should australia sell uranium to china? , page-22

Uranium stocks up on China hopes
By AAP and Nicki Bourlioufas
28mar06

SHARES in uranium and resource stocks powered ahead as Prime Minister John Howard signalled a deal to sell yellowcake to China could be close, with BHP Billiton leading the way.

Chinese Premier Wen Jiabao arrives in Australia for a four day visit at the weekend and Mr Howard said a deal that may open the way for uranium sales to China could be signed during the visit.

"It's possible that the discussions could be satisfactorily concluded so that something could be said or signed when the Chinese premier visits Australia next week," Mr Howard said.

The already hot uranium sector got a boost last night when a Chinese Government spokesman told a press briefing the draft texts of the safeguard agreements had been completed and were likely to be signed.

Shaw Stockbroking mining analyst John Colnan said the market was ignoring the opposition of most Labor state governments to the opening of new uranium mines.






Mr Colnan said BHP Billiton's massive Olympic Dam mine in South Australia, which holds the world' largest uranium deposit, was the pick of the yellowcake producers.

"The rest of it is just reminiscent of dotcom days," he said.

At 1255 AEDT BHP Billiton (bhp.ASX:Quote,News) was up 19 cents to $26.97 after earlier hitting a record of $27.02.

Shares in newly listed Toro Energy continued their stunning rise today, climbing another 7.5 cents to $1.385 by 1220 AEDT.

Toro shares were issued at 25 cents per share in a heavily oversubscribed offer and shot up an amazing 222 per cent on their first day on the market last Friday.

Toro Energy is a uranium explorer formed through the amalgamation of the uranium interests of Oxiana Ltd and Minotaur Exploration Ltd in South Australia.

Today's biggest mover was West Australian uranium explorer Encounter Resources, which shot up 39 cents or 82 per cent to 86.5 cents.

Others making big gains at 1226 AEDT were Deep Yellow, rising 3.5 cents to 15 cents, Pepinnini Minerals up 6.5 cents to 39.5 cents and Globe Uranium climbing 8.5 cents to 66.5 cents.

Aequs Securities dealer Ric Klusman said investors were betting that the Government would sign a deal with China.

Mr Klusman said that with China outlining plans to generate four per cent of its power from nuclear power plants by 2020, investors could see demand for Australia's uranium skyrocketing.

"Uranium is the new gold," he said.

Most of the buying of uranium stocks at this stage was from smaller speculative investors, he said. If the run continued, bigger investment houses would start to take notice, he said.

"If the capitalisations of these thing start to hold up you will start to see some interest from the institutional investors because they will have to have some exposure to it," he said.