Flavour Of The Month.

After that article on “COPPER” that I posted yesterday. I thought it would be a good idea to post this article on “URANIUM” which is fast becoming the “Flavour of the Month”

4 December, 2006 Analyst : Warwick Grigor

Uranium is Still the Most Volatile Sector

Update taking into account price movements and company releases.

The Market is Acting First and Thinking Later: The market is still very buoyant with shares tending to act dramatically on sampling results that don’t warrant the enthusiasm.

In most cases investors should be saying “…interesting, tell me more”, but instead they are buying first and wondering later.

Beware of Anomalous Paleochannels: It is not good enough to just have a radiometric anomaly covering apaleochannel This is only the start. You have to find where the transport has stopped and the deposition has taken place.
As uranium passes along a channel it leaves traces. In most cases it is the trace of uranium that is excitingpunters, and companies are reporting these traces as if they amount to a discovery.
This is very misleading. Most ofthese companies will find that the uranium has simply passed on by and the excitement has been premature.

Calcretes About to Face Litmus Test: There are many calcrete uranium deposits in WA, of varying sizes and grades, and these have been enthusing the punters.

Bear in mind though, that whilst mining of these is easy, the metallurgy can be very complicated.
All eyes should be on Langer Heinrich as Paladin commissions this project.
Will there be metallurgical problems? PDN shareholders are being exposed to commissioning risk right now.

If it goes well, then everyone will be happy; but if it has serious problems there could be a knock-on effect with respect to all the other calcrete players.

Use of Gold Equivalent Comparisons: We have included a table which gives gold equivalent values to simplify matters, but bear in mind that there is not a direct correlation between the two metals.

You should discount the gold equivalent by about 20% to account for the metallurgical and other issues in uranium production.

What Uranium Price Should We Factor in?: Just as no-one believes current copper prices are sustainable, we should be using modest long term prices for uranium.

Vast numbers of deposits will be economic at prices of US$100/lb, but the field looks much smaller at US$50/lb.

If this is the long term sustainable price, you wouldn’t want to have a grade of less than 0.06% U3O8 (600ppm), unless there were uniquely positive features concerning the

USA Deals Coming Through: We are stating to see a number of deals coming through from the USA, in areas that have previously supported production.

These offer encouragement but they are generally small in size, though with the benefit of good grade. Bear in mind the excessively tight environment laws now operating in the USA and the extended lead times in bringing anything into production.
AUTHORS NOTE: This is designed as a quick reference document giving views on the companies listed, from one person’s perspective.

Relative value is the key, taking into account risk profiles of investors. There is a paucity of information from most of these companies and therefore fundamental analysis is very much imperfect.
Nevertheless, it is important to get a feel of where the perceived value as this uranium bull market is not going to evaporate overnight.

I hope that it may be of use to you in sorting the wheat from the chaff.

Companies Covered in this Review

A. Producers and Potential Producers Quality Value Mkt Cap

AEX Acclaim Exploration Fair Cheap $24m ( I have this one currently in my portfolio.)
ARU Arafura Resources Good Fully priced $58m
BKY Berkely Resources Good Fair $99m
CMR Compass Resources Excellent Expensive $611m
CTS Contact Resources Average Fair $49m
DYL Deep Yellow Fair Expensive $360m
EME Energy Metals Good Fully priced $117m
ERA Excellent Reasonable $3.6bn
MTN Marathon Resources Uncertain Fair $65m
MEE Metex Resources Good Excellent $18m
MRO Monaro Mining Good Excellent $37m
NEL Nova Energy Good Sound $131m
OMC Omega Corp. Fair Fully priced $148m
PDN Paladin Resources Good Expensive $3.5bn
PNN PepinNini Minerals Fair Fully priced $90m
SCX Southern Cross Expl’n Poor Fair $6m
SMM Summit Resources Good Sound $587m
UNX Uranex Good Fully Priced $69m
UEQ Uranium Equities Good Reasonable $44m

B. Advanced Explorers

ACB A-Cap Resources Good Fully priced $82m
ALB Albidon Good Fair $259m
AGS Alliance Resources Good Fully priced $439m
BMN Bannerman Resources Fair Expensive $192m
CUY Curnamona Energy Good Reasonable $32m
EVE Energy Ventures Fair Fair $34m
EXT Extract Resources Fair Expensive $90m
GGY Glengarry Resources Fair Good $15m
IPT Impact Minerals (IPO) Good Good $18m
SRZ Stellar Resources Good Good $19m
TOE Toro Energy Excellent Expensive $107m
UKL Uranium King Fair Fair $40m
WME West Aust. Metals Fair Fully priced $43m
WHE Wild Horse Energy Average Fully Priced $101m

C. Grass Roots Explorers

AEE Aura Energy Average Fair $10m
ARM Aurora Minerals Fair Fair $16m
BLR Black Range Minerals Fair Fully priced $46m
CTS Encounter Resources Fair Fully priced $32m
EPS Epsilon Energy (IPO)
ERO Eromanga Uranium Average Expensive $33m
ERN Erongo Energy (name change) Average Fully priced $28m

Far East Capital Ltd Australian Uranium Companies – December 2006 Sector Comment

This commentary is provided in good faith from sources believed to be accurate and reliable.
Far East Capital directors and employees do not accept liability for the results of action taken on the basis of the information provided or for any errors or omissions contained therein.

There are no recommendations to deal in the stocks mentioned herein.

Readers should consult their professional financial advisors before acting on information contained.

FAS Fairstar Resources (IPO) Average V. Expensive $92m
GIR Giralia Resources Fair Expensive $73m
GBE Globe Uranium Fair Fully priced $55m
IVK Investika Average Fully priced $54m
KOR Korab Resources Fair Fair $17m
MRU Mantra Resources Fair Fair $22m
MDX Mindax Fair Inexpensive $8m
MUR Murchison United Fair Fair $21m
NRU Newera Uranium Average Fair $11m
NTU Northern Uranium Good Fair $17m
PDM Paradigm Gold Fair Cheap $4m
PEN Peninsular Mining Good Good $29m
RTM Reefton Mining Average Fair $14m
SIM Scimitar Resources Fair Good $25m
SAU Southern Gold Sound Fair $23m
SRK Strike Resources Average Expensive $111m
TAS Tasman Resources Fair Fair $16m
THX Thundelarra Exploration Good Fully priced $48m
UTO U3O8 Fair Fully priced $47m
URA Uran Fair Dependent $48m
UXA Uranium Exploration Australia Average Expensive $37m
UOG Uranium Oil and Gas (IPO) Average Fair $19m
USA UraniumSA Fair Fair $24m
WMT Western Metals Good Fair $44m
WTN Western Uranium Average Cheap $7m
XST Xstate Resources (pending IPO)

Then the review goes on in great detail on each of the above.

Great reading! A must see for anyone wanting to ride the Uranium Bull

You can download the complete review at :-


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