aoth - wyoming, uranium and other, page-6

That's an awesome find, flyboy.

Likewise, rallypoint.

What is happening right now in the Powder River Basin is unadulterated confirmation of what makes PEN such an attractive investment proposition.

Firstly, as Dennis Higgs and the interviewer alluded to, within the Powder River Basin itself there is enormous scope for M&A activity.

Now, Cameco is of course the world's largest uranium producer. And as the acquisition of Hathor demonstrates, they are unspeakably well aware of future uranium supply deficits. Not to mention time constraints in obtaining permits (and the like) and cost effective nature of ISR mining. So one might proffer that they remain hungry for more.

Whether or not this ever comes to pass, is, for a company of PEN's rising stature, a moot point. While at some future time it may add some upward dynamism to PEN's SP, it would be much more profitable for us all if we developed these projects of our own volition. Solo and unhinged.

Having done a bit of research on Uranerz previously, nothing in that interview surprised me. Uranerz's plan was to always fund the Hank Nichols project internally: $35 million to put the latter into production, $40 million in the treasury. As we now know, URZ would like to keep at least $10 million in the kitty (for working capital purposes, and who could blame them? It's good business practice). The amount they would have to borrow is therefore negligible (with cash flows and revenues commencing from 2H12).

What does this have to do with PEN? Personally, I think they are very similar companies with similar philosophies.

No debt, lots of working capital, outstanding management, same region, same mining method, same satellite operations, similar stage of planned production, similar MC.

PEN's initial CAPEX should be around $53 million (give or take, and using RCR's Sep 1, 2011 figures). Cash in the bank is around $26 million. If we get Nucore on board, that's another $15 million. Total cash is therefore $41 million. That leaves a deficit of about $12 million.

If the worst came to the worst and we could not raise the finance (less than a 1% chance), PEN would only need to raise $12 million (as of today) to see it through to initial production. Obviously, PEN would need to raise more than $12 million to allow themselves enough wiggle room for working capital purposes, at least until commencement of cash flows and revenues (slated for 2H12 by my calculations).

And if the worst did come to the worst, there's a $100 million facility sitting there by virtue of having a cornerstone investor in Pala. The way things stand, I'd say PEN might need $25 million to $30 million to comfortably see it through to planned production.

Given that we're at, in my opinion, the beginning of changing winds in the uranium sector, as more and more nations find it impossible to fund alternative forms of cost-prohibitive/unreliable energy.

Whilst, concurrently, there exists a growing realisation (prior to becoming a full-blown paradigm shift) amongst anti-nuclear proponents - people and governments - that nuclear is not the anathema it is painted to be.

In light of the continued exponential growth in Asian population numbers; much less in that of the Asian bourgeoisie. Twenty-four hour printing press cycle and political paralysis leading to stubbornly high rates of unemployment and stagflation throughout the United States and Europe.

It is nigh on impossible to think that nuclear energy does not, and will not, have a necessary and indeed exemplary future. And I'm betting financiers all over the world believe that too.