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With
one third of the world’s current production of uranium coming out of the Athabasca
basin, Purepoint Uranium’s advanced properties gives them an edge as the price for
uranium goes up and demand increases
Mining
Uranium
(PTU-TSX: V)
Purepoint Uranium Group Inc.
67 Yonge Street, Suite 501
Toronto, Ontario, Canada M5E 1J8
Phone: 866-835-8368/416-603-8368
Chris Frostad, BBA, CA
President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
January 26, 2006
BIO:
Chris Frostad, BBA, CA
President and CEO
A founding partner bringing 25 years of expertise to his position as president and CEO,
Chris Frostad is dedicated to the company's responsible and sustainable growth. Throughout
his career, he has been instrumental in the development and building of a variety of high
growth, early stage, public and private companies. Most recently, he was CEO in Residence
of a Toronto-based Venture Capital firm. In the past, Frostad has been a guest lecturer at
numerous business conferences, as well as at the INSEAD School of Business in Fountainbleu,
France and at ABB's Learning Center in Zurich, Switzerland.
Company Profile:
Purepoint Uranium Corporation is a uranium exploration company driven by intellectual,
precision prospecting focusing on distinct, targeted properties with historic significance
in the Canadian Athabasca Basin. Currently, Purepoint's seven, 100% owned, Athabasca
Basin uranium projects cover nearly 120,000 hectares and are considered high prospect
properties that include several near term targets expected to be drill ready for winter
2005/06.
CEOCFO: Mr. Frostad, what was your vision when you joined the
company, and how has that developed?
Mr. Frostad: “Purepoint is a uranium exploration company
that has been solely focused on the exploration of uranium and focused even more closely
on properties in the Athabasca basin. One third of the world’s current production of
uranium comes out of the Athabasca basin. We went up there around three years ago, before
the current rush in uranium, to see if we could identify some historic properties that
have been worked through the last boom and had fallen off the radar after the economics
fell out from under the commodity. When we were up there in late 2002, we spent a fair
amount of time just researching through the hundreds of millions of dollars of exploration
that had gone on in the area. At that time the stock price of uranium was down around 8 or
$9.00. There was a wide-open field to look for. Since that time and since we staked our
property, the stock price of uranium has jumped up to $33.00 a pound and we have found
ourselves in the middle of a land rush there.”
CEOCFO: How did you know
it was a good time to do this?
Mr. Frostad: “I would like to think we saw all of this
coming but that would make me a mind reader or a profit. At the time, the historic
discovery price or the cost of discovery in Canada for uranium had been down around the
$8.50 mark and it wasn’t to far off the spot price. It was being depressed primarily
by inventory of stockpiles of uranium that had been built up in the early 1970’s. Our
objective at the time was to see whether we could find more advanced projects that would
allow us to reduce that cost of discovery and possibly find a deposit that was well worth
proceeding with. Initially, we were not out there toting the fact that the stock price was
going to start tripling and doubling over night, we were out there to see if we could
recover some more projects and do a lot of research in the area and find an economic
solution. As it turned out, the timing could not have been better because around the time
that we started our staking after about a year-and-a-half of evaluation, the stock price
really did start to move and we found ourselves holding onto about 120,000 hectares of
some of the most prospective property on the planet with regard to uranium.”
CEOCFO: Do you own these
one hundred percent?
Mr. Frostad: “These are all owned 100%, they were
claimed by the company back then. Since that time, we did a reverse takeover of a CPC
(Capital Pool Company) shell on the Vancouver Stock Exchange about four months ago, so we
really have only been trading publicly for that time. It seemed like the most appropriate
way to move forward in order to finance the company properly and set ourselves up to get
the financing and the time to work these properties properly.”
CEOCFO: How many
properties do you have right now?
Mr. Frostad: “There are seven properties.”
CEOCFO: Will you tell us
about the status of your projects?
Mr. Frostad: “The reason the Athabasca basin is
important is the ore grade. Around the world, uranium is mined of an ore grade of
approximately .15%. The average deposit in the basin has been sitting around 3% and some
of the larger mines up there have averages of 20% with pockets going up to 80%. It is a
unique place on the planet if you are looking for uranium. When we are referring to the Athabasca
Basin, we are referring to a depression on the Canadian Shield. It is a bowl or depression
that is filled with sandstone. The first thing that everyone gravitates towards is the
outside of that basin because what we know is that it is a conformity deposit and these
deposits are generally found at the bottom of that bowl. If you go looking in the middle
of the basin, you are going down about a mile whereas if you have projects around the
perimeter of the basin, you are only going down 100 to 30 meters.
The first thing we are looking for is projects at a lesser depth to a potential deposit so
even a small find could be economically feasible. Our first two projects that we are
drilling this winter are on the eastern edge of the Athabasca basin and directly on strike
with nineteen of the twenty-two deposits that have been found in the basin over the last
thirty years. We are in an interesting area with properties that have had a fair amount of
previous work done on them so they are well advanced and a reasonable depth. We are
excited about those projects specifically. Some of our other five projects are to the
north of that, northwest and some around the western edge of the basin, but all have held
prior work and were well advanced by the majors.”
CEOCFO: How has your
recent IPO impacted on your financial picture?
Mr. Frostad: “Prior to the IPO (Initial Public
Offering), we had raised a little over $2 million and had spent only about a quarter of
that staking our properties and advancing them over the last season. We have a fair amount
of money in the bank but we are in the middle of raising another 5 to $7 million of
flow-through funds. CIBC World Markets and Black Box are co-leading that deal now and we
have gone through a fair amount of it and it is scheduled to close on October 28th,
at that point we will be well set up to advance these projects in a significant manner.
This winter we will be drilling on our two most eastern projects and we will probably be
one of a couple of junior exploration companies that will be drilling in the basin this
season. Because we were able to pick up such advanced projects and get to work on them
early, we are a good year-and-a-half away from most of the crowd that is out there
now.”
CEOCFO: What should we
expect over the next few years?
Mr. Frostad: “There are a lot of folks that got caught
up in the land rush and their focus was amassing property. Our initial object was to
identify projects. When you look at our seven projects, you see we have a portfolio of
opportunities. They are different properties in different regions of the basis whereby
different techniques have been found to be more useful in some areas than others and that
are at all different stages of exploration. What you will see coming out of us is a very
staggered and progressive story. On our most easterly project that we are drilling this
season, we did a fair amount of surface work last year but we will be drilling this season
and that will be narrowing us in on hopefully some high value targets. The properties of
the north, we are going to be doing a fair bit of airborne geophysics within the next few
weeks to confirm a couple of targets that we have identified and to enhance some of the
information that we have on others. What we hope to be doing is ground geophysics on
approximately twelve targets of the northern edge of the basins. To the west, with our two
projects out there we are going to be initially doing a lot of seismic work and confirming
the depth of the basin at that point before we start confirming anymore significant
exploration. Throughout the basin and our projects we have a variety of things going on
and a variety of targets that will be at various stages over the next one or two
years.”
CEOCFO: How does
Purepoint’s philosophy differ from others?
Mr. Frostad: “Because we were out there three years ago
and had the luxury of time on our hands, we spent the first six months focusing solely on
the known deposits. We pulled out years of assessment data on the work that surrounded the
existing deposits. Our focus at that time was to see if we could identify and enhance the
list of indicators that one looks for when they are out looking for uranium. You cannot
see uranium from the surface so you have to rely on other indication that you are getting
close to the target. There are a number of well know ones including graphitic conductors
and areas in the basin and thrust faults and places in the basin where it would make sense
for the stuff to pool. What we did was identify at least a dozen indicators and looked to
see if we were finding something that held its own against all of the known deposits. With
our indicators, we were able to find within 100% of the known deposits out there.
From a starting point and when we started analyzing and we did analyze a variety of areas
around the basin before we decided on the one that we did, we had a well understood list
of criteria that we used to do that staking as opposed to trying to amass land. As I said
before, nineteen of the twenty-two major deposits in the basin are crowded on a trend to
the east of the basin. It has always been questioned as to whether the same kind of
high-grade deposits exist throughout the entirety of the basin. The ore we have seen out
of Cluff Lake in the last month or so demonstrated that there is high-grade ore on the
western edge, As you move across the basin you are dealing with different times and
geological structures and different paths, so to take what worked in the east and apply it
blindly across the entire basin would be foolish. Although many of those indicators and
indications still hold, we are trying to be careful in just blindly assuming everything is
built the same way.”
CEOCFO: Is your
management team in place or do you still need to add?
Mr. Frostad: “We are always looking and adding, but one
of the outcomes of our arrival at the basin is that we were always able to secure a number
of early relationships. We have people working that have been working in that area for ten
or thirty years. On our board is someone who once managed all of the production for El
Dorado Nuclear out of Uranium City, in the northern part of the basin. There is a
geologist that has done a lot of early research on these properties, who worked with the
Saskatchewan departments of Mineral and Resources, and Energy and Mines for the last
thirty years and probably had his hand on every core sample pulled out of the basin in
that time. Another gentleman out of LaRonge has been up there doing work for the last 25
years and has been managing all of our field work for the last few years. We have a strong
base of individuals that are familiar with the area, and familiar with the history, and
familiar with how to operate up there.”
CEOCFO: In closing, why
should potential investors be interested in the company and what should they know that
might be overlooked at first glance?
Mr. Frostad: “What has produced a fury in the price of
uranium these days is a simple supply and demand story; the World Energy Council predicts
that fifteen years from now the planet will be consuming twice the electricity it was
fifteen years ago. Nuclear energy has resurfaced as one of the opportunities to fill that
gap. We currently have 440 reactors around the world and there are 50 or 60 to come online
in the next ten years. The demand for nuclear energy is growing and people in general are
taking a much kinder view of it than they might have 30 years ago. What people do not
realize is that only half of the uranium that has been used to fuel these reactors has
been coming out of the ground. Back in the 70’s there was a huge uranium boom when
they thought that nuclear power was going to take off and that uranium was scarce, which
it isn’t and what happened was a huge stockpile built up. Half of the uranium that
has been used has come out of that inventory and that depressed the price of uranium to
below $10.00, which vaporized any exploration dollars surrounding uranium. Those
inventories are scheduled to be depleted in the next few years. With demand going up and
almost half of the supply literally vaporizing, there has been a huge resurgence of
uranium and uranium prices in general. For an investor, I think anyone looking at the
uranium story, should be looking at a variety of different ways they can invest in that
story and in what is probably going to have legs for the next ten or fifteen years.
Right now Purepoint is new to the market in terms of being publicly traded, so we are only
just getting our name out there and out stock is trading at the same level as most of the
juniors out there. The difference is and what is probably not reflected in the price is
that our properties are more advanced than most the folks out there. We will have drill
results coming out in the coming season of mid to late winter whereas a lot of the others
won’t be able to drill for about a year and a half. We have the luxury of spending
time to do our homework and analyzing not just what we stake but we spent a year looking
at the entire basin to pick up projects. We were able to pick up well-advanced projects
that were well prospected and had previously been held by a lot of the majors. We have
drilling authority so we know we have uranium. We have the graphite that we look for and
we have radiation in drill well water and all the things we look for. We will be one of
the few companies drilling this winter and I think that makes us something that people
should be looking at.”
Purepoint Uranium Group Inc. is a uranium exploration
company driven by intellectual, precision prospecting focusing on distinct, targeted
properties with historic significance in the Canadian Athabasca Basin. Currently,
Purepoint’s seven, 100% owned, Athabasca Basin uranium projects cover nearly 120,000
hectares and are considered high prospect properties that include several near term
targets that are drill ready for winter 2005/06.
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