Categories: Energy
Topics: General Energy

What’s So Hot about Hathor?

At a time when most Uranium exploration companies are struggling to maintain stock prices and financings are few and far between, Hathor Exploration Ltd. (TSX.V: HAT) is seeing consistent and intense interest. Its stock price remains strong, financings are oversubscribed, and every Canadian analyst is only too eager to talk up the stock.

The reason?

Besides the fact that Hathor is the hands-down contender for next Canadian Uranium mine, the company is maturing into a diversified explorer with projects in gold, silver and uranium. This provides a cap to downside risk from single-commodity pricing, and attracts a broader investment audience.

The core of Hathor’s success is its Midwest NorthEast uranium project, located approximately 4 km to the northeast of the Midwest uranium ore body of AREVA, Denison Mines Inc. and OURD Canada Co. Ltd. that grades 5.47% U3O8, 4.37% nickel and 0.33% cobalt.

According to a research report dated September 4, 2008 by Raymond James,

The latest intersections from Roughrider contain grades of 20.41% U3O8 over 6.5 metres and up to 59.1% U3O8 over 0.5 metres. These grades, although not representative of the entire dataset, are akin to that of Cameco’s behemoth McArthur and Cigar Lake deposits. Roughrider mineralization is approximately 215 metres deep and hence very likely amenable to open pit extraction.”

Bart Jaworski, in the same report, stated,

"To our knowledge, Hathor's discovery has strong potential to rank at the top of the list of best discoveries this (uranium) cycle. We are initiating coverage on Hathor Exploration Limited (HAT-TSX.V) with a STRONG BUY rating and a 6-12 month target price of $7.20 per share".

Patrick Donnelly, an analyst with Salman Partners agrees:

"Hathor has hit high-grade uranium mineralization in nearly every drill hole that targeted the Roughrider Zone. Recommendation SPECULATIVE BUY, price target $6.40".

Hathor has now launched its biggest ever drill program, which will see 22,000 metres of drilling over the next several months test additional extensions and improve the understanding of stratigraphic controls governing the deposit. Four diamond drill rigs will be conducting the operation.

Historic drilling success on the property has the investment and uranium industries salivating over the potential success of this program, which will likely generate a steady stream of news in to the summer of 2009 and beyond.

    Top drilling highlights include:
  • 11.9 metres grading 5.29 per cent U3O8, including 0.2 metres at 40.20 per cent U3O8
  • 15.0 metres grading 10.02 per cent U3O8, including 2.0 metres at 43.85 per cent U3O8;
  • 9.0 metres grading 10.06 per cent U3O8, including 3.0 metres at 22.72 per cent U3O8;
  • 5.0 metres grading 3.58 per cent U3O8, including 1.5 metres at 10.85 per cent U3O8;
  • 9.5 metres grading 2.60 per cent U3O8, including 2.0 metres at 10.39 per cent U3O8;
  • 69.0 metres grading 2.33 per cent U3O8, including 9.0 metres at 10.54 per cent U3O8;
  • 6.5 metres grading 20.41 per cent U3O8;
  • 46.0 metres grading 3.25 per cent U3O8, including 7.0 metres at 11.99 per cent U3O8;
  • 6.5 metres grading 8.93 per cent U3O8 in DDH 08-34;
  • 18.0 metres grading 4.15 per cent U3O8, including 9.0 metres at 8.22 per cent U3O8;
  • 23.0 metres grading 11.23 per cent U3O8, including 7.0 metres at 28.14 per cent U3O8.

Analysts Loving Hathor
One of the aspects of Hathor’s success is its apparent ability to raise capital at premium levels even while the rest of the market is shut out. For this, and Hathor’s Athabasca portfolio, analysts give the company premium billing.

According to David Talbot of Dundee Securities Corp,:

"Athabasca deposits account for 23% of the world's production. With so few sizeable or high grade deposits, we believe the Midwest NE project is one to watch. We are initiating coverage of Hathor with a BUY rating, Speculative Risk, and a 12-month share price target of C$5.00."

And he’s not alone. Wayne Hewgill, a mining analyst with Research Capital Corp., said:

"The management team’s experience in the capital markets is backed up by an exceptional advisory team comprised of individuals with decades of experience devoted to uranium exploration in the Athabasca Basin. We are initiating coverage on Hathor Exploration Ltd. with a BUY recommendation and a target price of $4.80."

Gold and Silver – Eskay Creek, British Columbia
Hathor has a collection of four properties near Barrick’s Eskay Creek mine that the company plans to spin out into another company, which will give investors in Hathor now a free ride to some degree in the new venture when that happens.

The Eskay Creek mine, owned by Barrick Gold Corp., is located approximately 80 km northwest of Stewart, B.C. and was one of the richest precious metals operations in the world. The Eskay Creek ore body is a precious metal-enriched volcanogenic massive sulphide deposit, which occurs in association with volcanics of the Jurassic-aged Hazelton Group. It ceased operations in the first quarter of 2008.

The exit strategy? Takover by a major…
Hathor’s proximity to the processing facilities at the McLean Lake Mill makes it a prized acquisition target for any of AREVA, Dennison Mines, or Cameco. Continuous problems with flooding at the Cigar Lake mine will continue until at least 2010, which means a shortage of feedstock for McLean Lake.

With the attention being concentrated on Hathor by analysts and investors, the opportunity for a low-risk, near term win is tantalizingly within reach. In this market, that’s a gift.

Visit the company’s web site at http://www.hathor.ca.

James West, www.midasletter.com