So far this year, we have seen a spike in interest in companies that are levered to rare earth metals and valuable resources. We believe this trend is just getting started and have been focused on identifying operators that could benefit from this cycle.
Pegasus Resources Inc. (TSX Venture: PEGA) (Frankfurt: OQS2) (Pink Sheet: SLTFF) is a diversified junior Canadian mineral exploration which owns uranium, gold and base metal properties in North America. We consider Pegasus to be an emerging growth story and are monitoring how the management team executes on a multi-faceted growth strategy. By focusing on resources that are necessary for many global industries, we believe the company is targeting high growth markets which can create significant long-term value for shareholders.
Focused on Capitalizing on Rising Demand for Uranium
Earlier this month, Pegasus hired Dahrouge Geological Consulting to manage the field exploration work from its acquisition of Energy Sands Uranium Project located in Emery County, Utah. We consider this to be an important step of the process and expect to learn more about the potential value that is associated with the asset in the near future.
We consider the Energy Sands Project to be a core pillar of Pegasus’ growth opportunity and are favorable on the types of resources that were found in the initial mining process. So far, the projects consist of sandstone-hosted uranium and vanadium mineralization. We consider the initial findings to be significant and believe the market underappreciated the potential value that is associated with the resources.
In the back half of the year, we expect Pegasus to report significant developments with the project and believe the Energy Sands Project has a favorable risk reward profile. Some of the important aspects of the project are related to the size of the location of it. The project has 30 unpatented lode claims which amount to 600 acres of land which is located within the San Rafael Uranium District.
Many decades ago, there were small scale production projects taking place on the property. The results of the projects show the types of minerals that could be mined, and we consider this be an important aspect of it. The property is located near the Western Uranium’s Rafael Uranium Project which reported to host approx. 758,050 tons of indicated mineral resources.
Although the management team has stated that past results or discoveries on adjacent properties may not indicate the presence of mineralization its property, we are favorable on the findings. We believe the data provides important information on the type and number of resources that are found in the region and are bullish on the potential for Pegasus.
A Business with Significant Growth Catalysts
Another attractive asset that is owned by Pegasus is the Pine Channel Uranium project that is located in the northern Athabasca Basin, Saskatchewan. So far, the company is continuing the permitting process for the project and expects to commence production [DM1] on the property as soon as it is granted the permits.
Pegasus holds four uranium properties located near the prolific Athabasca Basin of northern Saskatchewan which includes a historical resource estimate of 204,200 tons at an average width of 15.8 feet that is expected to contain a significant amount of uranium. The properties in the region include:
- The Wollaston Northeast Property – The property is located on the northeastern edge of the Athabasca Basin and is near the Eagle Point Uranium Mine. Historical data shows that there have been several uranium/base metal findings and we are favorable on the geographic location of it.
- Bentley Lake – The property is located northeast of the edge of the Athabasca Basin and in a transition zone that is between the Wollaston and Mudjatic geological domains. Based on data from other operators, there have been several deposits found on the transition zone and consider this to be an attractive growth opportunity for the business.
- The Mozzie Lake Property – The asset includes two claim blocks that are located northeast of the edge of the Athabasca Basin and within the Charlebois-Higgingson Lake Uranium District. The historical data that is associated with the region leads us to believe there is a significant uranium deposit in the area and are bullish on this. Based on the data, the deposits have remained largely dormant since it was first explored between 1940 and 1960. The historical data makes references to rare-earth-element (REE)- bearing minerals in the region and Pegasus believes that a re-evaluation study of the district should be conducted to better understand the amount of uranium that could be found on the property.
- The Pine Channel Project – We consider the project to be an attractive asset in Pegasus portfolio and consists of six mineral claims at the northern most edge of the Athabasca Basin. After initial studies on the property indicated that a large deposit could be found at shallow depths, projects remained idle until 2005 when an airborne magnetic, radiometric and gravity survey was conducted on the property and its surrounding area. The survey confirmed positive data from historical studies, and we believe the Pine Channel project has several important properties which make it an attractive exploration target.
A Diversified Growth and Execution Story
We classify Pegasus as a diversified Canadian junior miner and are bullish on the types of resources it is focused on finding. Another important growth initiative for the business is related to the Golden Project which is located along the British Columbia – Alberta border. The projects that are associated with the property are:
- Gold Mountain – An early-stage gold/silver property that is comprised of two mineral claims.
- Vertebrae Ridge – The project consists of two mineral claims and is located northwest of the Gold Mountain property.
- Punch Bowl – The project consists of three mineral claims and surrounds the historic Punch Bowl where quartz-gold veins have been identified within the McNaughton Formation.
Going forward, Pegasus plans to extract value from the Golden Project and believes the historical results warrant further exploration. When you combine the potential value that can be found at the Golden Project with the other assets that are owned by the company, we believe Pegasus has a recipe for success and our readers should be aware of this.
Pegasus Has the Traits that are Needed to be Successful
We consider Pegasus to be a business with visible growth catalysts and expect positive data to serve a major value driver for it. Over the next year, we expect demand for resources like uranium to increase and consider this to be a long-term global trend. We believe Pegasus is well positioned to capitalize on the rising demand for high-value resources and consider the opportunity to be underappreciated.
At current levels, we find the valuation to be compelling and are bullish on the direction the business is heading. We believe Pegasus is led by a management team that has a proven track record of success in the resource industry and consider this to be a core pillar of the story. We are of the opinion that Pegasus is in the early innings of a major growth cycle and will continue to closely follow the story.
If you are interested in learning more about Pegasus Resources, please send an email to email@example.com with the subject “Pegasus Resources” to be added to our distribution list.
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