December 3 2008 – Purepoint Uranium Group Inc. (TSX:PTU.V) is pleased to provide the following overview of its current financial position, its exploration progress, and its focused exploration plans for the coming year.
“Continuing market turmoil has forced all investors to examine their individual portfolios” said Chris Frostad, Purepoint’s President and Chief Executive Officer. “Now, more than ever, companies such as Purepoint must work harder to report regularly to shareholders and provide increasing transparency into their finances, their properties and their prospects. Prudent exploration juniors must make every possible effort to carefully protect and budget their capital resources in a market where the ability to raise additional financing may be limited for an indefinite period”.
Purepoint was fortunate to raise more than $20,000,000 of equity in the more liquid markets of 2006 and 2007. As at September 30, 2008 Purepoint had working capital of more than $4,600,000. In anticipation of the continued declining markets, Purepoint actively took steps through much of 2008 to conserve its treasury and reduce overheads and operating costs. Purepoint management is confident that the company has the financial resources, without additional equity, to continue to explore on a more focused basis at least three of its highest priority targets through 2009 and beyond.
In recognition of these unprecedented market conditions, Purepoint’s board of directors recently resolved to defer Purepoint’s budgeted 2009 winter drilling program. Given the extensive amount of geophysics and drilling undertaken by Purepoint over the past 18 months, Purepoint management believes that the coming winter months would be most profitably spent analyzing and interpreting the massive amounts of data generated by its earlier programs, and supplementing that data with additional geophysics if warranted, in order to further advance its geological theories and design even more precise drilling programs.
The material savings in anticipated field operation costs, together with management’s agreement to salary reductions, leave Purepoint in a much stronger position to weather the present market storm and eventually resume drilling activities.
Purepoint completed the last of its planned 2008 exploration programs with the announcement of encouraging results from its Smart Lake property. In the last five years, Purepoint has incurred more than $20,000,000 of exploration in the identification of more than 50 defined target areas on its eight 100% owned projects in the Athabasca Basin, and has undertaken more than 23,000 metres of first pass drilling on the first few of those prospects.
Purepoint also completed in 2008 the program expenditures necessary to earn its initial 20% joint venture interests in the two additional Basin projects Purepoint operates in joint venture with Cameco Corporation and UEM Inc. Purepoint may eventually earn up to 50% in these projects, however it has no further funding commitments in 2009 or 2010.
Until the return of more reasonable market conditions, Purepoint has determined that it would be in the best interest of its shareholders to defer certain budgeted drilling and other programs in 2009 across its diverse project portfolio and limit ongoing exploration expenses to focused infill geophysics programs on its top three priority targets:
- Red Willow’s Osprey Zone, where diamond drilling returned assay grades as high as 3.03% U3O8 at shallow depths of less than 100 metres;
- Turnor Lake, where most of the diamond drill holes completed to date have returned significantly elevated radioactivity and favourable alteration; and
- Smart Lake, where Purepoint intersected a radioactive structure over 54 meters reflecting intense clay alteration, silicification and hematization.
Since inception Purepoint has worked hard to deliver “precision exploration” by ensuring that every exploration dollar is spent as cost-efficiently as possible. To deliver efficiency Purepoint, unlike most of its peers, established an internal operational infrastructure designed to deliver exploration services at a cost significantly less than those available from third party suppliers. In 2008 Purepoint achieved a per unit reduction of 30% for its camp and field support costs and as much as 50% reduction in its drilling costs per metre. Management expects this savings to be maintained and improved upon in coming years. By way of example, Purepoint:
- owns, rather than rents, its exploration camps;
- owns or finances, rather than contracts, its drilling equipment;
- utilizes, where possible, permanent year round exploration camps; and
- establishes temporary or year-round ground access to its camps, rather than relying on expensive air freight and helicopter transport.
Where possible Purepoint takes the longer term view and incurs upfront expenditures where significant longer term efficiencies can be realized.
Purepoint’s commitment to cost efficiency is reflected in the nature and results of its exploration programs. The company invests heavily in the upfront geophysical work necessary to pinpoint existing conductors, structural faults and other geologic anomalies, prior to the more expensive first pass or follow-up drilling.
Although there are no industry specific statistics readily available, Purepoint has compiled and maintains its own database of the exploration and drill programs publicly released by more than 25 of the grassroots junior exploration companies operating predominantly in the Basin. Based on that database, Purepoint management believes that over the current exploration cycle (2005 through 2008) Purepoint can quantifiably demonstrate that:
- Purepoint has drilled and disclosed more diamond drill holes than any other peer in the Basin (96 of the 665 drill hole results disclosed)
- Of the peer drill results published, less than 10% reported 0.005% or more U3O8 (generally the threshold level Purepoint believes to be worthy of follow-up)
- In contrast, more than 50% of Purepoint’s drill results reflected 0.005% or more U3O8, with nearly 10% producing results greater than ten times that threshold over at least one meter
Purepoint has made available on its web site a summary chart for each of its properties detailing, on a target by target basis, the results of all of its drilling to date. The company intends to maintain and update these charts as results become available in order to provide investors with a clear and complete picture of Purepoint’s exploration progress.
Purepoint Uranium Group Inc. is focused on the precision exploration of more than 55 defined target areas on its eight 100% owned projects in the Canadian Athabasca Basin,and its two Basin projects joint ventured with Cameco Corporation and UEM Inc. a company owned equally by Cameco Corporation and AREVA Resources Canada Inc. Established in the Basin well before the resurgence in uranium, Purepoint is actively advancing this large portfolio of multiple drill targets in the world’s richest uranium region.
Scott Frostad BSc, MASc, PGeo, Purepoint’s Vice President, Exploration, is the Qualified Person responsible for technical content of this release.
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
For further information please contact:
Purepoint Uranium Group Inc.
Chris Frostad, President and CEO