cgnpc and rio, page-25

Ubull,

For a day trader, you might be right, throw money at things and expect instantanous results just like the current GenX, GenY & GenZ or whatever we call them now - instant gratification, no patience, gimme gimme now now;

Contrary to that view, I belive that for an investor who's has done his homework, and understands the market fundamentals, then your proposal that $8.65 is the "best case" scenario makes no sense at all.

Points to consider:
1) Global supply forecasts indicate a shortage in coming years

2) While some European Govts (and/or opposition parties in the case of France) are attemping to walkaway from nuclear power, the economic reality is that such moves are unlikely to take place, in full at any time in the foreseeable future

3) The bulk of increase in globale energy demand is now coming from Asia and that balance (or inbalance) is highly unlikley to be tipped any time soon

4) Megatons to megawatts is coming to a conclusion, although there is an extension option, there will still be a shortfall

5) recent takeover metrics suggests $4.27/lb in the ground is a joke, and insult and most of all a bloody bargain which no real player in the game will let slide to the chinese. Consider the following resource acquisition costs:
(a) Hathor cost to RIO approx $11.15/lb
(b) Mantra cost to ARMZ approx $9.90/lb
(c) BMN cost $0.88/lb
(d) Husab cost to CGNPC approx $4.45/lb if this proposal goes through.

6) Further consider the development cost for each of these assets in "$/lb in the ground" terms to compare the ACTUAL cost of getting the uranium to the market (ie resource acquisition + capex), and to refer to post by “Drag100” on another forum on 2nd December, and in reference to some recent reporting contained on post # 7474895 from 29 Nov 11 on the PDN thread:

DIRECT QUOTE FROM DRAG’S POST:
“IMO this report is misleading as it under quotes capex figures for Hathor, Mantra and BMN but not for EXT. It also fails by not comparing apples with apples. The EXT cap costs are based on DFS results whilst other companies' capex costs are from preliminary scoping/feasibility studies. Well we all know what a difference this makes (i.e.multiply at least by a factor of 2). The following are quoted cap costs vs. actual costs (as shown in companies' feasibility studies) for above companies:
•?Hathor – Quoted by report = $458, Actual = $567. Please note that most analysts have stated that the cap costs presented by Hathor management have been GROSSLY underestimated and using Denison Mines Phoenix deposit DFS results it is reasonable to expect the costs of constructing mine access alone to be >$700M + the cost of a mill + cost of tailings management
•?Mantra – Quoted by report = $298M, Actual = $430M. Uranium One has recently hinted that both capital and operating costs will be significantly higher. DFS to be completed in 2012.
•?BMN – Quoted by report = $562; Actual = $638. BMN will complete the DFS in 2012.

Using correct figures (although still not comparing apples with apples) we then get the following valuations:
•?Hathor = acquisition costs $11.5/lbs + capital costs $6.5/lb = $18/lb
•?Mantra = acquisition costs $9.9/lbs (1.02B/101Mlbs) + capital costs $4.26/lb = $14.2/lb
•?BMN = acquisition costs $0.88/lb + capital costs $3.0/lb = $3.88/lb
•?EXT = acquisition costs $4.45/lb + capital costs $3.3/lb ($1,700M/512Mlbs) = $7.75/lb (assuming T/O price of $9/share)

Interestingly, Uranium One has recently completed extensive drilling program at Mkuju River deposit and their resources increased from 101Mlbs to 119Mlbs only. Their measured and indicated resources currently stand at 93Mlbs vs. 358Mlbs for EXT.
UNQUOTE from Drag100’s post

To re-iterate, we have:
(a) Hathor: $18.00/lb
(b) Mantra: $14.20/lb
(c) BMN: $3.88/lb
(d) Husab: $7.75/lb (NB in fact this will be less at the $8.65 offer).

So all it would take is for Cameco (or anyone else) to fly in and offer 300p for KAH, and therefore about $10.17 for EXT which equates to $5.27/lb for the resource and $8.57 for acquisition + development costs.

If Cameco do that, they get a bloody huge resource, in a development ready state for about $4.5B; and yes that’s a lot more than the Hathor exercise, but you know what, it has a bankable definitive feasibility study and a mining licence sitting under it.

So UBull, I ask as a genuine investor willing to listen to all well researched and articulated posts, why is $8.65 the “BEST CASE” scenario for EXT. Anyone who got into this early enough will be well ahead, I know of many investors sitting on 10 baggers plus with more to come.

I also note you hold no stock, and of course you and anyone else is entitled to & welcomed to post here despite that and it is the contrarians who help keep our feet on the ground, your sentiment reads "none" yet your post screams "sell"