Strateco Resources | Matoush Project Properties

 

The Matoush Project

Matoush Property

Eclat Property

Matoush Extension Property

Pacific Bay-Matoush Property

Cautionary Notes

 


 

THE MATOUSH PROJECT

 

The Matoush project is located in the Otish Mountains of northern Québec, approximately 275 kilometres north of Chibougamau and 210 kilometres northeast of Mistissini. It consists of the wholly-owned Matoush, Matoush Extension and Eclat properties, as well as the Pacific-Bay-Matoush property, where the Company holds a 60% undivided interest.

 

The Matoush project currently comprises 590 claims covering a total area of 31,195 hectares (312 square kilometres). The project is accessible by air, and in winter by the Eastmain winter road, which runs about 7 kilometres to the west of the project. The winter road was upgraded over a distance of 142 kilometres to allow access to the camp and transportation of the equipment and fuel required. The workers and consultants on site enjoy a fully-equipped 50-person camp that was completed in 2007.

 

The Matoush prospect was discovered in 1980 by Uranerz Exploration and Mining Ltd. (Uranerz) and the works continued until 1984. Intensive work was carried out in vicinity of the AM-15 lens, including EM and radiometry airborne magnetic surveys, linecutting, sampling, ground geophysics and a total of 23 exploration holes. At that time, the Matoush structure was geophysically defined as having a length of 3,900 m and was tested over a distance of more than 900 m by 17 drill holes. One of the holes, AM-15, intersected a significant mineralization of 0.95% U3O8 over 16 m, but the project was abandoned in 1985 due to the weakness of uranium prices.

 

Following the discovery in 2002 by the Ashton Diamonds/Soquem joint venture of the Renard kimberlites, located 70 km to the north of Matoush, the western portion of the Otish Basin experienced a staking rush and what is now the Matoush property was acquired by Ditem Exploration Inc. (Ditem). Ditem flew an aeromagnetic survey over a large area and collected till samples for heavy mineral analyses.  Apparently, no kimberlite targets were defined on the Matoush property and no holes were drilled. Ditem optioned the property to Strateco in May 2005.

 

Strateco began its operations on the Matoush property in early 2006. The Matoush property is currently the main focus of the Matoush project.

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MATOUSH PROPERTY

Location and Access

 

The Matoush property is located approximately 275 kilometres north of Chibougamau in the Otish Mountains of northern Québec, Canada (map of our properties). This property is accessible year round by air, and in winter by the Eastmain winter road, which runs about seven kilometres to the west of the property. Strateco built a 1.3 km landing strip that is used for the transportation of the manpower and equipment required for the project. The inaugural flight took place on October 15, 2010.

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Ownership

 

The property is wholly-owned by Strateco and consists of 25 claims covering an area of 1,328.46 hectares. The Matoush property is currently the main focus of the Matoush project.

 

A letter of intent dated May 12, 2005 provided for the Company to earn a 51% interest from Ditem Explorations Inc. ("Ditem"), which then owned a 100% interest in the Matoush property, in consideration of payments totalling $125,000 over two years, including $5,000 on signature of the agreement; $750,000 in exploration work over three years, including $200,000 the first year; and the issuance of 600,000 common shares of the Company over two years. The Beaver Lake Area project, which lies approximately 20 kilometres to the west, was also covered by this initial agreement.

 

A new letter of intent was signed with Ditem on February 21, 2006, giving the Company a 100% interest in the Matoush property under the following terms: payment by the Company of $10,000 on signature of the letter of intent, and $140,000 and 400,000 common shares within five days of approval of the transaction by regulatory authorities. The shares were subject to a resale restriction of four months plus a day. Ditem retains a 2% NSR, in accordance with industry standards. The claims in the Beaver Lake area were not renewed by the Company following its acquisition of a 100% interest in the Matoush property.

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Uranium Potential

 

The Otish Mountains area is well known for its uranium potential, particularly due to exploration conducted by Uranerz Exploration and Mining (“Uranerz”) and Cogema in the late 1970s and early 1980s.

 

The results of exploration conducted by Uranerz in the early 1980s before uranium prices tumbled, as well as those obtained by the Company since 2006, indicated that the Matoush property has very good potential.

 

Uranerz only explored a 900-metre section of the Matoush structure, which had been traced over 3,900 metres on this property. The German company discovered the Matoush structure in the early 1980s. In 1984, Uranerz drilled 23 holes, including Hole AM-15, which returned a 16-metre intersection at a vertical depth of 200 metres grading 0.95% U3O8, or over 20 pounds of U3O8 per tonne of ore, a very high grade by today’s standards. Due to low uranium prices from 1985 to 2005, the uranium potential of the Matoush property was not explored any further. Uranerz’ exploration results date from the late 1970s and early 1980s, and preceded Canadian National Instrument 43-101 (“NI 43-101”).

 

This exploration work by Uranerz served as the Company's point of departure for exploration of the Matoush property.

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Exploration Activities

 

2006

Strateco began exploring the Matoush property in 2006 with a helicopter-borne radiometry, magnetic and electromagnetic survey covering the entire Matoush project over about 1,410 line-kilometres.

 

Following the survey, 38 drill holes totalling 13,668 metres were drilled on the property. Hole MT-06-02 (a “twin” hole) confirmed the presence of the high-grade mineralization over a substantial thickness found in hole AM-15 (0.95% U3O8 over 16.0 m), with an intersection of 0.74% U3O8 over 18.1 metres.  The 2006 drilling program led to the delineation of the AM-15 lens. By early 2007, definition drilling was underway on the AM-15 lens in preparation for the first NI 43-101 resource estimate.

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2007

In October 2007, Scott Wilson Roscoe Postle Associates Inc. (”Scott Wilson RPA”) prepared the NI 43‑101 mineral resource estimate for the core of the AM-15 lens at Matoush using drill hole data available as of September 6, 2007. Indicated mineral resources were estimated to total 201,000 tonnes grading 0.79% U3O8 containing 3.48 million pounds of U3O8 and inferred mineral resources were estimated to total 65,000 tonnes grading 0.43% U3O8 containing 0.62 million pounds of U3O8.

 

Holes drilled under the AM-15 lens at the end of 2007 led to the identification of the new MT-22 lens. At the beginning of 2008, hole MT-08-003 intersected 1.9% U3O8 over 7.5 metres, including 5.6% U3O8 over 2.4 metres. This hole confirmed the high grade of the new MT-22 lens. The MT-22 lens is located at a vertical depth of between -300 metres and -650 metres and extends over a length of approximately 600 metres. Another lens (MT-34) was discovered on the Matoush property in April 2008 by Hole MT-08-034, the best hole drilled by Strateco up until then on the Matoush property. It intersected a 57.3-metre section of drill core and graded an average of 0.67% U3O8, including a 27.5-metre section grading an average of 1.36% U3O8 and a 4.8-metre section with a grade of 6.03% U3O8. The MT-34 lens is located at depth in the southern extension of the AM-15 lens.

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2008

In September 2008, Scott Wilson RPA updated the NI 43-101 resource estimate for the Matoush uranium project using drillhole data available as of July 25, 2008. Indicated mineral resources were estimated to total 250 thousand tonnes grading 0.68% U3O8 containing 3.73 million pounds U3O8. Inferred mineral resources were estimated to total 1.3 million tonnes grading 0.44% U3O8 containing 13.07 million pounds U3O8.

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2009

In February 2009, a 30,000-metre drilling campaign covering the entire Matoush project started with two operational drills. The drill results for the first quarter of 2009 were promising, particularly south of the MT-34 lens. Hole MT-09-006, drilled 1 km south of the heart of the MT-34 lens on Section 46 + 00S, intersected an 8.9-metre zone strongly altered in fuschite with the presence of pitchblende and uranophanes. This intersection graded 0.27% U3O8 over 9.5 metres, including 0.97% U3O8 over 1.2 metres.

 

In the second quarter of 2009, another eight holes were drilled in the MT-06 area on a 100-metre grid to test the continuity of the hole MT-09-006 intersection. The best hole was MT-09-009, drilled to a vertical depth of -600 metres along the presumed plunge of MT-09-006, 100 metres away. It intersected 0.11% U3O8 over 2.4 metres at the level of the fault.

 

In June 2009, four holes were drilled in the upper part of the MT-34 lens. Three of the four holes intersected high grades over considerable intervals.

 

Hole MT-09-012, whose pierce point lies just a few metres from Hole MT-08-050 due to strong deviation, returned an intersection of 0.69% U3O8 over 25.5 metres, including 1.44% U3O8 over 7.20 metres while hole MT-08-050 intersected 0.49% U3O8 over 21.3 metres, including 1.99% U3O8 over 2.0 metres.

 

Hole MT-09-016, whose pierce point lies midway between holes MT-08-050 and MT-08-034, returned an intersection of 0.56% U3O8 over 25.8 metres, including 0.94% U3O8 over 12.5 metres.

 

In the third quarter of 2009, drilling continued steadily on the Matoush property, with two drills in operation. One drill was dedicated to definition drilling on the MT-34 lens to improve data quality in preparation for a new resource estimate. The second drill was essentially used for exploration drilling on the southern extension of the MT-34 lens (widely-spaced holes).

 

The closely-spaced holes drilled on the MT-34 lens returned excellent results overall, confirming and increasing confidence in the geological continuity and high grades, as can be seen by the increase in the indicated resource and grades in the new September 2009 resource estimate.

 

On September 18, 2009, Scott Wilson RPA issued an updated NI 43-101-compliant resource estimate for the Matoush project based on drill results available as of September 1, 2009 and using similar methods as applied in the previous estimate (Scott Wilson RPA, Sept. 2008).

 

The increase in the indicated resources from 3.73 million pounds grading 0.67% U3O8 (Scott Wilson RPA, Sept. 2008) to 7.46 million pounds at 0.78% U3O8 is significant. The indicated resources for the MT-34 lens, which lies in the upper part of the ACF-4 stratigraphic unit, is now estimated at 174,000 tonnes grading 0.89% U3O8 containing 3.42 million pounds U3O8. It should be noted that no indicated resources have yet been estimated for the MT-22 lens due to the current drill hole spacing, which is about 50 metres by 50 metres. This zone will be drilled at a tighter spacing during the underground exploration program. No mineral reserves have yet been established for the Matoush project.

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2010

In 2010, 18 holes were completed for a total of 10,268 metres. In the first quarter of the year, holes were drilled in the southern extension of the known mineralized zones (lenses) (AM-15, MT-22, MT-34) to test the potential of the anomalous areas identified at the end of the 2009 program, specifically two areas located 1.5 kilometres and 2.5 kilometres, respectively, south of the MT-34 lens. 

 

The four holes drilled returned a best intersection of 0.56% U3O8 over 0.5 metres in the area 2.5 kilometres south of the MT-34 lens (MT-10-004).

 

In the second quarter of 2010, the Company focused its efforts on the Eclat property to continue outlining the Matoush fault. Consequently, no drilling was done on the Matoush property, apart from the last 24 metres of a hole drilled at the beginning of April.

 

Five holes were drilled on the Matoush property in the third quarter of 2010. The first three holes were drilled to test for structures similar to the Matoush fault about one kilometre farther east, and confirmed the presence of faults, but failed to intersect any significant dikes or mineralization. They nevertheless provided important information on the structural setting of the property as a whole.

 

The two other holes were drilled to test the potential of anomalies identified by drilling in the first quarter of 2010 in the two areas of interest 1.5 and 2.5 kilometres south of the MT-34 lens. Both holes intersected the Matoush fault and strong fuschite alteration. In terms of mineralization, hole MT-10-009, located 1.5 kilometres south of the MT-34 lens, intersected 0.21% U3O8 over 0.7 metres. 

 

In the last quarter of 2010, the Company focused its exploration activities on the area considered highest priority, 1.5 kilometres south of the MT-34 lens. Seven holes were drilled over a distance of 300 metres along the Matoush fault, to vertical depths of between 390 and 500 metres, to test the potential at this level.

 

The results were compelling, particularly the first hole (MT-10-011), which confirmed the presence of a new lens (MT-36) with one intersection of 0.49% U3O8 over 0.9 metres and another of 12.8% U3O8 over 0.3 metres in the footwall, nine metres from the Matoush fault.  Hole MT-10-013, drilled 100 metres south of MT-10-011 at the same depth (400 metres), intersected 0.13% U3O8 over 8.6 metres, including 0.40% U3O8 over 2.0 metres.

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2011

In the first quarter of 2011, eight holes were drilled on the Matoush property for a total of 5,227 metres.

The holes drilled in the first quarter of the year were focused on the centre of the resources delineated for the AM-15, MT-22 and MT-34 lenses. The goal was to assess the potential of the area between the MT-22 and the MT-34 lenses at vertical depths of between -400 and -700 metres. This area of interest, which extends about 300 metres along strike, has only been tested by a few holes over the years. There could be another lens with a plunge similar to that of the MT-34 lens or continuity of the mineralization between the MT-22 and the MT-34 lenses. As an indication, the only hole drilled in the centre of this area in 2008 intersected the Matoush fault at -500 metres, with a grade of 0.09% U3O8 over 3.0 metres.

Seven holes were drilled during the first quarter of 2011 to a vertical depth of between -450 and -550 metres. The results were very encouraging, confirming the presence of high uranium grades in an area that remains, for all intents and purposes, unexplored.

Hole MT-11-004, with a pierce point at the heart of this zone at -520 metres, proved truly impressive, with an intersection of 0.41% U3O8 over 5.6 metres, including 0.80% U3O8 over 2.5 metres. Four other holes returned sufficiently promising result to indicate the possibility of a new lens.

In the second quarter of 2011, 19 holes were drilled on the Matoush property for a total of 10,745 metres, including two holes abandoned due to poor ground conditions.

The priority for the quarter was to continue drilling in the mineralized area between the MT-22 and MT-34 lenses. Four new holes were drilled to outline this mineralization. Preliminary results included a mineralized zone of 0.03% U3O8 over 9.2 metres intersected in Hole MT-11-009. The mineralized area outlined in the first two quarters between the MT­22 and MT-34 lenses was included in the resource estimate update carried out at the end of 2011 to increase the uranium resource on the property.

Five holes were also drilled on the ACF-3 layer to test some unexplored zones to the north and south of the AM-15 Extension lens. The best results (MT-11-019) were 0.05% U3O8 over 8.5 metres (including 0.14% U3O8 over 2.0 metres) and 0.14% U3O8 over 2.8 metres.

The positive results of these two drill holes confirm the growing potential of the AM-15 Extension lens, which is now nearly 400 metres long.

Three holes were also drilled between the MT-34 lens and the MT-06 zone, which confirmed the extension of the mineralization north of Hole MT-09-006 (0.27% U3O8 over 9.5 metres, including 0.97% U3O8 over 1.2 metres). Results included an interesting mineralized zone intercepted by Hole MT-11-025, located approximately 145 metres from MT­09-006, which returned 0.06% U3O8 over 3.5 metres.

The remaining holes were drilled in the area of the Coonishish dike, discovered in 2008 at the northern end of the MT­22 lens. The first hole (MT-11-04), drilled on the Matoush fault, intercepted a mineralized zone grading 0.57% U3O8 over 5.5 metres (including 1.39% U3O8 over 2.0 metres) at the contact with the Coonishish dike. The other holes drilled in this area did not intersect significant grades despite many similarities with the Matoush fault in terms of mineralization, alteration and structure.

Sixteen holes were drilled on the Matoush property in the third quarter of 2011, for a total of 8,131 metres. Most of the drilling was focused on the south extension of the MT-34 lens, along a distance of about 1.5 km.

Very encouraging results were obtained in holes MT-11-032 and 033, located 200 metres and 400 metres south of the MT-34 lens, respectively. Hole MT-11-032 intersected mineralization with a grade of 0.36% U3O8 over 27.5 metres, including 1.37% U3O8 over 3.0 metres, and Hole MT-11-033 returned 1.39% U3O8 over 4.8 metres, including 3.62% U3O8 over 1.60 metres.

Two other holes drilled in the promising area around Hole MT-09-006, about1 km south of the MT-34 lens, intersected interesting results: Hole MT-11-035 returned 0.05% U3O8 over 5.2 metres including 0.42% U3O8 over 0.6 metres, and Hole MT-11-036 yielded 0.03% U3O8 over 8.1 metres. These holes showed alteration with a high degree of fuschite, tourmaline and oxides, which could be indicators of mineralization.

The area around the MT-36 lens, located about 1.5 km south of the MT-34 lens, was also drilled at the top of the ACF-4 unit to extend the uranium mineralization towards the south. The two holes drilled returned grades of 0.07% U3O8 over 5.0 metres, including 0.12% U3O8 over 1.5 metres (MT-11-038), and 0.10% U3O8 over 4.4 metres (MT-011-039), respectively.

Drilling results obtained in third quarter of 2011 for the southern extension of the MT-34 lens resulted in the delineation of three lenses with subhorizontal plunge over a distance of about 1.5 km, lying at the top of the ACF-4 unit. These are in addition to the AM-15 Extension lens outlined in the ACF-3 unit in the second quarter of 2011 over a distance of more than 400 metres, as well as another lens identified between the MT-22 and MT-34 lenses. These positive results point to a substantial increase in the resource as reflected in the report 43-101.

In July 2011, a radon survey was conducted by RadonEx above the AM-08, AM-15 and MT-22 lenses to test the method being used. This survey produced very positive results, showing that the method is effective and very quick. This inexpensive technique will thus help reduce exploration costs. The radon anomalies detected are less than 100 metres from the Matoush fault, and were clearly associated with the AM-08 and AM-15 lenses.  Weaker, more diffuse anomalies were detected in the portion of the survey corresponding to the MT-22 lens (-400 m), indicating that signal intensity diminishes with depth. This radon survey therefore showed that it could detect uranium mineralization associated with Matoush-type structures at various depths.

As the 2011 drilling program ended in mid-September, relatively little field work was done in the last quarter of 2011. Exploration personnel focused their activities on the preparation of statutory reports, and more specifically on the compilation and interpretation of the drill results on the Matoush property in preparation for the new resource estimate.

Roscoe Postle Associates Inc. (“RPA”), formerly Scott Wilson RPA, was hired in the last quarter of 2011 to update the resource estimate for the Matoush uranium project in accordance with National Instrument 43-101 using the drill results available at December 31, 2011, and similar methods to those used for the previous resource estimate (RPA, September 2009). The final results of the resource estimate were received on January 2, 2012.

The Company’s chief geologist actively participated in the resource update to lend additional understanding to the various geological parameters involved in the resource calculation, such as density, lithologies and alteration. A mineralization contouring exercise was also undertaken in partnership with RPA. Finally, Strateco and RPA checked the database very closely and practiced very tight quality control.  

The resource update showed a significant increase in the inferred resource, which now stands at 2.04 million tonnes grading 0.43% U3O8 containing 19.22 million pounds of U3O8. The indicated mineral resource is estimated at 453,000 tonnes at a grade of 0.78% U3O8 for 7.78 million pounds of U3O8, which is similar to the 2009 estimate as Strateco did not carry out any definition drilling work from November 2009 to October 2011, which would have increased the indicated resource. The mineral resources are contained in the AM-15, MT-34 and MT-22 zones, as well as in the new MT-02, MT-06 and MT-36 zones, over a lateral distance of 3 km. The Matoush structure has been identified over a strike length extending 11 km southward and 2.5 km northward.

The excellent results of holes MT-11-032 (0.36% U3O8 over 27.5 metres, including 1.37% U3O8 over 3.0 metres) and MT-11-033 (1.39% U3O8 over 4.8 metres, including 3.62% U3O8 over 1.60 metres) increased the uranium resource significantly by extending the MT-34 lens southward.

In 2011, 42 holes totalling 24,103 metres were drilled on the Matoush property.

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2012

In the first quarter of 2012, two holes were drilled on the Matoush property for a total of 1,859 metres. These two first holes of the year were drilled to test the northern and southern extensions of the mineralization of the new MT­02 lens, located between two major lenses, MT-34 and MT-22.

 

Hole MT-12-001, drilled at the southern end, intersected a weakly-mineralized interval of 0.05% eU3O8 over 0.9 metres, while Hole MT-12-002 confirmed the northern extension of the mineralization with an encouraging  intersection of 0.34% eU3O8 over 1.6 metres.  

 

In early April 2012, two more holes were drilled on the southern extension of the MT-34A lens. These holes intersected very high grades over substantial widths. Hole MT-12-003 intersected 2.19% eU3O8 over 6.7 metres and Hole MT-12-004 intersected 0.50% eU3O8 over 25.5 metres, including 2.76% eU3O8 over 2.8 metres. These holes were drilled within a radius of about 50 metres of Hole MT-11-032, which had intersected 0.36% U3O8 over 27.5 metres.

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ECLAT PROPERTY

Location and Access

 

The Eclat property is located in the Otish Mountains of northern Québec, immediately south of the Matoush property. The property is accessible by helicopter, by the winter road that links the Eastmain mine to Témiscamie and, since October 2010, by the Matoush project landing strip (map of our properties).

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Ownership

 

The property consists of 90 mining claims covering 4,786.90 hectares. The Company acquired from Vija Ventures Corporation (“Vija”) a 100% interest in the Eclat property for all mineral substances except diamonds.

 

A letter of intent dated July 12, 2005, granted the Company an option to acquire a 100% interest on all minerals, except diamonds, of the Eclat property over a period of four years. The agreement provides for the Company to earn its 100% interest by making payments totalling $150,000 over four years, including $7,000 on signature of the agreement and $7,000 on the first anniversary, $20,000 on the second and third and $96,000 on the fourth anniversary; by carrying out $500,000 in exploration over four years; and by issuing 600,000 common shares of the Company over three years.

 

The Company paid the last payment in the amount of $96,000 on June 15, 2009. The property is subject upon production to a 2% NSR in favour of Vija on all minerals other than diamonds and a 2% portion in favour of Vija of all gross proceeds from the eventual sale or disposition of carbon emission rights tied to the production of uranium on the property.

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Uranium Potential

 

The property is strategically located in a relatively unexplored area with known uranium potential. It is bordered to the north by the Matoush property, wholly-owned by the Company, and to the south by ground staked by Cameco Corporation (“Cameco”).

 

The property lies in the southern extension of the Matoush structure, which was traced by Uranerz over 3,900 metres using ground VLF surveys conducted in the early 1980s. The holes drilled by Uranerz and the Company clearly showed uranium potential.

 

In 2009, the results of holes EC-09-05 and EC-09-06, drilled 200 metres apart with pierce points at the same elevation, clearly indicated the mineral potential of the Matoush fault, which has been traced by drilling over a distance of more than 15 km. This confirms that the deposition mechanisms for the uranium mineralization are not limited to the area of the AM-15 lens.

 

The similarities between the two mineralized zones in terms of degree of alteration, local presence of pitchblende mineralization in shear zones and proximity to mafic intrusives in the Matoush fault, as well as marked similarities of the texture and nature of these mafic intrusives to those occurring around the mineralized zones, are impressive. 

 

Thus, the almost identical hydrothermal systems and reducing agents support the existence of mineralized potential all along the Matoush fault, and confirmed the potential for the discovery of new mineralized zones at the Matoush project.

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Exploration Activities

 

2006

In February 2006, the first hole drilled on the Eclat property, primarily to maintain certain mining claims in the area, confirmed the southern extension of the Matoush fault over a distance of more than seven kilometres.

 

The results proved promising. The structure was intersected at 111 metres down the hole, at a vertical depth of 76 metres. While unmineralized, the typical tourmaline alteration of the structure was intersected over a 10-metre section, with the fault appearing to be strongly chloritized.

 

The radiometry and magnetometry survey carried out by Aeroquest Ltd. in the fall of 2006 on the Matoush property also covered the entire Eclat property.

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2007

During summer and fall 2007, 10 holes were completed for a total of 2,260 metres. These exploration holes drilled with the assistance of the helicopter allowed the Matoush fault to be accurately located on the Eclat property, up to 9 km south of the AM-15 lens. 

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2008

More drilling was done in this area during winter 2008 at the border with the Cameco Corporation property, 11.5 km south of the AM-15 lens on the Matoush property. The first hole had to be abandoned at 759 metres because of large influxes of water and sand. However no influxes of water or sand had been encountered in AM-15 and MT-22 lenses. A clay breccia appearing to correspond to the Matoush fault was intersected at a depth of 575 metres down-hole, followed by disseminated mineralization grading 0.15% eU3Oover 2.1 metres.

 

Finally, hole EC‑08‑03 was drilled a few hundred metres north of the border with Cameco’s property, and targeted the basement rock. The basement was reached without any anomalous traces found in the sediments. The basement rock intersected was mafic in nature, and very likely represents the folded extension of the “Camie River” greenstone belt.

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2009

In the first quarter of 2009, four holes were drilled on the Eclat property. Hole EC-09-05 proved very revealing, both because it intersected two mineralized zones with particularly strong tourmaline and fuschite alteration, and because of the analytical results for the two zones, which lie 20 metres apart. The zones returned values of 0.16% U3O8 over 2.4 metres and 0.11% U3O8 over 1.5 metres. Hole EC-09-06 intersected a zone of 0.15% U3O8 over 1.5 metres.

 

The results for holes MT-09-06 and EC-09-05, drilled 200 metres apart with pierce points at the same elevation, clearly indicate the mineral potential of the Matoush fault, which has been traced by drilling over a distance of more than 15 km. This confirms that the deposition mechanisms for the uranium mineralization are not limited to the area of the AM-15 lens.

 

The similarities between the two mineralized zones in terms of degree of alteration, local presence of pitchblende mineralization in shear zones and proximity to mafic intrusives in the Matoush fault, and the marked similarities of the texture and nature of these mafic intrusives to those found around the mineralized zones, are impressive.

 

Three holes were drilled on the Eclat Nord property in the third quarter, but with mitigated results despite the intersection of the Matoush fault and the presence of strong alteration on a 150-metre grid about 1.5 north of the AM-15 lens.

 

In the fourth quarter of 2009, two holes were drilled on the Eclat Sud property for a total of 1,170 metres. The two holes intercepted the Matoush fault, as well as interesting uranium values: 7.5 metres grading a weighted average of 0.05% U3O8 and 15.5 metres grading an average of 0.04% U3O8 with pierce points located about 460 metres below surface. 

 

The exploration strategy for the Eclat property was to systematic drill along the Matoush fault at a 200-metre spacing to identify favourable areas.

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2010

In the first quarter of 2010, twenty holes were drilled over a distance of approximately 3.6 kilometres south of the MT-34 lens. The fault was intersected in every hole, with variable fuschite alteration ranging from medium to strong. The area of most interest lies along an 800-metre interval. Hole EC-10-002 is of particular note, with an intersection of 0.67% U3O8 over 1.2 metres. Hole EC-10-016 also merits mention, with an intersection of 0.21% U3O8 over 0.7 metres.

 

Another area of interest, between sections 75+00S and 87+00S, is characterized by intense fuschite/tourmaline alteration, as well as the presence of other dikes running parallel to the Matoush fault. The alteration halo has a true thickness of up to 250 metres, which indicates potential for the discovery of mineralization. 

 

Drilling in the second quarter was aimed at continuing to define the Matoush fault on a 200-metre grid and to follow-up on the anomalies located between lines 110+00S and 118+00S. A total of 21 holes were drilled.

 

These holes were particularly aimed at following up on holes that, in 2009, had intersected uranium mineralization worthy of note about six kilometres south of the MT-34 lens. This area is particularly interesting because of the presence of anomalies along nearly one kilometre of the Matoush fault. Two holes confirmed the potential of this area, with intersections of 0.03% U3O8 and 0.05% U3O8 respectively, both over 0.5 metres.

 

In the third quarter of 2010, the Company continued to test the uranium potential along the Matoush fault. Four holes were drilled. Two holes drilled on a spacing of about 100 metres were aimed at following up on anomalies in the same area as in the second quarter. Hole EC-10-044 returned the best results, with an intersection of 0.08 % U3O8 over 2.50 metres. With its pierce point at a vertical depth of 690 metres, this hole proved to be the deepest drilled to date in this area of interest, about 150 metres from the basement rock. In 2010, 46 holes were completed for a total of 27,588 metres.

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2011

The Company did not conduct exploration on the Eclat property in the fourth quarter of 2010 or in 2011.

 

However, during the third quarter of 2011, a radon survey covering the Matoush Extension and Eclat properties identified interesting radon anomalies.

 

Based on the promising results obtained from the radon survey above the AM-08, AM-15 and MT-22 lenses, in the third quarter of 2011, Strateco decided to carry out another radon survey covering the Matoush Extension and Eclat properties to test for the presence of radon anomalies possibly associated with the Matoush fault in various as-yet unexplored areas, as well as for certain Matoush-type geophysical lineaments.

The preliminary results obtained for the survey as a whole are encouraging. The results for Block 1 (Matoush Extension), located about 4.5 kilometres north of the MT-22 lens, showed an elongated, 500-metre long radon anomaly oriented north-south above the projected northern extension of the Matoush fault. These results are all the more promising as this area has not yet been tested by drilling.

The results for Block 3 (Matoush Extension), located 4.5 kilometres northeast of the AM-15 lens, were also very positive. An elongated 400­metre long radon anomaly striking north-south was detected on the eastern edge of a north-south Matoush-type geophysical lineament not yet tested by drilling. This lineament, identified by MPH Consulting Ltd. in 2010, could be the source of the mineralized boulders (including one with 61,000 cps) of the Laurent-Martin showing, which lie less than 500 metres to the southwest. It should be remembered that two holes drilled 250 metres northeast of the showing in 2007 failed to locate the source. The juxtaposition of this lineament with the radon anomaly makes this a high-priority drill target for 2012.

Another, lower-intensity, 800-metre long anomaly was detected on Block 2 (Eclat Nord), approximately 1.1 km north of the MT-22 lens. The anomaly extends to the northeast, about 700 metres onto the Matoush Extension property.

The radon survey was conducted on the Matoush Extension and Eclat properties early in the last quarter of the year 2011. The RadonEx team took a total of 402 radon readings in six different areas. This then enabled Strateco to produce a map showing the final radon results.

The best results of the survey on the Matoush Extension and Eclat properties indicate target areas for exploration during the next drilling program. The final compilation of this survey confirms the presence of a number of promising radon anomalies for the next phases of exploration. Two anomalies deserve special attention and should eventually be tested by drilling: one in the north extension of the Matoush fault (Block 1) and another northeast of the Laurent-Martin showing (Block 3). The other anomalies will be tested by drilling in a second phase if the first two anomalies return positive results.

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2012

The Company did not do any significant exploration work on the Eclat property in the first quarter.

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MATOUSH EXTENSION PROPERTY

Location and Access

 

The Matoush Extension property is located north, west and east of the Matoush property in the Otish Mountains, in Northern Québec. The property is accessible by helicopter, by the winter road that links the Eastmain mine to Témiscamie and, since October 2010, by the Matoush project landing strip (map of our properties).


Ownership

 

Wholly-owned by the Company, the Matoush Extension property consists of 198 claims covering 10,503.85 hectares. These mining claims were acquired by the Company in the fall of 2005 and the winter and summer of 2006 to protect the area in the vicinity of the Matoush and Eclat properties.

 

The northern border of the property is very close to the northern edge of the Otish Basin. The property is broken up by a row of mining claims belonging to Pacific Bay Minerals Ltd.

 

With the addition of the Matoush Extension property, the Matoush project as a whole covers 23 kilometres along its north-south axis, intersected by a 900-metre section belonging to Pacific Bay Minerals Ltd.

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Exploration Activities and Prospecting

 

2007

In 2007, following the 2006 airborne radiometric, magnetic and electromagnetic surveys, prospecting, line cutting, ground geophysics and drilling were conducted on the Matoush Extension property.

 

Systematic scintillometer prospecting covered most of the property. The main boulder fields were prospected and anomalous boulders sampled. At least two new uranium showings were discovered by prospecting.

 

In the east-northeast corner of the property, detailed prospecting, linecutting, a ground magnetic and electromagnetic survey and two drill holes for a total of 436 metres were carried out to follow up on highly radioactive boulders (Laurent-Martin showing), especially one with readings up to 61,000 counts per second (cps).

 

Prospecting on the northern portion of the Matoush project, on Matoush Extension property, leaded to the identification of an outcropping radioactive zone with 600 to 10,000 cps. Four drill holes were completed in the area for a total of 1,290 metres. Mixed results were obtained, the Matoush fault being laterally displaced.

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2008

Three holes were drilled on the same section on the Matoush Extension property in 2008 for a total of 1,473 metres. The section lies a few hundred metres north of the east-west string of Pacific Bay claims, on what should be the extension of the Matoush fault.

 

The first hole, MT-08-002, was extended to the basement without hitting the Matoush fault. Discordance was seen at a depth of 685 metres down hole. The basement rock consists of alternating granitic material and large laminae of mafic units. Many marginal uranium anomalies were intersected in the basement, the most important being 0.02% U3O8 over 4.0 metres. The two subsequent holes were drilled on the same section and failed to detect the extension of the Matoush fault. No radiometry anomalies were detected.

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2009 / 2010 / 2011

Exploration work in 2009 on the Matoush Extension property was limited to prospecting in the summer. The Company did not conduct exploration on the property in 2010 and 2011.

 

However, during the third quarter of 2011, a radon survey covering the Matoush Extension and Eclat properties identified interesting radon anomalies.

 

Based on the promising results obtained from the radon survey above the AM-08, AM-15 and MT-22 lenses, in the third quarter of 2011, Strateco decided to carry out another radon survey covering the Matoush Extension and Eclat properties to test for the presence of radon anomalies possibly associated with the Matoush fault in various as-yet unexplored areas, as well as for certain Matoush-type geophysical lineaments.

The preliminary results obtained for the survey as a whole are encouraging. The results for Block 1 (Matoush Extension), located about 4.5 kilometres north of the MT-22 lens, showed an elongated, 500-metre long radon anomaly oriented north-south above the projected northern extension of the Matoush fault. These results are all the more promising as this area has not yet been tested by drilling.

The results for Block 3 (Matoush Extension), located 4.5 kilometres northeast of the AM-15 lens, were also very positive. An elongated 400­metre long radon anomaly striking north-south was detected on the eastern edge of a north-south Matoush-type geophysical lineament not yet tested by drilling. This lineament, identified by MPH Consulting Ltd. in 2010, could be the source of the mineralized boulders (including one with 61,000 cps) of the Laurent-Martin showing, which lie less than 500 metres to the southwest. It should be remembered that two holes drilled 250 metres northeast of the showing in 2007 failed to locate the source. The juxtaposition of this lineament with the radon anomaly makes this a high-priority drill target for 2012.

Another, lower-intensity, 800-metre long anomaly was detected on Block 2 (Eclat Nord), approximately 1.1 km north of the MT-22 lens. The anomaly extends to the northeast, about 700 metres onto the Matoush Extension property.

The radon survey was conducted on the Matoush Extension and Eclat properties early in the last quarter of the year 2011. The RadonEx team took a total of 402 radon readings in six different areas. This then enabled Strateco to produce a map showing the final radon results.

The best results of the survey on the Matoush Extension and Eclat properties indicate target areas for exploration during the next drilling program.

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2012

Four grass-roots exploration holes totalling 779 metres were drilled on the Matoush Extension property in the first quarter. The Company had to build a 17 km road in order to drill these holes, including a mobile bridge to cross the Tichégamie River with a minimum of environmental impact. 

 

These four exploration holes were aimed at testing two geophysical lineaments located in the centre and at the northern edge of the Matoush Extension property. Two of the holes were also drilled to test radon anomalies identified by the survey carried out in the fall of 2011 over the southern portion of the Matoush Extension property.

 

The first two holes intersected fault zones, including a new structure in Hole MN-12-002, with a mafic intrusive and alteration halos typical of the Matoush fault. The interest in the northern part of the Matoush Extension property is enhanced by the presence of outcrops with radiometry anomalies, and the presence of Archean bedrock that could be prospective for uranium deposits at the shallow depth.

 

The two other holes, drilled to test the radon anomalies in the possible extension of the Matoush fault about 5 km north of the MT-22 lens, failed to locate the Matoush fault. Apart from the discovery of a new dyke, no uranium results were obtained.

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PACIFIC BAY-MATOUSH PROPERTY

Location and Access

 

The Pacific-Bay Matoush property is located in the Otish Mountains in northern Quebec, about 40 km south-west of the Matoush property. The property comprises an area of 14,576.33 hectares (145.76 km2) in the Otish Mountains, where the Company has been drilling the Matoush high-grade uranium ore body (map of our properties).


Ownership

 

On January 14, 2008, the Company and Consolidated Pacific Bay Minerals Ltd. (now called Pacific Bay Minerals Ltd.) (“Pacific Bay”) executed a definitive agreement with an effective date of October 29, 2007 whereby the Company can earn a 60% interest in 277 Pacific Bay mineral claims representing 14,576.33 hectares located in the Matoush District of Québec's Otish Mountains.

 

The agreement calls for the Company: (i) to pay to Pacific Bay a total of $500,000; (ii) to issue 200,000 common shares of the Company over 4 years and (iii) to incur $3 million in exploration expenditures over 4 years, including a minimum of 10,000 metres of drilling. As part of the transaction, the Company has acquired one (1) million units of Pacific Bay at a price of $0.30 per unit. Each unit consists of one common share of Pacific Bay and one warrant to purchase one common share of Pacific Bay at $0.60 per share for a period of 24 months. The shares and warrants were subject to a 12-month resale restriction period that expired on January 14, 2009.

 

In October 2009, the Company met its annual commitments for the year by completing the issuance of 40,000 common shares (valued at $34,400 in 2009), paying $100,000 and completing $750,000 in exploration work including the minimum of 2,500 metres of drilling.

 

In October 2010, the Company met its annual commitments for the year by issuing 50,000 common shares (valued at $30,100 based on the share price on the date the shares were issued) and making a cash payment of $125,000. The annual commitments for 2010 exploration work were not met, as only $298,224 was spent. The Company negotiated an amendment whereby the remaining 2010 exploration expenditures will be added to the 2011 commitment, increasing the 2011 exploration commitment to $957,364, which will also meet the minimum requirement of metres to be drilled.

 

In 2011, the Company fulfilled its obligations under the option and joint venture agreement dated October 29, 2007, between the Company and Pacific Bay, and exercised its option to acquire a 60% interest in the Pacific Bay-Matoush property effective October 29, 2011.

In order to acquire its interest over a four-year period, the Company acquired 1,000,000 units of Pacific Bay at a price of $0.30 per unit in January 2008. Each unit consisted of one common share of Pacific Bay and one warrant to purchase a common share of Pacific Bay at $0.60 for a period of 24 months. The warrants expired without being exercised. The Company also carried out more than $3,000,000 in exploration on the property, including a minimum of 10,000 metres of drilling, and made total cash payments of $500,000 to Pacific Bay and issued a total of 200,000 common shares of the Company to Pacific Bay over a four-year period.

 

Under the joint venture agreement, when the joint venture was formed the Company held a 60% undivided interest and Pacific Bay held a 40% undivided interest in the property. The Company will act as the manager of the joint venture management committee and will manage the exploration committee on the Pacific Bay-Matoush property for as long as it holds an interest of at least 50% in the joint venture.

Under the joint venture, any party whose interest has been diluted to 10% or less will see its interest converted into a 2% Net Smelter Return (“NSR”) and yellowcake royalty on the Pacific Bay-Matoush property. A 2% NSR is also payable by solely and exclusively by Pacific Bay to an individual on 142 of the 277 property claims.

 

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Exploration Activities

 

2007

Since October 29, 2007, the Company assumed direction of exploration activities on the Pacific-Bay Matoush property.

 

Four holes were drilled with the help of a Versadrill helicopter-borne drill (Major Drilling) between October 31 and November 25, 2007 for a total of 1,061 metres. These holes are all located in the southern block of the Rabbit Ears claims about 10 km north-east of the Matoush property camp. These holes were drilled in an area of the property with favourable geophysical anomalies such as magnetic lineaments and airborne radiometric anomalies, as well as VLF/EM conductors. Uranium-bearing boulders have also been discovered in the area during prospecting in the summer of 2007.

 

Drilling on the Rabbit Ears south block intersected the two same types of sedimentary facies seen in the Matoush sector. These correspond to the active channel facies (ACF) an arkosic to subarkosic conglomeritic coarse sandstone, and the channel-bar facies (CBF), a finely laminated subarkosic fine-to-medium sandstone, of the Indicator Formation. The vertical hole, PB-07-01, confirmed a sub-horizontal bedding in this area of the basin. The best hole was PB-07-05 which intersected a 10 cm altered sandstone averaging 0.03% eU3O8.

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2008

Seven holes totalling 1,510 metres were drilled on the Pacific-Bay Matoush property in 2008. The holes were drilled between August 8 and September 7, 2008 using a helicopter-transportable drill (Versa drill). The holes were drilled in the “Rabbit Ears South” sector. The targets were established for the purpose of identifying a Matoush-type uranium mineralized zone, based on the results of prospecting done in 2007 and 2008, geophysical surveys and the geomorphology study done by Poly-Géo Inc. in 2008.

 

Two sectors were tested. Five holes were drilled on Sector 1 to trace a potentially-mineralized north-south fault similar to Matoush. The holes covered an east-west lateral distance of 630 m to a vertical depth of about 300 m. Sector 2, where two holes were drilled for a total of 596 metres, lies about 700 metres directly south of Sector 1. The goal was to test for the presence of a geophysical lineament interpreted as having a similar slip to that of the Matoush fault. No significant mineralization was intersected during this drilling program.

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2009

In the first quarter of 2009, five holes were drilled to test for a major structure like the Matoush fault in the “Rabbit Ears South” area. A barren but major clay-rich breccia structure was intersected.

 

Following the completion of drilling on the Mistassini property in late June 2009, the Company took advantage of the availability of the helicopter-borne drill to drill a 200-metre hole on a section of the Pacific-Bay Matoush property, which consists of four mining claims in the possible extension of the Matoush fault, 3 km south of the Eclat property. The Matoush fault was not intersected.

 

In the third quarter of 2009, seven holes were drilled on the Pacific-Bay Matoush property. Four holes were drilled to trace the Matoush fault, which becomes diffuse north of the Eclat Nord property. No remarkable structures were identified. Three holes were drilled to test a linear geophysical anomaly on the “Rabbit Ears” area, about 5 km east of the AM-15 lens, but failed to locate any structures of note. Work ended on the property in September 2009.

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2010

In 2010, on the Pacific-Bay Matoush property, prospecting work was done in the second quarter on the north-south belt to the west of the Eclat South area. This led to the discovery of a 3.0 metre anomalous sub-outcropping boulder measuring up to 1,800 counts per second approximately four kilometres west of the Matoush fault.

 

This new, previously unexplored area was suddenly of particular interest because the geophysical survey data processing discussed earlier revealed the presence of a north-south lineament about four kilometres long containing two clearly identified targets for fourth quarter drilling.

 

The three holes totalling 2,010 metres drilled early in the fourth quarter of 2010 to test this structure were highly successful. A Matoush-type fault called the Alfred fault, with identical alterations to those of the Matoush fault, was intersected over 365 metres. The geophysical anomaly indicates that the Alfred fault extends to the north and south. This is an important discoverie on the Matoush project outside the Matoush fault corridor. These holes, which returned weak uranium grades, show that other Matoush-type structures (faults) exist throughout the Matoush project.

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2011

Five holes totalling 2,931 metres were drilled in the first quarter of 2011 on the Pacific Bay-Matoush property, where Strateco exercised its right to earn a 60% interest. Starteco acquired its 60% undivided interest on October 29, 2011.

It should be recalled that in October 2010, three holes drilled to test a north-south-striking structure similar to the Matoush fault, located 4.0 km away, returned positive results. A Matoush-type fault called the Alfred fault, with identical alterations to those of the Matoush fault, was intersected over 365 metres, and a series of holes was planned to test its continuity.

Five holes were therefore drilled in this area in the first quarter, including three to test the northern extension of the Alfred fault over a 270-metre strike length. Another hole was drilled midway between the two holes drilled 365 metres apart in the fall of 2010, and the last hole tested the vertical extension of the fault at a depth of -500 metres.

The five holes confirmed the continuity of the Alfred fault toward the north and at depth, with the presence of alteration typical of the Matoush fault. However, no significant mineralization was encountered.

Five more holes were drilled on the Alfred fault in the second quarter of 2011 for a total of 2,580 metres. These holes outlined the extension of the Alfred fault to the south, thus tracing its continuity over almost two kilometres. The similarities with the Matoush fault remain interesting, as do the conditions for mineralization of the Alfred fault, despite the absence of significant uranium anomalies. The holes drilled to date have confirmed that certain mineralizing properties associated with the lenses on the Matoush fault are also found elsewhere on the property.

Strateco did not conduct exploration on the property during the third and fourth quarters of 2011.

In 2011, 10 holes totalling 5,511 metres were drilled on the Pacific Bay-Matoush property.

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2012

The Company did not do any exploration work on the Pacific Bay-Matoush property in the first quarter.

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Cautionary Notes

 

A qualified person has not done sufficient work to classify the historical estimate by Uranerz as current mineral resources or mineral reserves. The Company does not consider resources or reserves of an historical estimate to be mineral resources or mineral reserves, as these categories are defined in articles 1.2 and 1.3 of the NI 43-101, as amended. The investor or reader should not rely upon this historical estimate.

 

The technical data in the following text is based on a report entitled: Technical Report on the Mineral Resources Update for the Matoush Uranium Project Central Quebec, Canada, dated September 16, 2008, prepared in accordance with National Instrument 43-101 respecting standards of disclosure for mineral projects (“NI 43-101”). This data has been reviewed by the authors of the report, David A. Ross, M. Sc., P. Geo., and R. Barry Cook, P. Eng., of Scott Wilson Roscoe Postle Associates Inc. (“Scott Wilson RPA”). The Matoush Mineral Resources Update dated September 18, 2009, was prepared and reviewed by David A. Ross, M. Sc., P. Geo., of Scott Wilson RPA, and is available on this website. The technical data based on recent information has been reviewed by Jean-Pierre Lachance, the Company’s Executive & Exploration Vice President. These three individuals are all qualified persons as defined in NI 43-101.

 

Note to U.S. investors concerning estimates of Measured and Indicated Resources.  This section uses the terms “measured resources” and “indicated resources”.  The Company cautions U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them.  U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.

 

Note to U.S. investors concerning estimates of Inferred Resources.  This section uses the term “inferred resources”. The Company cautions U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it.  “Inferred resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility.  It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category.  Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre‑feasibility studies except for some exceptions.  U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally minable.

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