're fully funded for this year and into next, based on what we want to do. If we can find more access to partnerships to move another asset forward like Cree East, we will do that.  

Matthew Gordon: What sort of partners are you looking for? Because I'm hearing a lot of those sorts of conversations out there. What are you looking for?

Cory Belyk: We're looking for partnerships that make sense to move the asset forward towards discovery. We're very cautious about who we interact with, who has access to that capital? We can afford the luxury we have because of our land position in the state we are in, we have the luxury to be able to have those conversations and in the appropriate mix. Not all deals are created the same, not all deals are good for our shareholders. We're being very careful about how we advance these conversations, and with whom, not everyone will get access to it.  

Matthew Gordon: Let's look at the next 12 months: with the spend that you've talked about, what precisely are you going to be doing? Why is that the best use of your money?  

Cory Belyk: Right now as we speak, we're drilling our Waterbury projects, which are located right close to Cigar Lake. They've got analogous targets that look like a Cigar Lake or a classic unconformity-type targets. The project we are drilling right now is an extension of the Rabbit Lake fault or the Collin’s Bay fault, which is host to the Rabbit Lake operation of Cameco. We're drilling that right now. That's coming in the near term.

June 1st, 6-8 weeks down the road, we're getting back into West Mcarthur. We've opened up this large exploration corridor attached to our 42 Zone discovery of 8% Uranium. We want to go in and test the ideal target at the unconformity. That's going to be our summer. Along with that in the summer, with some of these generated projects, we're going to go in and do some very cursory early-stage prospecting work. We are looking to upgrade the idea with some more current information and that should allow us to gauge whether or not we're in the right space but also to help attract partnerships that make sense to advance those basement-type targets, those new projects that we generated in the last 12-months.

That's the summer. We're also going to go in and touch on our diamond stuff. Again, this is a bit strange, but in essence we're going to go in and do some very light work looking for indicator minerals, prospecting and helping move these forwards, still focused in the Uranium space primarily.

In addition to that, on Nickel we've got the deal sitting there with Fjordland. We're trying to get our permits in place so we go can out and potentially drill that in the summer-fall.

We've just done the deal for the Manibridge Project in the last couple of weeks. That's going to see potentially, a round of investment the next 12 months in and around the Buckle Nickel mine, so that really good high-grade Nickel space in the Thompson Belt. There's a lot of opportunity to move both Nickel and Uranium forward in the next 12 months, and that's what we're choosing to do. We're fully funded for all of this. Again, in the Nickel space were using other people's money to bounce those projects, partnerships, we can do the same thing in the Uranium space.  

Matthew Gordon: With Nickel, what does the deal with Fjordland looks like? What have you agreed with them?

Cory Belyk: It's roughly a USD$9M deal to earn 80%.

Matthew Gordon: What does that mean? How does that USD$9M come in?  

Cory Belyk: It’s 3-stage option arrangement. They can earn 3 stages up to 80% based on spend over time. It essentially comes with cash shares. We're just waiting on permits to kick the first stage off and we'll get in and drill some of these targets which look like Thompson-scale targets that have never been drilled, never followed up, and we're really excited about the opportunity.

Matthew Gordon: Let's get into the weeds here: you are waiting for some permits on that deal. There's a USD$9M package, cash-shares in 3 stages, up to 80%. Can you break that down? Stage 1 - how much cash is being spent on the ground?

Cory Belyk: You are testing my maths here, stepping back 12 months. We are spending about USD$1M in stage 1. I think it was about USD$2.5 in the next stage, and then about USD$4.5 in the third stage. That’s USD$8M.

Matthew Gordon: That's USD$8M in cash, and the rest in shares. Is that what it looks like?

Cory Belyk: That's the spend. The spend is there. Then you have shares: up to 6M shares, then you have some smaller cash components. It's really about getting the spend in the ground to discovery.

Matthew Gordon: That's what I'm getting at with you. There was a deal you did in May 2020. You are still waiting for permits. What was the timeline time horizon there? What is the problem? 

Cory Belyk: It's not a problem. We're in the process of working through the permitting process with the government and the First Nations in the area. So do we have a timeline on it? No, because it's a conversation that we're working through with all the parties involved. As soon as we get access to that, then we're going to take off that program.

Matthew Gordon: That's an option on the table at the moment, permit depending. The second project is similar: you said something took about 12-months spending money. What does that deal look like?  

Cory Belyk: It's about USD$4M total spend into the ground. The first stage is USD$500,000 in 12-months. The second stage is another USD$1.5M over another 12-months, then USD$2M over the next 24-months. It's a 4-year deal to earn 100% for D-Block.

Matthew Gordon: It’s the same with the previous deal where at each stage that can work out whether they want to carry on with you or not. Does the deal mean, like with the first project, if they've spent their USD$1.5, do they get to keep the percentage or is it all or nothing?

Cory Belyk: As it's staged, if they met the requirements and the share issuance requirements, they earn that.  

Matthew Gordon: And they get to keep that if they decide not to move forward with you?

Cory Belyk: Any further in the option – correct. It's their option.

Matthew Gordon: I want to be clear: if they own 40% for spending USD$1M and they decide not to go on and spend phase 2, phase 3, do they get to keep the 40%?  

Cory Belyk: They keep the 49%. They've earned that percentage.

Matthew Gordon: That’s good.

Cory Belyk: It's great because we get to move the asset forward. If we are successful in discovery it works for everyone, and the shareholders get the upside through the share ownership and retention, that 20% ultimately, down the road.

Matthew Gordon: Is that because you're not Nickel guys? Do you think, do you know what? That's just an option for us if it works out. We are Uranium guys. Do the Uranium deals look the same, are they going to follow a cookie-cutter approach or can they be different?

Cory Belyk: Every deal is a bit unique. We've done a couple of in the Nickel space recently that look very similar in structure. You'll also find a lot of similarities to a lot of the deals in the Basin that are staged earn-ins, these types of things. But anything is on the table to be honest. The conversations are to find what works for both parties because it can't just be cookie-cutter; you have to find a partner that works for you and brings money to the table. Then you try and find that cliche win-win for both parties: the shareholders for CanAlaska, the other party shareholders or ownership. Thus, every deal is a little bit different. In general, the Canadian-style deal with the option earn-in is pretty standard for us as a rule. You don't rule out sovereign funding, we've had a few rounds of investment out of Korea and Japan in the last cycle: the Koreans at Cree East and Mitsubishi at West Mcarthur, which allowed us to develop those early-stage project generation ideas to the point they are at today and at West Mcarthur discovery. We're into those types of options as well and we have great partnerships around the world, or let's call it acquaintances if you want, where that could come into play.

Matthew Gordon: I remember Peter talking about those, but they didn’t quite work out for everyone because of what happened in the marketplace, but they are nice relationships to have. For you, the focus is Uranium. That's where you think the value lies today. Do you think at USD$65M that you are slightly over-valued today?

Cory Belyk: The short answer to that is, no, but as we enter what appears to be another Uranium cycle, the value that is being attributed to CanAlaska presently is recognising how much in that front-running pack CanAlaska's in. In terms of the stage of its projects, the mix of its projects in the Uranium space, and also the fact that we are on a discovery at 42 Zone West Mcarthur. That does need a lot more attention. You don't drill 8% Uranium in the Athabasca very often.

If you just step back, 6-months ago there was a handful of companies in the Athabasca Basin. That's starting to pick up pace, and I think we touched on this earlier, and you'll probably see that ramp up again. In the last cycle there was 10, maybe 100 companies floating around in the Athabasca. Globally 500-600 companies, all in the Uranium space. That will probably happen again, I think for investors you need to look at: who's got the right land? Who's got the right team in place to explore that land? If you're financed or have a partnership that brings financing in, where's the best potential for discovery?

We're right near MacArthur. We're 2km away from the Fox Lake discovery. 80Mlbs of 8% Cameco and Orano. We're on the same geological trend that West Mcarthur and 42 Zone are on, that's essentially a connected system, or an extension of that discovery that Cameco and Orano made. We're in the right space. We've got the right projects. We are on discoveries. We've got projects like Cree East that are primed for the next round of drilling. We just haven't been able to realise that since Fukushima, and it's just ripe for discovery.

Everything at Cree East looks like West Mcarthur, we just haven't yet got that tiger by the tail. Those first high-grade intercepts, all the alteration, all the enrichment - everything looks correct. This fingerprint: 1 of these Uranium deposits sits at Cree East, so we're really excited about both those core assets. Again - project generation, setting us up for the next wave of important discovery in the basement, that's what we're looking for. That’s what we understand.

Matthew Gordon: What I'm confused by is why dilute the story with the Nickel and with the Copper? You could just offload those, be a pure-play Uranium. You could have cashed those in and use that to develop these what sound like pretty good assets, and work that system harder. You talking about being the right formation, on trend with lots of big names that you've just dropped on the table. Why confuse and dilute the story?  

Cory Belyk: I don't think it's confusing. I reframe it in that we are actually monetising in many ways those Nickel assets. We're not using CanAlaska's money. We're not using shareholder money to advance the Nickel assets. We are using other parties that are interested in the Nickel space, have the financing in place and the interest to move those forward. We are running those projects in the Nickel space, so that provides a little bit of administrative feedback for CanAlaska which allows us to focus on the Uranium space. We're also preserving through these deals, the structure and the upside opportunity for discovery, whether it's retained percentage, Royalties, all these types of things. I would argue that we are monetising them. It's allowing us to focus back into the Uranium space and not get bogged down with spending our shareholder money.  

Matthew Gordon: When you say you're monetising them, you've got an option of monetising them with the deal structures that you've got, so they're still there, but you haven't yet monetised them. Do they distract? And given them positive Uranium market, bull market that we're moving into, is there another way for you to structure your company so that perhaps it is a much cleaner story?

Cory Belyk: I think it is a clean story. I do like the story. We are a Uranium company, but I'm going to come back to: Uranium generates electricity. That's the space we’re in. Copper moves that electricity, and the Nickel space is a natural tag on.

Matthew Gordon: I see what you did there: green energy. 

Cory Belyk: Nickel storage. Green energy - it really is tight. I think it's a brilliant connection. It really is. We're not spending CanAlaska money, Uranium money, let's call it, in the Nickel space because we're bringing in partnerships. Is there value there? Sure, hopefully one day that's the objective. Is it realised in the stock price today? Perhaps not. I believe that's driven mostly by Uranium. That's our main game.  

Matthew Gordon: You guys have done a lot since we last talked to the company. Say hello to Peter for me.

Cory Belyk: I shall do.

Matthew Gordon: We have a weekly Uranium show. We discuss Uranium every week, for an hour and a half or so. It's been a fascinating ride for the last year and I think it will continue to be for this year. Best of luck with it all.

Cory Belyk: Thank you, Matthew. It's a real pleasure to be here today and tell the CanAlaska story and try and paint the picture of what the next 12-months looks like the company. It's really exciting times. We're eager to get going.

To find out more, go to CanAlaska's Uranium Website.


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