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TABLE OF CONTENTS Jan 6 - 12, 2014 Volume 99 Number 47 - 0 comments

Interview: Fission's Ross McElroy on the PLS uranium discovery

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By: John Cumming

Last week, we awarded our "Mining Persons of the Year" for 2013 to Fission Uranium (TSXV-FCU) president and COO Ross McElroy and chairman and CEO Dev Randhawa. This week we interview McElroy, and next week, Randhawa, on their careers, Fission and the Patterson Lake South uranium discovery in Saskatchewan, and the year ahead.

TNM: Could you trace your career, and how Fission Uranium fits into it?

Ross McElroy: I graduated in 1987 from the University of Alberta with a B.Sc. specializing in geology. I got my first real job out of school working for what is now Cameco — it was called SMDC before that (the provincially owned Saskatchewan Mining Development Corporation). They hired me in 1987, and so I started working from the beginning of my career in the uranium industry, and in the Athabasca basin. I stayed with Cameco for a few years. The second project I was on was McArthur River, and that was at the discovery time. It was a small team of us — there were three of us in the field outside of drilling — but that was the discovery group, so I was fortunate to be on that thing. That was during the season from discovery to outlining this deposit over a kilometre and a half. That was a good project to get started in. Nobody recognized what it was at the beginning — certainly the management didn’t have an appreciation for it — but it’s turned into the world’s biggest high-grade deposit.

I left Cameco for a few years to go work for what’s now Areva — it was Cogema at the time, everyone’s changed their names. That was working on the east side mainly, but also working on the west side of the basin, that’s where Areva had the operating Cluff Lake mine. They knew that mine was running out, so they were looking for more uranium to keep it alive. That was the hunt, and that eventually led to the Shea Creek discovery, and I was on that team as well — looking for Cluff Lake-type mineralization just off the Carswell structure that the Cluff Lake deposit is located on.

We were hunting around, and the year I was there we found a three-inch seam of high-grade uranium that, over the next few seasons, turned into the Shea Creek discovery. That was kind of fun to be on, too — it led me to appreciate that uranium was everywhere in the Athabasca basin. It wasn’t just in one area. I got a pretty good rounding of the uranium sector in my first several years after graduating.

I went on to BHP Minerals and spent 14 years there. Half of that time was in the gold division, where we made the Hope Bay belt discovery. BHP divested it after we discovered three deposits.

Eventually that was acquired by Newmont, and they paid something like a billion and half for it, and eventually wrote a lot of it off, as they were still trying to wrap their heads around it. There were multi-million ounce gold deposits up in the Hope Bay belt, and that was a project I was involved in right from the first prospecting to the discovery, through to underground trial mining.

That was my career up in the Arctic, then they transferred me over to the diamond division where I spent six years, most of that time at Ekati doing grade-control mapping and diamond reconciliation.

TNM: So you decided early in your career to only work on incredibly high-grade deposits?

RM: [Laughs.] Apparently. That’s what Canada is good for. It really is the high-grade capital of the world, and not just uranium deposits, but gold and diamonds as well. In 2004 I came back to the uranium sector, and started with a company called Triex Minerals. They had a few properties in the Athabasca, and they liked the idea that I had experience when most people didn’t, except for guys who were 70 years old at the time. There’d been a hiatus in the industry, and not a lot of younger — and ‘younger’ meaning in your forties — people with that experience. I worked for Triex, and then came on at Fission.

Fission Energy was spun out from Strathmore Minerals in July 2007, and I started with Fission in September 2007. I was vice-president of exploration, and moved to the role of president in about 10 months. During the Fission time we made the discovery at Waterbury Lake in the east side of the basin near Midwest, and right adjacent to the Roughrider deposit. Then the Patterson Lake South (PLS) discovery in 2012.

TNM: Can you go through the steps of finding PLS?

RM: The history really goes back to 2007. At that time, we were Fission Energy, which has since been bought by Denison Mines, and we staked a couple of claims there sort of near the edge of the basin.

ESO Uranium, which eventually became Alpha Minerals, also had a couple of claims they staked in 2007. And they were close enough together that we came up with an agreement to pool our claims into the PLS project, and become fifty-fifty partners and share the exploration costs. We were equal partners right out of the gate, and it was decided Fission would be the operator, because we had a two-year, alternating operatorship. The clock started in January 2008 with Fission as initial operator for two years, and Alpha as operator in 2010–2011, then back to Fission. Of course, we’ve taken out Alpha, so it’s now 100% Fission.

TNM: That was an unusual arrangement.

RM: It was very unusual, and I’d never do it again, because it only makes sense if you have nothing. [Laughs.] As soon as you become busy and active, it’s a terrible arrangement.

TNM: Who had the claim that contains PLS?

RM: Neither of us. The deposit, the boulder field, all that stuff is on ground that we staked subsequently as a joint-venture while Fission was operator. The four original claims we had — two from Fission, two from Alpha — are the northernmost claims, and there’s no mineralization on any of them.

TNM: These boulders containing the high-grade uranium, people couldn’t detect them from the air before you guys came along?

RM: No. Well, I think it’s part of the fact that no one was really looking to begin with.What happened is that a lot of the activity was focused on the eastern side of the basin. Cameco was the dominant player there. But since the boom in 2003, every junior has had ground in the eastern side, but few people were looking in the western side.

To me it made sense, because I’d been involved in exploring and discovering Shea Creek. I knew that the potential for the west side was every bit as good as the east side.

It really didn’t stop us from looking. But that really wasn’t where the centre of activity was. Now, was that why the boulders were missed? Possibly, but people just weren’t looking.

And don’t forget that the boulder field is outside of the basin margin on the map, 8 km south.

People have it in their head that you want to be looking in the Athabasca basin margin. If you look at our original claims on a map at PLS, we’re right on the edge of the basin, and that was kind of the idea at the time.

We flew a radiometric survey with a unique system, and it’s one we’ve since filed a patent on. We helped design this system to be superior to be anything that exists out there — not superior, but unique in that we filed a patent on it. We flew that area in 2009, and you could see there were intense anomalies south of our claims. So we staked the ground down there, and that’s where the boulder field was found back in 2011, with follow-up ground-level prospecting, when Alpha was operator.

TNM: This patented process, it relates to improved computational power?

RM: That is part of it. It’s a different sequencing of sodium iodide crystals in the thing. It’s a quite complicated array of 16 large crystals. And it’s inside the fuselage of a fixed wing aircraft. And the computational power is incredible. And what it does is give us the ability to have real-time, real-space signatures for any radiometric anomaly.

Normally in a radiometric airborne survey, you get a blurry picture. I don’t know if you’ve seen that ad, where to dissuade you from drinking and driving, they put all those beer glasses in front of you and the road gets mucky? That’s sort of what a standard airborne survey does. You just don’t see anything. But ours gives you a real clarity of anomalies, such that you can follow those up on the ground within several metres to detect what that anomaly is.

Now, nobody else can do that, and that’s why we filed a patent on this thing. That’s what we did with our airborne survey — it outlined this bright area with pinpoint accuracy, then we went out prospecting and mapping, following up these anomalies, and sure enough, there’s high-grade uranium in the best part of the airborne anomaly. We took over as operator again in 2012, and in November 2012, we made the discovery, and that was with drill hole 22, about a couple of kilometres up-ice from the northern tip of the boulder field.

If you look at the history of PLS, it’s one of those rare situations where you’ve taken an idea from concept to finding something interesting through an airborne anomaly and mapping on the ground to finding the boulder field, and putting down proper ground geophysics, and finally drilling.

The geophysics is absolutely key, because that’s what works in this environment. And we have a strong geophysics department, led by our vice-president of exploration Raymond Ashley. We’ve built a powerful exploration team, there’s no doubt.

We’re looking for structurally controlled deposits, and you can only get that by understanding the basement below. All of these are blind targets, there are no uranium outcrops to go follow. It’s like the oilsands sector — you really depend on geophysics to paint the picture for you and figure how to interpret the data, and figure out where to drill. And that’s where I think we have an expertise, and that’s how Waterbury was found. And in essence, that’s how PLS was discovered, and through drilling.

We found these conductors that were in around the boulder field. We did ground EM and ground resistivity, and understood the trend. You could see the structure and the faults in the ground . . . and that’s what gave us drill targets, and the discovery with hole 22.

TNM: Have you flown your entire property package with your new technology?

RM: Yes, we have. That’s all been done. There are a few other things to follow up on, but from what we could see from the airborne anomaly, we’ve probably got most of the major anomalies covered by prospecting.

TNM: In the bigger picture, what does the PLS discovery mean for the basin?

RM: It’s extremely significant for a number of reasons.

First off, it’s not really in an unknown area, although it kind of is. The western part hasn’t really undergone the same exploration activity that the eastern side has had, but you still have the producing Cluff Lake mine, the Shea Creek deposit — these are significant deposits in the area.

But what is different about PLS, certainly in this region, is that you’re finding mineralization that’s shallow. The first deposits that were found in the Athabasca basin were found along the edge of the basin margin at shallow depth: Key Lake, Rabbit Lake and Collins Bay. And those were the most economically viable deposits anywhere.

Now, what happened is that people assumed all those deposits were found, so the hunt turned into an effort to get deeper and deeper into the Athabasca basin and look for deposits that were 200 metres below, then 400 metres, then 600, 700 metres deep — basically looking for deposits that were harder and harder to find.

PLS is in an area that was under-explored and it’s a shallow-type of deposit, and that’s important.

But what’s also important is that the deposit’s size is pretty impressive. We don’t have a resource on it yet, but you can tell that it will become one of the big deposits in the Athabasca basin.

Mineralization starts at 50 metres below the surface at the top of the bedrock — that first 50 metres is all overburden. It lends itself to open-pit mining. I guess that’s what’s different about this thing, and that it’s outside the basin margin.

It has really reinvigorated, or initiated, exploration in this part of the basin, where nobody was really looking before.

TNM: How deep is that lake, by the way?

RM: It’s not that deep. Laterally it’s quite extensive, it goes for 5–6 km, but it’s only 5 or 6 metres deep where we’ve drilled it.

Our vision is we’ll put in a coffer dam some time in the future when this becomes a mining operation. You put in a coffer dam to block off the rest of the lake from where you want to mine. You drain that small part where you want to mine, and that will be your open pit.

TNM: Can you talk about the radon surveys, for when the lake is frozen over?

RM: It’s one reason why the drilling has advanced strongly.

Radon is a light gas given off by uranium, and it’s measurable. And it’s mobile and it works its way upwards. Radon surveys were kind of the norm in the 1970s when people were looking for shallow deposits.

We’ve employed it with a different technique. We did it on the lake during winter. We’d already mapped out our structures with geophysics — the faults and the conductors — so we knew the trend we wanted to be on.

We drilled little holes in the ice, sent the instruments to the bottom of the lake and took samples every 25 metres to measure the radon.

And that showed some incredible and continuous anomalies along that trend.

We stepped out drilling to test those radon anomalies and see what they were all about. And that led to the high-grade hole 38, which was a 400-metre stepout at the time along trend that was 35 metres of almost 5%. It was quite something. It was the best hole on the property. And this was testing at the edge of this radon anomaly 400 metres away.

We kept employing that same technology, and did a much more extensive radon survey along that conductor, and tested these other targets. And that’s what has led to finding five or six zones along a 1.7 km trend on this same fault zone.

TNM: I didn’t realize you could do radon surveys at the bottom of a lake.

RM: Well, most people don’t — they only put some samples down on the ground in the soil. It was kind of a unique method we were using, and we just wanted to try it and see if it would give us anything, without really knowing.

We thought, "You’re in a lake, where radon goes up into the lake and moves quickly," with currents and that kind of thing. So we did it during the winter when the lake is frozen and any currents are pretty slow, and won’t move the gas much. We just thought we’d get better chances of higher concentrations in the winter than in the summer.

It was extremely successful and led to the discovery, and changed how people do radon surveys, too.

So we have an airborne radiometric survey that’s second to none, perfected the technique of radon surveys to help with drill targeting, and our geophysics are second to none, and all these things have come together to advance PLS to where it is.

TNM: At PLS, you have this string of zones. Where do you go from here?

RM: It’s basically controlled by a fault zone that’s several kilometres long. The uranium pools probably at the intersection of several faults, so that’s where you’re looking, you’re looking at the structural complexity along this trend.

The mineralization is controlled by a fairly steep fault. The vertical component of our mineralization is in excess of 100 metres in some cases. You get a zone that’s maybe 200 metres depth, and you’ll see mineralization, as we announced the other day, in about 40-43% of that. So it’s got a lot of depth potential to it as well.

Where do we go with this thing? We’ll continue to expand it along strike because it’s wide open. We haven’t even tested it laterally to see how wide it is.

There’s still a lot of drilling to do to put three dimensions to this thing and ultimately get a resource on it.

It’s pretty impressive what we’re sitting with now. We have 5 or 6 pods along the trend of this fault zone. This upcoming winter drilling is really going to stitch together the drilling between these pods and hopefully link up the mineralization so we see hopefully one big long body of mineralization.

That’s what we expect and there’s no reason to think it will be anything different, but that’s where we’re headed.

TNM: It is impressive. Are the conditions [on Dec. 19] good to drill?

RM: They’re getting there. Generally you’re waiting for the ice to be thick enough to support all the heavy equipment, and that doesn’t happen till early January. We are out now prepping the ice. We’ve got ice makers who are flooding it. We’re making it already over 20 inches, so it’s a great start. There’s no reason we won’t get off to an excellent start in January, it’s such a nice, cold winter. Things are going well and nature’s working with us, and we’re prepping up for our biggest season ever.

We’ll probably drill over a hundred holes in three-and-a-half months, and work towards defining a resource estimate in 2014. That’s where it’s headed.

TNM: In 2014, how much of your attention will be on PLS, and how much will be on other prospects or properties in the Fission portfolio?

RM: When we did the deal with Alpha, the idea was to put PLS as its own separate project in a company, so from Fission Uranium’s perspective, it will be 100% PLS.

The other projects have been put into "Fission 3.0" — a separate company — and I’ll work for both groups. I sort of see my time as being 80% PLS and 20% Fission 3.0. But we’ll use the same technical team between the two companies. There’ll just be a separation at the corporate level and the president level, where we can make sure we’re not in a conflict of interest.

We’re an incubator, if you will. A project generator. We stake new ground and employ our techniques to advance it and make discoveries, which we’ve done twice in the last four years. It’s been pretty successful. So basically, building an asset up with the intent to sell it to a Cameco or one of the majors out there.

TNM: What about these boulder fields to the southwest on the PLS property, are they also prospective?

RM: The short answer is yes. What we’re trying to get our heads around is, are these multiple source deposits? These are all glacially transported boulders. What we’re trying to understand is, did these all come from one location, or did they come from multiple locations? And so we’re doing signature studies on the boulders right now in order to determine if they have the same geochemical signature as what we’re seeing in the drill core to see if these are the same boulders or is this a different boulder field.

If it’s different, then there’s the prospect of finding the same boulders on other conductors here. I have a sense that it’s multiple sources into these boulder fields.The up-ice direction is still to the east–northeast. That’s how we know where the ice came from, so those boulders all came from the east. We’re going to continue looking, and this winter we’ll be testing another bunch of conductors on the property looking for the same type of situation that we found on the PL3B conductor, which is the one that hosts all the mineralization.

TNM: It’s an amazing story and it’s all happened so quickly.

RM: It really has. We’re only 13 months from the discovery and what we’ve accomplished here, it’s pretty incredible. It’s quick growth of a big robust system, and that’s where we’re at.

TNM: What kind of reaction have you gotten informally from other uranium geologists active in the basin?

RM: I think everybody that understands this stuff understands what a special project PLS is. I gave a talk back in October in Vancouver at the MEG convention, it was the first luncheon of the season. And it was packed, standing-room only, and that’s filled with geologists.

This one has really caught the imagination of a lot of people. Every once in a while a project comes along and it changes things, like a Voisey’s Bay or an Ekati.

When we made this discovery, the staking rush that came after it was unbelievable. Now everybody is looking for a PLS, and we’re proud of that. What a statement it is, that everybody else is looking around for what you’ve already found.

TNM: And then you’ll be getting the Bill Denis Award for a Canadian discovery from the Prospectors & Developers Association of Canada.

RM: Yes, it’s a great honour, and I’m extremely pleased with that. I think it’s recognition of the team that we’ve put together, and the merits of the project and just how far we’ve advanced it.

These deposits are there. We didn’t put the uranium there. It’s just trying to unwrap where it is. We have a fantastic team, and I’m so proud of that award on behalf of our team and company.

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Fission Uranium president and COO Ross McElroy.
Fission Uranium president and COO Ross McElroy.
Drilling in 2013 by Fission Uranium into the Patterson Lake South (PLS) uranium discovery, 8 km southwest of the Athabasca basin in Saskatchewan (showing the locations of 4 zones). Credit: Fission Uranium.
Drilling in 2013 by Fission Uranium into the Patterson ...
Location map of Fission Uranium's Patterson Lake South (PLS) uranium discovery, 8 km southwest of Saskatchewan's Athabasca basin.
Location map of Fission Uranium's Patterson Lake South ...

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Fission Uranium Corp

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