Giralia, Summit And Polaris Benefit From Being Involved In Uranium, Australia’s Hot Mining Sector
By Our Man In Oz
Mention uranium in Australia these days and two things happen. If the word is attached to a listed company the share price jumps. If applied to a politician, you seen a similar sort of jump. Take yesterday’s example as a case study. Polaris Metals was a business which had seemingly done little since listing in April last year. It started with a focus on the gold-rich “greenstone” belt around Southern Cross in Western Australia, and earned a bit of publicity with a hunt for iron ore in the nearby Bullfinch area. The reaction from investors was a rather rude yawn, until Tuesday when Polaris said it had struck a deal with an Aboriginal group over access to a uranium exploration project in the far north Kimberley region of WA. In the space of a few minutes, the stock jumped 28 per cent, from a lacklustre A15.5 cents to A20.5 cents.
It will be a long time before Polaris advances its Gardiner Range uranium prospect from a rock-kicking exercise to something more substantial, but at least the company is now on the radar screens of a market which has fallen in love with uranium. It’s the same with two more advanced players in the increasingly busy world of Australian uranium exploration, Summit Resources and Giralia Resources. Summit is, arguably, one of the leaders in this mini-stampede thanks to its large tenement position in the highly-rated ground near Mt Isa in Queensland. Included among its extensive holdings are the Valhalla and Skal projects which have a history tracing back to the last great Australian uranium boom of the 1950s and into early 1970s – before political correctness struck and the Australian uranium industry was sentenced to 30 years in the sin bin.
Investors with long memories might even be able to shake the cobwebs out and place both Valhalla and Skal as assets of the late (and briefly great) Queensland Mines. One reference, in a 25-year old text book, even lists Valhalla as having been discovered as far back as 1954, and containing “ore reserves” of 3,810 tonnes of uranium, plus an additional resource of 1,633 tonnes. On a “back of the envelope” basis, that historic data points to around A$500 million worth of uranium in the ground. Such calculations, as much fun as they are over a long lunch, are purely indicative, though they can also be seen as a pointer to the potential of Summit which is the current owner of large slice of ground which is unquestionably rich in uranium.
Armed with a A$7 million capital raising completed earlier this year, Summit is back on the trail of the uranium discoveries which excited an earlier generation of investors. It has at least seven “hot” targets considered worthy of drilling, and describes itself as being the “controller” of more than 75 million pounds of “measured, indicated and inferred uranium oxide”. Some of this material (Valhalla and Skal) fall into the Isa Uranium Joint Venture (a 50/50 affair with Resolute ) and other areas, such as the Andersons, Bikini, Pile, Western and Mixabe prospects, are wholly-owned by Summit.
Summit’s latest estimate for Valhalla stands at 36.5 million pounds of uranium plus an inferred resource of 55 million pounds. A 5000-metre drilling program is underway to expand the knowledge base of this asset. At Skal, about 10km west of Valhalla, there is a drilled indicated resource of 7.6 million pounds of uranium plus an inferred resource of 10 million pounds. A 3000-metre drilling program is scheduled.
Giralia is less advanced than Summit. It does not have the benefit of a historic uranium province under its control, but it is a business developing a very clear focus on uranium, as indicated in recent announcements. In early July, Giralia said it was “farming out” a large package of copper/gold tenements to Pacific Magnesium in a complex deal which will leave Giralia shareholders with an 11 per cent in Pacific Magnesium. Another corporate move is the formation of an iron ore focused division called Red Hill Iron. But, most interest for the investing class came in last week’s announcement that Giralia has the clear intention of building its uranium portfolio, including the acquisition of three new prospective properties in WA, including one from which has been recovered a high-grade surface sample assaying a stunning 37 per cent uranium – pity the geologist who handled that little bit of dirt.
The latest deal means Giralia has a string of nine uranium properties largely under its direct control, and two highly-rated uranium joint ventures. The existing tenements are Dawson Well, Paddy Well, Ardmore, Westmoreland Extended, Wabli Creek and Olary Creek. Early drilling at Dawson Well and Paddy Well in WA has revealed “ore-grade” mineralisation, while the JVs at Lake Frome and Angelo could see Giralia become a uranium producer quicker than most outsiders imagine, largely because the Lake Frome property in South Australia is in JV with Heathgate Resources, one of only three companies with a uranium export licence in Australia, and the operator of the 1000 tonne-a-year Beverly in-situ uranium leaching project.
And that leads to the obvious questions of why so few licences, and will there be more issued? The answer to the first question is to look back 30 years to a time when uranium was “wrong” and coal was “right”. Today, a classic flip-flop is underway – but it is in slow motion and Australia is probably not yet halfway through the flip phase, let alone starting to flop. The situation can be explained like this. In the field, there is a land grab underway with the obvious place to start being in the records section of the Mines Department which are run by State Governments. After that comes the political debate which still calls for a shifting of the ground at a State and Federal level. Talking has started, coal is now the “naughty” fuel source, but it may still be years before the hard-line socialist leaning State Governments which issue mining licences warm to the uranium story, even if the right-wing Federal Government, which issues export licences, is thawing a little.
Meanwhile, on the market, speculators are following the chaps grabbing land in the outback. That 28 per cent jump by Polaris tells part of the story, as does Summit’s rise from a 12-month low of A4.6 cents last August to recent sales at A67 cents (to produce an amusing little 1,356 per cent price rise, nice!), and Giralia’s rise from A11 cents a year ago to recent trades around A30 cents for “just” the 172 per cent gain – underlining the point that uranium in Australia today really is a case of get it while it’s hot.
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