Mining companies are setting their sights on Baffin Island as a new hot spot for uranium, with at least three companies currently exploring the area for the radioactive mineral.

Peregrine Diamonds Ltd. plans to explore for uranium later this year, after it discovered signs of the mineral while looking for diamonds last summer on two properties between Iqaluit and Kimmirut.

"Just as a test area, they did a soil sampling, or a till sampling program, through the region," Peter Holmes, Peregrine's vice-president of exploration, told CBC News in an interview.

"We were surprised when some of the samples started returning very high counts of uranothorianite, a uranium-bearing mineral."

On Feb. 1, the Vancouver-based company was awarded prospecting permits from the federal Indian and Northern Affairs Department, for an area covering 1.3 million hectares.

That same day, junior mining firm Uranium North Resources Corp., also of Vancouver, also received two permits covering about 52,600 hectares in the Fury-Hecla Basin, north of Igloolik.

"It's a basin that's had very little work," said Uranium North CEO Mark Kolebaba.

"It's had some work in the past, and we looked at it, noticed that there were other competitors there — including Cameco — and we thought, 'Well, let's just jump on it because likely they will grab that ground as well.'"

Uranium North will explore this summer on a site near the area where Saskatoon-based uranium giant Cameco Corp. began exploring for uranium in 2007, in a joint venture with UNOR Inc.