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Cauldron Energy's extensive uranium assets highly leveraged to rebound in commodity price

Cauldron owns the Yanrey Uranium Project, 85 kilometres south of Onslow in Western Australia.
Uranium on periodic table
The total uranium resource is 21.51 million pounds at 270 ppm uranium at a 150 ppm cut-off

Cauldron Energy Ltd’s (ASX:CXU) share price has responded positively to a rebound in the uranium price over the last three weeks.

The price of the energy commodity has increased from a six-month low of US$20.25 per pound to US$21.75 per pound, a gain of 7.5%.

While this may not represent the start of a substantial rebound, the fact that it coincides with other political developments and macroeconomic trends may suggest a recovery.

Investors are perhaps taking these peripheral issues into account as Cauldron’s 25% share price increase to 4 cents coincided with the uranium price rebound.

While its share price has lost some of that ground, it has been under low volume selling and is arguably characteristic of stocks that are rebounding off a low base.

Political and macroeconomic factors are positive

If nothing else, underlying global factors indicate the worst could be over for a severely beaten down commodity.

As can be seen from the five-year chart, there has been little respite for uranium.

The blip on the far right-hand side of the chart, being the recent 7.5% increase, may not look all that significant but the changing landscape definitely points to a revival.

Cauldron’s war chest

Cauldron owns the Yanrey Uranium Project, 85 kilometres south of Onslow in Western Australia.

The licence area incorporates 12 granted tenements totalling about 1,280 square kilometres of Mesozoic sediments.

The group also has seven applications for exploration licences covering an area of just over 900 square kilometres.

These are highly prospective for sandstone-hosted uranium mineralisation, amenable to In-situ recovery (ISR) mining.

Uranium resource of 21.5 million pounds

The total uranium resource is 21.51 million pounds at 270 parts per million (ppm) uranium at a 150 ppm cut-off.

Preliminary economic evaluation has shown that a 150 ppm uranium average grade over at least half a metre is potentially economic for ISR type uranium production at the Yanrey project

Tenements lie within an area historically proven to host significant uranium deposits, evidenced by Paladin Energy’s (ASX:PDN) 26 million pound Manyingee uranium deposit.

Exploration target at Bennet Well

Drilling was undertaken at Bennet Well, part of the Yarney project, to test the exploration targets for the region referred to as BW Extended.

This is in addition to the established 21.5-million pound resource.

The exploration target for BW Extended is between 19 and 54 million tonnes of mineralisation at a grade of 300 to 420 ppm uranium for a contained 18 to 53 million pounds.

These metrics were compiled using a cut-off of 150 ppm.

This area is likely to be a focus for exploration and resource extension should Cauldron, in response to a recovery in the uranium price, recommence drilling.

Diversification outside of uranium

Until the uranium price demonstrates some clear direction and the promise of a sustained recovery, Cauldron is going to focus on opportunities outside of uranium.

In a strategy termed Project Generation, Cauldron is reviewing projects n Australia and overseas.

Commodities include gold, lithium and cobalt.

While the focus of exploration at Bennet Well has been solely on uranium, there is the prospect of delineating non-uranium mineralisation within the tenements.

From a geological perspective, management said the basement rocks, structural control and proximity to known base metals such as copper, as well as gold workings, provided promise.

The company had cash of $2.4 million as at the end of the March quarter and management intends to examine a range of options in the near term.

Argentinian interests

In Argentina, Cauldron controls, through its wholly-owned subsidiary Cauldron Minerals Limited, 445 square kilometres of exploration licence at its most advanced project, Rio Colorado, in Catamarca.

The project is prospective for copper and silver of the globally significant strata-bound sedimentary-hosted copper style of deposit. 

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