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Purepoint Uranium Group research and analysis

Contributed by eResearch

Purepoint Uranium Group Inc.’s 2012 exploration plans include expenditures of $2,020,000 on six projects in the Athabasca Basin in northern Saskatchewan, Canada.  About half of that is to be spent on the Red Willow property, where crews have been mobilized to begin the Winter 2012 exploration program being undertaken by optionee Rio Tinto Exploration Canada Inc., which is earning a controlling interest (see page 3). The drill program to be carried out by Rio Tinto Exploration Canada follows a year of detailed analysis and the completion of a regional 3D model incorporating extensive geophysical data collected to date.

THE COMPANY

Purepoint Uranium is an early-stage Canadian exploration and development company, focused on exploration of its uranium prospects in the uranium-rich Athabasca Basin. The Company is involved in project partnerships with the three largest uranium producers in the world: Cameco Corporation; AREVA; and Rio Tinto, plc.

RECOMMENDATION and TARGET PRICE

Purepoint Uranium’s stock price languished in the second half of 2011, closing the year around $0.10 per share. Since the middle of January 2012, however, the shares have moved up to the $0.14 per share area, with good volume. We continue to recommend Purepoint Uranium shares as a Speculative Buy for risk-tolerant investors, and our Target Price  remains at $0.60. This price objective presupposes a return of investor interest to the uranium sector; not just to the senior producers, but to the junior exploration companies as well. It also reflects the expectation of successful drilling results this winter by Rio Tinto Exploration Canada at Red Willow.

PUREPOINT URANIUM PROPERTIES

Map: Purepoint Uranium Properties in the Athabasca Basin

2012 EXPLORATION PROGRAM

FINANCING

In mid-December 2011, Purepoint Uranium closed a non-brokered private placement of 9.64 million flow-through units at $0.11 per unit, for aggregate proceeds of $1.06 million. The net proceeds are for the advancement of Purepoint Uranium’s 12 uranium exploration projects, as well as general corporate purposes. Purepoint Uranium had also completed a private placement in June 2011, of 2.27 million flow-through units at $0.22 per unit, for gross proceeds of $500,000.

PROJECTS UPDATE

1. Red Willow

Purepoint Uranium’s Red Willow property, on the eastern edge of the Athabasca Basin, measures 25,612 hectares. The property adjoins AREVA Resource Canada Inc.’s claim group (containing the JEB, Sue, McClean and Caribou deposits) to the west, and UEX’s Hidden Bay property to the south. The latter property surrounds Cameco Corporation’s Rabbit Lake, Collins Bay, and Eagle Point deposits (see map, previous page).

Purepoint Uranium reported in late January 2012 that crews are mobilized to begin the Winter 2012 exploration program for Rio Tinto Exploration Canada Inc. at Purepoint Uranium’s Red Willow uranium project in the Athabasca Basin in Saskatchewan. Purepoint Uranium optioned the property to Rio Tinto in late 2010, with Rio Tinto being able to earn a controlling interest by spending up to $22.5 million in exploration and development expenses. The program will include about 1,600 metres of diamond drilling on targets within the Geneva and Osprey areas.

(a) Geneva

A gravity survey, with follow-up diamond drilling, is underway at the Geneva area (southwest corner of the Red Willow property). An airborne electromagnetic survey (VTEM) delineated 3.8 kilometres of conductors at Geneva, within a distinct fold structure highlighted by the aeromagnetic results. In a 1984 drill program, Eldorado Resources (a predecessor to Cameco) intersected a graphitic fault zone that returned 0.22% U3O8 over 1.0 metres in this area.

(b) Osprey

A weak EM conductor, about 700 kilometres long, lying beneath Osprey Lake, will be primary drill target at the Osprey area this winter. It cross-cuts the main Osprey conductor near the intercept of 0.20% eU3O8 over 5.8 metres. The eastwest- trending conductor follows the shape of Osprey Lake, and is coincident with a magnetic low, a gravity low, as well as a resistivity low. The area is untested by diamond drilling.

2. Staking at the Athabasca Basin

Since the uranium down-cycle began in 2008, the Company has used a number of strategies to seek out opportunities in the Athabasca Basin, and has acquired, through staking, six new projects covering 33,000 hectares in prime locations. Among the projects acquired by this method are Red Willow North and McArthur East.

Red Willow North

The Company announced in mid-October 2011 that it had expanded its Red Willow North property by staking an additional 2,057 hectares in the Hatchet Lake area of the Athabasca Basin.

The Red Willow North property, on the eastern edge of the Basin, measures 15,493 hectares and comprises four claims covering meta-sedimentary basement rocks. The property is contiguous with the Company’s joint-venture Red Willow project (with Rio Tinto) and, on the west, with the Denison Mines/Virginia Energy joint-venture Hatchet Lake project. Target areas at Red Willow North include:

The Golden Eye Shear Zone, which extends over six kilometres and joins the historic FDL Showing (up to 1.43% U3O8) and AJ Showing (up to 0.46% U3O8).

The FDL Conductor;

Turkey North Conductor, which has returned intercepts of up to 0.16% over 1.0 metre, is now interpreted to continue untested for over five kilometres on the Red Willow North property; and Smith Bay.

Airborne electromagnetic and magnetic survey results indicate that the Red Willow Osprey Conductor, where Purepoint Uranium drilling has returned intercepts of up to 0.20% e U3O8 over 5.8 metres, continues for over five kilometres on the Red Willow North property.

McArthur East

Purepoint Uranium announced in late September 2011 that it had recently staked a 1,985-hectare property (McArthur East) due east of, and adjoining, Cameco’s McArthur River mine, and due south of Cameco’s renowned Cigar Lake mine. The McArthur River property contains the world’s largest high-grade uranium deposit.

URANIUM PRICE CHARTS

eResearch Analysts:
Bob Weir, B.Sc., B. Comm., CFA