Uranium stocks

[Bush Trader]

Also posted on PDN Thread

A raging bull is difficult to ride, I would be interested in your feedback


Consolidation Revalues ERA, Paladin

Source: FN Arena News - February 13 2007
Canada's SXR Uranium One has entered into an agreement to buy all the shares of Kazakhstan's UrAsia to form the world's second largest uranium producer by market capitalisation.
UBS analysts have crunched the numbers implicit from the bid, and arrived at a valuation of uranium resource of US$31.61/lb.
Australian listed exploration companies tend to trade at only US$16/lb, the analysts note, up from US$9/lb last year. But more important is the valuation implications for Australia's two uranium pure-plays (which are actually producing uranium), Energy Resources Australia (ERA) and Paladin Resources (PDN).
Applying the resource valuation implies a share price valuation for Paladin of $16.86. Equivalently, ERA would be valued at $44.04. Add Jabiluka, and ERA would be worth $100.
Food for thought.

Cheers

 

[michael_selway]

Also posted on PDN Thread

A raging bull is difficult to ride, I would be interested in your feedback


Consolidation Revalues ERA, Paladin

Source: FN Arena News - February 13 2007
Canada's SXR Uranium One has entered into an agreement to buy all the shares of Kazakhstan's UrAsia to form the world's second largest uranium producer by market capitalisation.
UBS analysts have crunched the numbers implicit from the bid, and arrived at a valuation of uranium resource of US$31.61/lb.
Australian listed exploration companies tend to trade at only US$16/lb, the analysts note, up from US$9/lb last year. But more important is the valuation implications for Australia's two uranium pure-plays (which are actually producing uranium), Energy Resources Australia (ERA) and Paladin Resources (PDN).
Applying the resource valuation implies a share price valuation for Paladin of $16.86. Equivalently, ERA would be valued at $44.04. Add Jabiluka, and ERA would be worth $100.
Food for thought.

Cheers

PDN & ERA, absolutely crazy those 2!

thx

MS

 

[Ken]

Hows NAD looking?

They just raised funds to see viability of exploring for Arnhem region that they have 4 target areas for.

Anyone know much about uranium prospects for NAD? Cant find much.

 

[PeterPan]

Hi guys,

I would be interested in Pegasus Minerals Limited IPO. Shares at 20c each but I haven’t got any idea of how the uranium stocks sector is going. Any thoughts to share?
Also, a quick question: Pegasus has 3 projects for uranium in WA, where mining for uranium is not permitted. Why buying projects in WA then? What sort of return can those projects give if they cannot be mined?
Many thanks for your help.
PeterPan

 

[captjohn]

Be careful Peter Pan or Capt.Hook (pegasus)will grab your $$ & sail around W.A. with it forever....till he runs out of rum...Aghhhhh!!& then ask for another 20 cents x 20 million.from another bunch of peter pans !!
Seriously tho'.....uranium is now the hottest commodity & everybody will try to look for it ...& maybe find some in W.A. but as you suspect ....they will not be able to mine it while carpenter & his merry men refuse to allow it....I think he is ignorant to keep saying "No"....as u3o8 is the future clean fuel for energy.
Fed. labor may agree at a big meeting in April. to allow it.

Please do your research before you buy ....even a 20 cent share can drop to10 cents.....& half your $$ are gone...

Buy into companies that have proven deposits & can mine it O.K.....for example Bannerman resources....which has more than paladin in Namibia....near Rio's mine..
Read all the uranium websites & learn for yourself....
good luck
captjohn

 

[PeterPan]

Hi CaptainJohn
Pegasus has already found uranium in its 3 tenements. Exploration for gold, platinum and other base metals will start soon after listing.
Do you see Pegasus absolutely as a NO?
Cheers
PeterPan

 

[Kauri]

There are now 80+ companies listed on the ASX ranging from BHP, ERA, PDN, down to the Pegasus's that are involved in Uphoria. And that is ignoring the Canadians, Americans et al listed on their own exchanges. I wonder what the attrition rate will be. The time will come when the oppurtunists without much serious hope will be weeded out. I guess a lot of them will eventually pick themselves up, dust themselves off, and revert to dot.commers. Which ones will survive.... and be able to raise the hundreds of millions needed to get into production??? I think the time is coming when I will need to do research that goes beyond anomalies and rock chips.

 

[reece55]

Kauri
I said this a couple of months ago myself....

I work in the accounting field with start up mining companies - all I can say is that we are fairly happy for people to continue to love Uranium stocks. But there will come a time where there will be a liquidity issues - I say wait until the escrowed holders of these cash strapped, equity rich Uranium companies want to cash in - this is normally 2 years from float date for related parties. Watch the stocks tumble as the directors try to pull out - those companies that have gone from 1 cent to 20 cents will suddenly plummet.... But don't believe me - I am sure Mega will take out every stretch of dirt in Australia for all I know!

Cheers

 

[Allyson]

What do you mean by absolutely crazy?? Crazy to buy in? Or they are crazy good???

 

[prs]

That's why I bought into Marathon (MTN). It's in South Australia where the Premier is in approval of mining U, it has JORC, it has a stable and what appears to be a solid management team, there's a reasonable amount of resource and it's not bad grade. It's only issue is the sensitivity of the area which will cause it to mine from underground.
The other U company I bought into is West Australian Metals (WME) and while they're based in Namibia, they also have JORC, good quality U and there's infrastructure not too far away. The good thing about WME is the cost of the shares , currently .30C

 

[Gspot]

1. NUCLEAR EXPLOSION IN THE U.S.A. (the good kind)
+60%–120% in the next 12 months

At long last, to the cheers of investors, America is entering the nuclear age.


Nuclear +60-120% in the next 12 months
Staggering new demand is facing a vast shortfall in uranium supplies.
years without building a single nuclear power plant, we now have 31 in the works in planning or construction. Eventually, the countryside will be dotted with 150 of them.

Why the big switch?

1. Today’s reactors are a far cry from those of 1973, much safer and more efficient. In the early ’80s, plants could run (rather nervously) at just over 50% of total capacity; now they hum along at over 90%.

2. Time has brought TMI and Chernobyl into perspective. No one died at Three Mile Island; in fact, the core’s meltdown was a textbook model of a fail-safe mishap. And Chernobyl was an outrageous case of sheer idiocy: The reactor was inherently unstable... it had no containment vessel at all... and on meltdown day, the operators were bypassing all the security systems. Using Chernobyl as the basis for banning nuclear plants would be like banning goldfish after a pit bull attack.

3. Because nuclear energy is so incredibly clean compared to fossil fuels, even the greenies are jumping on the bandwagon. Many of the top environmental scientists have switched to pro-nuclear.

4. Washington, too, has jumped on board, with multi-billion dollar tax credits, loan guarantees, and risk insurance.

5. It’s a new day. Overseas, France already gets 78% of its electricity from nuclear plants, mostly standardized and state-of-the-art. By 2025, Japan will build 11 new reactors, India eight more, and China and Russia are working on 40 more. India’s power demand is slated to jump 270% by 2030, and China’s threefold. In fact, 4.4 billion Asians are hooking onto the power grid, and there’s positively no way to meet that kind of demand without nuclear plants.

90% ROI This Year? Do the Math.

The U.S. has 890 million pounds of uranium, and our main foreign sources are Canada and Australia, neither of which produces citizens who fly planes into buildings.

But the biggest appeal of uranium for us in The Energy Society is the awesome gap between world supply (110 million pounds extracted from mines this year) and demand (175 million pounds eaten up by the world’s 439 plants).

That’s almost a 60% shortfall, which plainly cannot continue. Scrounging for fuel in used reactor rods has sharp limits. A further trouble is that new mines take years to get on line. So prices (already up tenfold in the last 4 years), will continue to do a moonshot. Think about it. A rise of 1,000% in 4 years is 78% a year. If that simply continues without change, you won’t find it hard to make 90% annual profits, especially with our regular advice on exactly where to invest in uranium. In fact, a few of our picks made over 200% in the last year, tripling members’ money.

This hyperinflation in uranium prices is being turbo-boosted by one ironic factor: Because of the high price of nuclear plants ($2-3 billion), the cost of uranium fuel looks almost like pocket change to the folks who operate those plants! Fuel comprises just 3-5% of their cost of generating nuclear power. So when they go to negotiate a supply contract or bid at an auction, their attitude is, “Well, whatever it takes.” They absolutely cannot shut down their plants for lack of fuel.

As you might suppose, this attitude is extremely inflationary, bad news for electricity consumers but a screaming bonanza for our members, who know the best ways to take advantage of it.


Quoted this from the Energy letter today.
Now soon energy needs + enviroment= nuclear, as the only forseable solution, for the next generation.
With the US woes, weighing heavily on world markets, maybe the time is soon too get back on some good uranium companys, before the rest follow??
We need power, credit crisis or not!

 

[56gsa]

there seems general agreement u3o8 will bottom sometime this year - just a matter of when - and be around the $100 mark again by end of the year

I love seeing ERA fluctuate with the U price, cause with their contracts anything above $30 going to mean more revenue for them...!!

treadgold below is no charlie aitken but he's been around the (bear) traps

Energy hunger will lift uranium
By Tim Treadgold

PORTFOLIO POINT: Increasing energy demand, particularly from China, will push up uranium prices. It’s time to reconsider a handful of stocks.

Apart from investing in fringe financiers there was one other way to lose money very quickly last year: uranium exploration stocks. It will take a long time for second-tier finance companies to recover, but there are already signs that uranium is the resource category most likely to fire in 2008.

The prices of the “energy resources” coal and oil offer a clue as to why uranium will stage a comeback. Both are at near-record levels as buyers scramble for supplies. Last week, without anyone seeming to notice, most of Australia’s specialist coal stocks hit 12-month share price highs.

A second clue is evidence of investment fund activity, such as that of the Canadian-based Uranium Participation Corporation (UPC), which last month waded into the market with an order to buy 900,000 pounds of uranium because it believes the price is “at, or near, the bottom”. And that's from James Anderson, chief financial officer of UPC, which is already sitting on a stockpile of 4.5 million pounds of uranium managed by a major uranium producer, Denison Mines.

Not everyone agrees. In the uranium market there are still as many bears as there are bulls. Deutsche Bank is one of the bears, last week talking down an immediate uranium revival – though even a report from such a well-regarded investment house contained the seeds of optimism.

Deutsche Bank says it will not be “until the final quarter of 2008” that the spot uranium price climbs back over $US100 a pound.

While pessimists seized on that forecast as evidence of a delayed comeback for uranium, optimists might as easily have pointed out that the $US100 price tip represents a 37% increase on the current spot market price of $US73 – and any commodity looking at a possible price rise of more than a third in less than nine months cannot be ignored.

That’s why it’s time to dust of your uranium files and start sifting through the 250 listed stocks, discarding about 240 of them as the boom-time rubbish they always were, and focus on the handful of companies with quality assets, in jurisdictions that actually allow uranium mining.

In Australia, that means looking at companies active in the Northern Territory or South Australia, or those with exposure to stable overseas countries such as the US, Canada, or a few southern African states such as Namibia, Malawi, or Zambia.

Do that, and you finish up with a list headed by:

Energy Resources of Australia, the local market leader set to benefit from an extended life at its Ranger mine in the NT and the higher uranium price.

Paladin Resources, which is steadily increasing production at its Langer Heinrich mine in Namibia and building a second mine in Malawi.

Equinox Minerals, which has started with copper production at its Lumwana mine in Zambia and is moving on to a separate uranium pit at the same location.

Extract Resources, a longer shot but a company that has reported a string of excellent exploration hits in Namibia, including the latest adjacent to Rio Tinto’s big Rossing mine.

Those four stocks cover the different segments of the market. ERA is a world-class producer; Paladin an emerging producer; Equinox a quality company with a proven uranium resource in the ground; and Extract is a pure explorer, but one with a better chance of delivering than most of its competitors.

 

[noirua]

When to buy Uranium minnow explores "when there is blood on the streets. Time for the brave?????????????

 

[exgeo]

Warwick Grigor of Far East Capital certainly seems to think so. He just bought some more Monaro and holds a lot of other U stocks too (just got a note through on AGS this morning, which he recommends as one of the best resource opps. in the last several years).

 

[peteai]

Warwick Grigor of Far East Capital certainly seems to think so. He just bought some more Monaro and holds a lot of other U stocks too (just got a note through on AGS this morning, which he recommends as one of the best resource opps. in the last several years).

Hi exgeo,

On what basis is Warwick Grigor buying more Monaro ? Does it have any JORC resource ?

Cheers,
Peteai

 

[exgeo]

Hmm, perhaps because he's a director? But he's bought other U shares too, notably AGS.

 

[Schmuckie]

If you want a broad cross section of what's happening in uranium stocks day by day, have a look at www.latesturanium.com

It only covers Canadian companies, and is 13 hours behind Australian time, so it may have cleared and re-set by the time Australians may be reviewing it (i.e., in the middle of the night here).

At the very least, it gives a good barometer of investor sentiment toward uranium stocks on a daily basis.

 

[rhen]

Rejuvenation of spot uranium price predicted for 2H 2008
Haywood Securities says uranium demand will “manifest as a technology-driven nuclear renaissance across a growing number of countries for generations to come.”

Author: Dorothy Kosich
Posted: Friday , 06 Jun 2008

RENO, NV -

In their Uranium Industry Report published Thursday, Haywood Securities forecasts primary uranium production at 113.5 million pounds this year, which is well below reactor demand as secondary uranium sources dwindle.

Haywood predicts that the second half of 2008 will see a rejuvenation of the spot price.

Meanwhile, demand continues to outstrip primary supply, while a sustained injection of capital is needed to meet required primary production increases, according to Haywood.

In the report, Haywood analyst Geordie Mark noted that production costs have increased across the sector with the uranium price representing only a small fraction of operating costs.

The World Nuclear Association had earlier forecast uranium production of 124.8 million pounds of U3O8 this year, which had been projected to be a 16.5% increase on 2007 production. However, Mark said that, "based on the stilted flow of supply to venture on stream thus far due to various technical and infrastructural impediments, it is anticipated that 2008 production will rise only moderately above 2007 production."

Mark attributed the drop in production to: 1. ongoing production pressure within the sector; 2. Uncertainty of power and acid supply; and, 3. Technical nuances of bringing new production on-stream. "Consequently, these factors provide greater potential for upward pressure on the spot price."

Haywood asserted that 2008 primary production "will continue to fall short of future reactor demand. Thus, the entire sector will be ever more reliant on dwindling secondary supplies that progressively become more expensive, as well as technically, and politically difficult to extract."

"These factors will continue to support uranium prices into the future, where geopolitical interests will become ever more focused on security of domestic supply," Mark suggested. "This is particularly pertinent given that the major producers (Canada, Australia, and Kazakhstan) have little domestic demand."

"Primary uranium production has failed to deliver at estimated forecast rates over the last few years, and 2008 appears to be no except with Q1 production data being lower than either the forecast estimates and/or the previous quarter for a range of operations owned by Cameco, BHP Billiton, Denison Mines, Energy Resources, Australia, Paladin Energy, AngloGold Ashanti, Uranium One and Uranium Resources.

LONGER TERM OUTLOOK

Haywood asserts that the public's quest for a cheap, cleaner alternative to hydrocarbon-based energy production is being met "with a measurable change in view and broader acceptance of nuclear power generation by the general populace.

"Popular acceptance equates to a shifting political outlook on nuclear policy leading to potential changes in nuclear power production policy in both: countries ramping down future production (e.g., Sweden and Germany, as well as those countries considering a nuclear future. These motions are leading to a shift, a rebalance in sources used for future energy supply leading inexorably to a greater role for nuclear energy; and a sustained nuclear renaissance."

Nevertheless, Mark acknowledged that "future growth is at a bottleneck that continues to narrow and lengthen due to infrastructural impediments, political and NGO engagement, and an over reliance on second source material."

Haywood advises that, in the midterm, increased uranium production capacity is going to be largely derived by the expansion of current mines, or the exploitation of deposits in currently producing countries, such as Kazakhstan, the United States, Canada and Australia. "This is primarily due to infrastructural, regulatory and community support that is in place to expand and/or develop mines in locations with a ready draw on personnel currently engaged in mining," Mark suggested.

New long-term nuclear capacity will be driven mainly from China, India, Russia, and the United States, Haywood suggests. The Gulf States, mainland Europe, Africa and other counties will also increase nuclear generating capacity at a smaller rate

In their report, Haywood predicts that the next uranium companies to move to producer status within the next three years will originate from U.S. operations. "The rationale is that the USA was the primary producer of the world's uranium, and thus is a producer with a regulatory framework and a well established infrastructure that can be employed to bring projects into production rapidly," according to Mark.

The U.S. uranium projects may be small at under 2 million pounds of U3O8 of annual production. The mostly likely states that will experience increased production are Colorado, Utah, Wyoming and Texas, Haywood predicts. Despite this production, the U.S. will still have significant need for uranium.

In the meantime, Haywood forecasts that primary production to 2015 will continue to rely on secondary supplies, "which is unsustainable, and particularly acute in an environment seeking to expand nuclear energy capacity."

 

[hangseng]

"Haywood predicts that the next uranium companies to move to producer status within the next three years will originate from U.S. operations"

I suggest you start researching PEN and the last few announcements and the FEC reports recently and the PEN thread on ASF would be a good place to start. PEN is now quite advanced toward developing the Lance Project in Wyoming USA. Once an operation site with a successful pilot plant.

PEN themselves has stated their objective is to be producing within 2 years of permitting. They are progressing very well to achieve just that.

 

[YOUNG_TRADER]

Hi guys,

Anyone see the RIO ann that is selling its Kintyre Uranium deposit for $495m USD?


This puzzles me for 2 reasons

1. Kintyre has a JORC 13Mt's@ 0.028% U = 80M lb's U approx, so at $495m US that = $6/lb U which is 10% of the current spot price, but the mkts are weak surely they could have got it cheaper? Cameco are paying top dollar


2. Its in W.A. so it won't be mineable for 500years so long as the Labour Govt rule the roost


Anyway I think its very very interesting as perhaps it sets a new benchmark price for U deposits world wide and shows that even in all this turmoil, quality U deposits will be sought by the BIG BOYS