In 1981, the Cigar Lake uranium deposit was discovered in Saskatchewan’s Athabasca Basin. A monster in its day, eventually sizing up at 290MM lbs. of U_{3}O_{8} at a mine grade of 15%! Seven years later and 45 km (28 miles) away the McArthur River deposit was found, dwarfing Cigar with its 500MM lbs. of U_{3}O_{8} at a mine grade of 22%. Certainly, the lion’s share of the Athabasca Basin’s rich uranium endowment had been secured.

But wait …… 30 years and over $2B in exploration spending later, the Basin serves up two more world class deposits 250 km (155 miles) away on the other side of the region; Triple R and Arrow coming in at 140MM and 300MM lbs. of U_{3}O_{8} respectively. Over the course of time, 39 deposits have been identified across the Athabasca Basin totaling over 2B lbs. of uranium – 10 of which came in at over 50MM lbs of U_{3}O_{8} each.

Known deposits are scattered across the Athabasca Basin, which covers approximately 100,000 square kilometres (39,000 square miles) of the Province of Saskatchewan Canada. Given the size of the Basin and the time, cost and difficulty in identifying a single deposit, how can there ** not** be more out there. More to the point, is it possible to calculate what is waiting to be discovered?

*Let’s give it a shot!*

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**Calculating Potential Endowment**

Extensive exploration drilling over many decades has shown that the Athabasca Basin is clearly a reservoir of uranium. The “background” amount of uranium contained in drill samples can approach what is typically considered “minable” in other parts of the world. As a matter of fact, if we were to mine the entire Basin to an assumed depth of 5 km. (a ridiculously uneconomic endeavour), it has been estimated that we would produce about 125B lbs. of uranium.

If we limited our mining to a more reasonable depth of 200 metres and only on those trends and regions around the Basin, known to have discovery potential, a similar calculation demonstrates a total potential of approximately five billion pounds of uranium. With 2B already discovered, there would appear to be about 3B more to find.

A more refined calculation as to “what’s left” may be possible thanks to Harvard linguist, George Kingsley Zipf who in 1949 formulated ** Zipf’s Law**, which describes the relationship between the size and rank of discrete phenomena. It is, in fact, a variant of the 80/20 rule that observes most things in life are not distributed evenly (i.e. 80% of a result is created by 20% of the input population).

Originally established to describe the frequency of words in natural language, Zipf’s Law was later applied to other phenomena such as income distribution among individuals, city populations, market share and, ultimately, sizes of oil, gas and mineral deposits.

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**Zipf’s Law and Resource Endowment**

There have been numerous technical publications issued on the mathematical formulation, calculation and application of Zipf’s Law but in its simplest form it boils down to the following:

- In geology, Zipf’s Law predicts how many entities (deposits) may be left in a sequence of decreasing size assuming we know the size of the largest deposit.
- When all deposits are ranked in order of size, the second largest deposit will be one-half the size of the largest deposit. The third largest deposit will be one-third the size of the largest deposit. The fourth largest deposit will equal one quarter the size of the largest deposit, etc.
- Starting with the largest deposit, the remaining theoretical deposits can all be calculated and a Zipf Curve is determined.
- Generally, the largest deposit identified to date is assumed to be the largest deposit existing in the region. This is based on the fact that the largest known deposit would typically have the largest footprint and would have been an early discovery in the history of the area.
- All
deposits are then matched to a correspondingly sized predicted deposit.__known__ - By eliminating the known deposits from the list, we are left with those yet to be found.

Once completed the resulting Zipf Curve will take this shape:

The stacked bars represent the actual deposits known to exist. The first stacked bar matches the first point on the Zipf graph. The gaps represent deposits not yet identified.

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**Zipf’s Curve in the Athabasca Basin**

As noted, there are currently 39 known deposits in the Athabasca Basin; a valid sample size for this sort of analysis. If we assume that McArthur River is, in fact, the largest deposit in the Basin and line up the known deposits by size, we start to see a problem.

__Deposit Name__ __Resource Size (lbs. U _{3}O_{8})__

__Zipf Predicted Deposits (lbs. U__

_{3}O_{8})McArthur River 500,000,000 500,000,000 *(assumed largest)*

Arrow 300,000,000 250,000,000 *(1/2 x largest)*

Cigar Lake 290,000,000 166,666,666 *(1/3 x largest)*

Key Lake 155,000,000 125,000,000 *(1/4 x largest)*

Triple R 140,000,000 100,000,000 *(1/5 x largest)*

Eagle Point 113,000,000 83,000,000 *(1/6 x largest)*

All of our deposits are, on average, nearly 40% larger than the Zipf Curve would predict. As a matter of fact, it appears that we have too many larger deposits. Further, if you add up all of the projected deposits set out on the entire Zipf Curve it totals only 3.5B lbs. of U_{3}O_{8}.

As we try to line up the known deposits with predictions, what becomes evident is that McArthur River, in fact, may not be the largest deposit in the Basin. By assuming an unknown larger deposit, our known deposits more appropriately align with the Zipf predictions.

__Deposit Name__ __Resource Size (lbs. U _{3}O_{8})__

__Zipf Predicted Deposits (lbs. U__

_{3}O_{8})** Undiscovered Deposit** –

**1,000,000,000**

McArthur River 500,000,000 500,000,000

Arrow 300,000,000 333,000,000

Cigar Lake 290,000,000 250,000,000

** Undiscovered Deposit** –

**200,000,000**

Key Lake 155,000,000 167,000,000

Triple R 140,000,000 143,000,000

** Undiscovered Deposit** –

**124,000,000**

Eagle Point 113,000,000 111,000,000

** Undiscovered Deposit** –

**100,000,000**

Moreover, the sum of the predictions from this set of numbers totals in the range of 5 billion pounds – more in line with our macro estimate – and results in the following curve:

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**So?….What’s Left**

It should be pointed out that Zipf’s Law is based on observation, not theory and, as with any law, there are restrictions and assumptions that cannot always be met.

If one is to lend credence to the predictions provided by Zipf’s Law, we can draw the following conclusions:

- Somewhere, lurking in the Athabasca Basin, there is a super-deposit in the range of 1 billion pounds of U
_{3}O_{8}– approximately the same size as the McArthur River, Arrow and Cigar Lake deposits combined; - There are three more Tier 1 deposits of between 100-200,000,000 pounds U
_{3}O_{8}yet to be discovered; - There are six more deposits out there ranging between 50-90 million pounds of U
_{3}O_{8}; - One could re-compile the analysis looking at the Eastern Basin as a separate region from the Western Basin. Such an analysis, however, results in the same conclusion – there is an unfound monster waiting to be found in the East. Further, the Western deposits are still being explored and continuing to grow. The “largest” deposit is not yet defined.

One thing is for sure. You cannot find a deposit if you are not drilling. For investors cheering on their favorite explorers, it would appear that the eight companies currently managing exploration drill programs across the Basin still have lots to discover.

*(They are Cameco Corporation, Denison Mines Corp, Fission Uranium Corp, Orano (Areva Resources Canada), NexGen Energy Ltd, Purepoint Uranium Group Inc., Skyharbour Resources Ltd. and UEX Corporation)*