CanAlaska Uranium – Part I

Canalaska, stands out as a well-capitalized, well-managed junior uranium miner. While most American investors have focused their attention on companies like URRE and UEC, this Canadian company has assembled a top-flight management team with superior land holdings that would seem to have far greater long-term potential for significant resource development. Capital raising is a fact of life of exploration stage companies, but the company’s performance in that area has gone a long way to settle any open question that might have arisen about their organizational competence and their ability to raise money.

You can read about their management team at your leisure. But for this brief report I want to focus on the performance of Emil Fung, VP – Corporate Development & Director. Mr. Fung was instrumental in securing C$40 million in exploration commitments from Japanese, Korean and Chinese partners. These strong partnerships are providing CanAlaska with the funding to push forward with aggressive exploration programs while other miners have had to scale back exploration and development efforts in order to conserve cash. This advantage should not be dismissed lightly.

While examining small companies, I always look for proof that the management team is able to execute their business plan. To-date, Canalaska has: 1) expended over C$55m on exploration and raised about C$35m in total share issuance, 2) amassed one of the largest land areas in the Athabasca Basin, 3) proven adroit at establishing partnerships and joint ventures, 4) secured and committed C$40m toward the exploration of its properties. Here is their current joint venture project list:

• Mitsubishi Corporation has undertaken to provide the Company C$11 mil. in exploration funding for its West McArthur Project
• Cree East Project is also progressing under a C$19 mil. joint venture with a consortium of Korean companies led by Hanwha Corporation, and comprising Korea Electric Power Corp., Korea Resources Corp. and SK Energy Co, Ltd.
• Canadian explorer Kodiak Exploration has also optioned the McTavish Project to advance exploration with the goal of attaining a 60% project interest earn-in by delineating a minimum of 35 million pounds U(3)O(8).
• Entered a memorandum of understanding with with East Resources, Inc., a Chinese partner to explore thePoplar and North East Wollaston Projects with 100,000 meters of potential drill testing.

Additional Background

The company started to acquire land in the Athabasca Basin in Sep 2004 and has one of the largest land positions there, with over 2,500,000 acres. Their land holdings are so substantial that they rival the combined holdings of industry giants Cameco & AREVA. The Athabasca Basin currently supplies about 1/3rd of the world’s uranium. Athabasca deposits tend to be of a much higher grade than those found elsewhere, with deposits ranging from 1% mineralization (which would yield 20lbs per tone) to over 20 percent (yielding an astonishing 400lbs per ton). If there is a better place on earth to mine for uranium it has not been found, thus the moniker “The Saudia Arabia of Uranium.”

Sedar filings

Cash Postion 4/2009 was C$6.6m, with $0 debt.
Cash Position 7/31/2009 was C$5.1m
143.7m shares issued and 175.3m outstanding as of 9/24/2009 (at C$.15, that would be ~$21m market cap)

As a strong intangible, Canalaska has good relations with First Nations communities, becoming the first company in over 25 years to undertake exploration activity on First Nations’ reserve territories in Saskatchewan.

Canalaska also has a 72% interest in the Rise and Shine gold project and a 100% interest in the Reefton gold project in New Zealand.

In August 2009, the Company closed two tranches of a non-brokered flow-through private placement of 5,826,764 units of $0.17 per unit for gross proceeds of $990,550

Summary

CanAlaska has some attractive features for any investor that wishes to stake some ground in the uranium space in front of a potential rebound in uranium prices. It also has attractive features for micro cap investors looking for competent management and adequate capitalization. I have begun building a position on those two counts alone. Part 2 of this report will focus on the Oct 20th news, an event that spiked the daily volume (763,150) 1,500% above the 90 day avg volume (47,700). Get a headstart.

Note: there may be tax issues for U.S. investors to consider.

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