Drill Campaign Could Re-ignite Utah Uranium Mining Boom

Talk about lousy timing. In the summer of 1980, exploration manager Clancy Wendt, then working for Phillips Uranium, a subsidiary of the oil company, had three rigs and a crew drilling mile centers in Utah's Thomas mountain range. They drilled between 60 and 70 holes, over every square mile, looking for altered versus unaltered rock to indicate uranium. One of those drill holes encountered 0.05% U3O8 over a 100-foot thickness at a depth of 900 feet. Shortly thereafter, Clancy Wendt was transferred to the company's minerals division, Phillips drilled a few more holes, and oh, by the way, there had been an accident about 2,000 miles away near Middletown, Pennsylvania, at a place called Three Mile Island. Utilities stopped building reactors and the uranium exploration business came to a grinding halt. Phillips Petroleum got out of the minerals business, and Clancy Wendt went on to discover the Mt. Hamilton gold deposit in the Carlin Trend for another company. But that drill hole about 150 miles southwest of Salt Lake City never stopped bugging him. "When you find something, you always remember that," Wendt told StockInterview.com. "I was working with it day and night. That was my project." And it is his project again today. After a twenty-odd-year hiatus, Wendt staked 540 acres of the property, which had been abandoned, and then optioned the 27 claims to Max Resource Corp (TSX: MXR; OTC BB: MXORF) for what both parties called a reasonable sum. Since then, Max Resource Corp staked around those claims, and increased the company's land position to 195 lode claims comprising 3,900 acres in the Thomas Mountain range. "We staked the entire caldera rim," Wendt explained, "because that is exactly where I think the uranium is going to be, within that rim or within the moat inside that rim." Wendt is now the vice president of exploration for Max Resource Corp. Max Resource Corp President Stuart Rogers is quite thrilled with the upcoming exploration of the caldera rim that he hopes will yield an economic grade of uranium, "It's felt that the caldera was the source of the mineralization for the nearby Yellow Chief uranium mine." A caldera is a large crater formed by volcanic explosion or by the collapse of a volcanic cone. "This is one that didn't get on the radar screen because it just had the one ore grade hole on it before they stopped exploration," Rogers explained about the PPCO claims. "Clancy was one of the few guys who knew about it." The Geological Significance Who would have remembered Utah's Yellow Chief, a uranium mine defunct since the early 1960s? It was a small producing open pit mine of less than 100,000 metric tons with a grade of 0.20 - 0.23 percent U3O8 in the middle of a desert in a mountain range. Delta, the closest town, is 20 miles away with a population of 3209, according to the last census. Uranium might be the last thought on anyone's mind. About 1.5 miles west at Spor Mountain is the world's largest economic beryllium deposit, owned by Brush Wellman (NYSE: BW). Like enriched uranium, beryllium is high up on the U.S. government's classified list. Beryllium is a strategic material used in most sophisticated U.S. weapon systems, used to control reactors on nuclear powered submarines and surface vessels, as a triggering device for nuclear warheads, and used in guidance, optical and satellite systems for which there are no substitute metals. Needless to say, there probably won't be much environmental challenge in Utah for uranium mining. Clancy Wendt observed, "This is an area that is well known for mining. They all want mining to happen. It helps the community. The Brush Wellman mine runs all year long." Back to the Yellow Chief mine. Discovered by prospectors in 1953, the ore zone was outlined by rotary drilling in 1955 and open pit mining of tabular ore lenses began in 1959. Most of the ore was mined by 1962. Stuart Rogers explained, "Most people agree the Yellow Chief stopped production because mineralization was faulted off to the east." And that is the direction where Max Resource Corp is going. Wendt explained the geology of the caldera, "The age of the mineralization is very young, when compared to uranium in Wyoming. It's between 27 and 34 million years. It's found within the caldera ring of the vent within a major vent, which is 40 to 50 miles across. Right at the edge of the circle (it stands out just like a circle on a topography map or land sat image), is where we found the mineralization." Wendt added, "It is postulated that this vent was the source rock for the Yellow Chief sediments. I am hoping a great deal of the ring itself will be mineralized because that's a nice conduit area. It's an area that's going to be permeable because it's along the ring fracture of the major vent." David A. Lindsay of the U.S. Geological Survey (Denver) who has written extensively about mineralization in western Utah, wrote in a 1978 report, where Yellow Chief was mined and where Max Resource Corp plans to drill, "Uranium occurs in four diverse settings in the Thomas Range: 1. In tuffaceous sandstone and conglomerate at the Yellow Chief mine, 2. In beryllium deposits in water-laid tuff, 3. In fluorspar pipes, and 4. In veinlets of opaline silica in volcanic rocks of all ages." Wendt, who has talked with Lindsay about the geology at Thomas Mountain, said this about the beryllium tuft, "The mineralization found in our drill hole, I think, is in the beryllium tuff unit. If it is not that unit then it is probably the source." Wendt also explained that background or trace values might be present, but economic values of beryllium would be very unusual. Ore occurs in tuffaceous sandstone that has been correlated with the tuff that hosts beryllium deposits nearby. Another indicator mineral suggesting uranium mineralization came about by accident on the first pass two decades ago. "When I drove up in my truck and I started walking toward the drill rig," Wendt remembered. "I thought for a minute the drillers had been dumping cottonseed hulls. (Drillers sometimes use cottonseed hulls to plug up formations that might suck up water.) Instead of hulls, I'm looking at this long line of black quartz crystals on the rocks." Smoky quartz, or black quartz, crystals are formed through natural radiation coming from nearby uranium deposits. That confirmed for Wendt that a uranium deposit was in the vicinity. "It's not an indicator mineral in all systems, but it is in this one," said Wendt. Reverse Circulation Drilling Could Increase Grade Asked if he would find uranium during this month's drill program, Wendt chuckled after answering "Yep." Why is he certain he would when most geologists pause on questions asking for a guarantee? "Because I found it there before," Wendt laughed. "If I hadn't drilled the hole there before, I would waffle, too. After the first hole, I don't promise any guarantees. That's the one I drilled." Why test what was once drilled in 1980? "We're going to re-drill to confirm the hole so that it complies with National Instrument 43-101," Wendt explained. "Secondly, we want to get a good sample that we can assay." His comment about getting a "good sample" to assay opened the door to the previous drilling, which was mud rotary style. Wendt explained how mud rotary drilling was done over 25 years ago at the present site: "You would dig two pits, like baby swimming pools, next to each other, and fill both of them up with water. The rig would start drilling a hole. Out of the hole would come the material that you're grinding. It would go in the first pit, which would be the settling pond for any of the material coming out of the hole. Material would then flow over into the next hole where you've got your intake hose pumping the water back down into the hole. You would catch your sample coming out of a pipe with a colander (just like you would for a salad or spaghetti). You would catch up the ground up material, and dump a lump of it on the ground every five feet, building 20 piles of material in a row - that's a hundred feet. And you would just keep plopping them down. When you got to whatever depth you were going to do it to, you would stop." Wendt agreed this was not a very scientific method in determining grades. "When you dumped it on the ground, you really didn't get a great sample for assay," he laughed. "You're only getting the chunky material. Any of the "real fine" material" would go through the colander. Wendt is optimistic about establishing a more accurate grade from the upcoming drill program, "It should come in higher." How will reverse circulation provide a different grade? "With reverse circ, you are sucking the material right up out of the center of the pipe," Wendt emphasized. "You are not losing the fine material." Another reason for reverse circulation is Wendt believes the system is "probably 6-7 million years old and in disequilibrium." He clarified, "This means that you have a reading on the electronic probe that may give you a lower reading than is really there." Lindsay's geological survey report points in the same direction, "Mineralogical and geochemical studies of the (water-laid) tuff have shown it is extensively zeolitized, leached of alkali metals, and likely to have been leached of uranium by ground water, so that the tuff is a possible source for the uranium at the Yellow Chief mine." The historic grade at the Yellow Chief was 0.2 percent. How would Clancy Wendt feel if the new drilling brought in 0.2? "If I had 100 feet of 0.2, then I'm in heaven. I would have over $100 in my rock. That would be like drilling 100 feet of 0.3 gold. Would that attract anyone?" He knows it would. Perhaps the timing was bad for Phillips Uranium, but just perfect for a very patient Clancy Wendt and Max Resource Corp. As a side note, and a possible parallel, there's now an oil rush in central Utah, according to Associated Press in Salt Lake City. It appears a tiny Michigan-based oil and gas exploration company triggered the "oil rush" after a wildcat strike. Before then, the region had a history of frustrating oil exploration. Will a uranium discovery by Max Resource Corp trigger a 1950's style uranium boom in western Utah? On July 6, 1952, Charlie A. Steen struck the biggest deposit of high-grade uranium ore in the United States on the other side of Utah. School teachers, insurance brokers, used car salesmen, and shoe clerks around the nation rushed to Utah to seek their fortune. A group of high school students staked forty claims, later selling them for $15,000. Within a few years, nearly six hundred producers were shipping uranium ore. Employment in the industry topped 8,000 workers in the mines and mills. Salt Lake City was dubbed "The Wall Street of Uranium." The boom ended in 1964 when the Atomic Energy Commission announced, "It is no longer in the interest of the Government to expand production of uranium concentrate." A lot has changed over those three decades. Since 2001, spot uranium has jumped by more than 500 percent. Accompanying the new uranium upswing, many of the old projects in Wyoming, New Mexico and elsewhere are being revived. According to a USA Today article published in mid January, "...a new generation of prospectors is staking thousands of claims in the desert Southwest." The Utah Geological Survey said more than 6,000 uranium claims were filed in 2005. Max Resource Corp's uranium project in Utah may be one of those worth investigating.