Purepoint Primed For Uranium’s Explosive Revival

Chris Frostad, President & CEO of Purepoint Uranium PTU: TSX-V, PTUUF: OTCQB, is anxious to get to work. After a 10-year downcycle in the price of uranium that grinded most mine operations to a halt, he sees the recent spike in the commodity’s price as a signal of prosperous times ahead.

It’s expected that over 150 new and planned nuclear reactors will come online over the next few years, putting new discoveries at a premium. That equates to some exciting opportunities for Purepoint, who along with  other global uranium producers – rely on long-term contracts from these utilities and reactors to remain profitable.

Processed uranium is the most critical commodity in the operation of nuclear power plants. As the planet moves away from harmful fossil fuels and towards more sustainable sources of energy, the demand for uranium is expected to skyrocket.

 “We’ve spent the last five years preparing for this,” Frostad declared. “We’re probably better positioned than anybody to take full advantage of the upswing. We’re ahead of the game in terms of permitting, and we’re fully funded to support our plans, so we don’t have to start up again from a dead stop. It’s time to crank up the volume.”

Crank up the volume indeed. Purepoint has done more drilling so far this year than in the last five combined and likely more than any other explorer in Saskatchewan’s Athabasca Basin, which is home to the highest-grade uranium deposits in the world and over 20% of the planet’s supply.

With greater access to capital, Purepoint is exploring beyond their flagship Hook Lake Project, to some of the company’s other promising, high-value projects in the Athabasca Basin. “Last year we did some drilling at our Red Willow Project, Umfreville, and Henday Lake, following up on older discoveries we hadn’t yet followed up on, or drilling things for the first time.”, said Frostad.

The most promising of these projects is Red Willow. Purepoint has drilled seven holes in the Osprey Zone area of Red Willow so far in 2022, and the results have shown high levels of radioactivity that may demonstrate a large system of uranium mineralization, similar to what they’ve found at Hook Lake. “We’re following literally a two-kilometre trail of uranium into this big open area. There could well be another huge deposit sitting there. We think there is.” enthused Frostad.

While the drilling continues in the Athabasca basin, Purepoint, and the rest of the uranium community are in a holding pattern. Despite the overall bump in Uranium prices coming out of a decade long lull, and the general enthusiasm about its rebound, prices have hovered just below the $50 per pound threshold that would trigger profitability for producers. Explains Frostad, “The price of uranium went up in August and September 2021, hit a plateau and didn’t go where it was expected to go, but the equities kept going up for a while before levelling off as well. All of the utilities have been reluctant to sign long-term contracts because the price of uranium has been so low, you can buy it more cheaply on the open market.”

But recent geopolitical instability in eastern Europe and Central Asia may be moving the needle in the right direction, towards a cycle of more long-term contracts between uranium producers and utilities. The major conflict between Russia and Ukraine, and significant civil unrest in Kazakhstan – the country responsible for 40% of the world’s supply of uranium – has caused a major upheaval in the global uranium supply. That upheaval has been reflected in global uranium prices, which have surged from just under $43 per pound in early 2022, to nearly $60 per pound by late March. The percentage change in the uranium stock price for all uranium companies traded in Canada has also increased accordingly.

As a result of this recent surge, global uranium giant Cameco – a strategic partner of Purepoint – has seen an uptick in contract buying, and have announced the reopening of Saskatchewan’s McArthur River, the largest high-grade uranium mine and mill in the world. “The world sees that because of these geopolitical factors, that the price of uranium might be up for another run, and we could be seeing the start of another long-term contract cycle”, says Frostad, “Everything that’s happened in the last little while will help drive that.”

Purepoint is ready to ride this potential bull market following a tough stretch for the industry. Ten years ago, a tsunami hit Japan, resulting in the closure of approximately 10% of the world’s nuclear reactors, uranium’s biggest consumers. It also coincided with an excess supply of uranium that poured out of Kazakhstan, which had just emerged of as a major producer. Together, these events sparked a decade-long downcycle in prices, and suddenly, mining the commodity wasn’t economically feasible.

As other uranium mining companies folded, consolidated, or turned their focus to other commodities, Purepoint was able to dig in for the long haul, thanks to a joint venture they had entered into with Cameco Corp. (TSX: CCO) and Orano Canada Inc., two of the largest uranium producers in the world. They needed help operating their Hook Lake project and saw Purepoint as the perfect partner.

That potential was made apparent years earlier, when two companies with adjacent properties to Hook Lake, Fission Uranium (TSX: FCU) and NexGen Energy (TSX: NXE), identified deposits totaling over 350 million pounds of uranium, precisely the kind of projects heavy hitters like Cameco and Orano covet.

“All told, the company has a lot to feel good about,” Frostad said. “We've probably got the most advanced exploration portfolio in the world's richest uranium region, and we’ve got the best partners on the planet to ensure that we’re the ones that make the next big discovery.

For more information on Purepoint Uranium Group Inc. (TSX.V: PTU, OTCQB: PTUUF) please click the request investor info button.

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