Terra Clean Energy Corp: Assay Results Highlight Some of the Best Intercepts to Date

DISCLAIMER: Any written content contained herein should be viewed strictly as analysis & opinion and not in any way as investment advice. Visitors to this site are encouraged to conduct their own due diligence. As a Research Spotlight product, HoldCo Markets has received financial compensation for the written content and analysis below. Please read the full disclaimer here: holdcomarkets.com/disclaimer

Yesterday, Terra Clean Energy Corp. (TCEC) released assay results from the winter 2025 drilling campaign at the South Falcon East Uranium Project, located in the periphery of the Athabasca Basin. Following an extensive winter 2025 drilling program, 682 samples were submitted for geochemical analysis at the Geoanalytical Laboratory at the Saskatchewan Research Council in Saskatoon. With an average grade and width reconciliation being 5%-30% higher compared to the previous released gamma probe logging, we’ve seen some of the best results to date at South Falcon. As grades appear to improve north along the NW fault, the stage is set for a robust summer 2025 drilling campaign targeting 2,500m. The summer field program is expected to commence in mid-August. A resource update incorporating the 2024 and 2025 drilling can at earliest be accomplished by this winter. Ahead of the summer campaign start, we maintain our $4.75 per lb, 0.70x target in-situ derived valuation. After factoring in corporate adjustments and a potential financing, our 12-month price objective is refined lower C$0.22 per share. Our price objective equates to +144% upside from the most recent close. We add that given the robust near-term drilling plans, the risk remains on the upside for a material valuation re-rate.

WINTER 2025 ASSAY RESULTS INCLUDE SOME OF THE BEST INTERCEPTS TO DATE   

Recall that this past March/April, Terra Clean Energy Corp. announced the results from its winter 2025 drilling campaign at the South Falcon East Uranium Project, located at the periphery of the south-eastern edge of the Athabasca Basin. With six of seven drill holes encountering uranium mineralization, the large-scale winter drill campaign consisting of 1,927m drilled was successful on numerous fronts. Though the gamma results were previously disclosed in the spring, the actual chemical assays as released yesterday have yielded highlight wider intervals of mineralization with higher grades than those identified within the probe.

Some of the newly released assay results represent the best intercepts achieved to date, with notable grade improvement to the north, along the NW fault. The northernmost hole, SF-0067, returned 3.87m at 0.05% U3O8, including a sub interval of 0.17% U3O8 over 0.5m.  This 0.5m interval represents the best sample of the program. Note that it is not out of the ordinary for the lab results to be higher than the equivalent gamma results. The variation is on average +5% to +30% higher, with the large range of variation due to dealing with the overall grades, with a small difference in grade leading to a larger apparent variation. Highlight intercepts include:

• SF-0067: 3.87m at 0.05% U3O8, including 0.17% U3O8 over 0.50m

• SF-0067: 8.05m at 0.03% U3O8, including 0.16% U3O8 over 0.50m

• SF-0065: 3.72m at 0.09% U3O8, including 0.13% U3O8 over 0.51m

• SF-0066: 3.44m at 0.06% U3O8, including 0.12% U3O8 over 0.65m

The typical pathfinder elements used to vector towards uranium in the basin, cobalt (Co), nickel (Ni), copper (Cu), lead (Pb) and zinc (Zn) all appeared elevated within the metasedimentary package hosting the mineralized pegmatites, in particular cobalt and nickel. Note that elevated lead is closely associated with elevated uranium.  Hole SF-0067 contains some of the higher pathfinder values, indicating another vector towards the north. Several drill holes returned high-grade values, including as much as 466% greater than the current deposit average. 

SUMMER 2025 CAMPAIGN TO BEGIN IN AUGUST

Owing to the results uncovered from the winter campaign, the identified target zone for the summer campaign is located in an area approximately 120m-150m north of winter drill holes SF-0063, SF-0065, SF-0066 and SF-0067. Recall that as announced earlier in April, drill hole SF-0067 intersected a 70m interval containing multiple mineralized granitic pegmatites and zones within the altered and graphitic pelitic gneiss package. Drill hole SF-0065 was drilled to follow up the results of SF-0063, reported earlier in March.  It was targeted to intersect the same mineralized pegmatites 60m to the northeast. The hole was completed to a depth of 282m and intersected a 75m wide zone of variably mineralized granitic pegmatites and zones within altered and graphitic pelitic gneiss.

The summer field program is anticipated to start in early-to-mid August. The field program is expected to run for between four to five weeks. The summer campaign will be executed by Terralogic Exploration Inc. under the supervision of Terra Logic staff and C. Trevor Perkins, Vice President, Exploration for Terra Clean Energy. The operations will be based out of a local contracting camp with helicopter support for the daily drilling operations.

As can be seen above, the identified target area is located further north of the Way Lake Conductor and intersects an inferred NW-SE fault (south of T-Bone Lake). The specific purpose of  the upcoming drilling campaign is to test an area highlighted in the Winter 2025 program where it is interpreted that a north-northwest trending brittle structure, a north dipping structure with strong clay alteration, and mineralized pegmatites with hydrothermal hematite alteration hosted in graphitic pelitic gneiss all intersect. Numerous indicators have been identified which are characteristic of higher grade mineralization. These identified indicators include:

• Graphitic metasediments

• Brittle reactivated basement structures

• Reducing fluid (indicated by clay alteration)

• Oxidizing fluid (indicated by hematite alteration, transports uranium)

All the above features have now been identified in the Fraser Lakes B deposit area. Where they are projected to intercept is considered a top priority target area for the discovery of a higher-grade unconformity related basement hosted uranium deposit and additional mineralized pegmatites. The upcoming summer program will be a helicopter supported drill program encompassing a total of between seven to ten diamond drill holes.

RECAPPING THE SOUTH FALCON EAST PROJECT

Strategically situated at the periphery of the Athabasca Basin, the South Falcon East Project is located 50km east of Cameco's (CCJ, CCO) Key Lake uranium mill and just 7km north of the powerline servicing the Key Lake operations. As previously defined, the shallow Fraser Lakes B deposit currently hosts a NI43-101 compliant uranium resource (Inferred) estimated to be 10.35Mt grading 0.03% U3O8 for 6.96M lbs, along with thorium (ThO2) mineralization. Mineralization remains open both down dip and along strike.

CONCLUSION & VALUATION

Our investment thesis remains intact: with Terra Clean Energy we see a microcap valuation leading to exposure to a pre-established, 6.9M lb Inferred shallow uranium resource situated near the needed infrastructure required for mining. The large scale summer drilling campaign will provide for additional near term catalysts. Results from the summer drilling campaign will dictate when an updated resource estimate will be published. Provided positive results, an updated resource estimate may come as early as this winter.  

Since exploration work and robust drilling campaigns are necessary standards for all exploration companies, we look at both all-in, earn-in cost and the earn-in ex work cost. Once backing out of the work budget, isolating the dedicated cash and share payments are more representative of the earn-in (asset) cost.  

These pro-rata valuations would equate to C$1.85/lb (at 51%) or C$2.20/lb (at 75%). These amounts are considerably lower to some of the more recently seen transaction valuations in the Athabasca Basin. See our August 22, 2024 initiation report for more details. Note as well that the numbers in Exhibit 6 above are for benchmarking purposes to the current 6.9M lb Inferred resource. We will wait until the updated resource estimate for any possible resource expansion.

Following the numerous management and corporate changes as executed late last year, we now see an unencumbered return to the primary objective of the company – drilling, de-risking and updating the Fraser Lakes B uranium deposit. We continue to believe that at the current microcap valuation, the risk remains on the upside, provided future drilling success. Seeing that the deposit remains open in numerous directions, additional work spend may lead to an increase in both grade and resource size. That said, our adjusted in-situ driven price objective amounts to C$0.22 per share. Acknowledging the recent market volatility, our target equates to +144% upside from the most recent close. We add that given the robust near-term drilling plans, the risk remains on the upside for a material valuation re-rate.