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Risky times in the uranium sector


THE DIRT: Robin Bromby | May 12, 2009
Article from: The Australian

Look at those profits, and look at the risk factors.

Had you been heeding comments that the uranium sector was on the come-back trail and started buying (the right) stocks a month or two ago, then you would be looking at some impressive capital gains.

Just how impressive is outlined in the latest uranium sector report out of BGF Equities.

The report takes the share prices of the producers and potential producers as of April 1 and then again last Friday, May 8.

These are the big gainers: White Canyon Uranium (159 per cent), Marathon Resources (143 per cent), African Energy Resources (117 per cent), Deep Yellow (89 per cent), Toro Energy (88 per cent), WildHorse Energy (88 per cent).

Others showed more moderate but reasonable gains in the five weeks - except for a couple of stragglers. Energy Metals and Extract Resources, both of which have their moments in the sun in the past, managed only a 2 per cent gain, while the biggest loser was Summit Resources, its share price down 7 per cent over the period.

The reason for Summit’s languishing performance is highlighted in another table in the BGF report. That is, the political factor.

NSW has the most repressive policy when it comes to uranium in that the most populous state won’t allow even exploration for the metal. Queensland will permit that, but not mining. So you have a situation where Summit is sitting on a large, established resource but can’t do anything about it.

This is how BGF ranks the political risk of jurisdictions in which Australian companies are operating.

Low: Botswana A-Cap Resources, South Australia Alliance Resources, Curnamona Energy, PepinNini Minerals, Namibia Deep Yellow, Paladin Energy
Extract Resources, Northern Territory Energy Resources of Australia, and Energy Metals

Becoming moderate: Western Australia Energy & Minerals , Toro Energy

Moderate: Spain Berkeley Resources, Zambia African Energy, Tanzania Mantra Resources, Uranex, Wyoming Peninsula Minerals, and Utah White Canyon Uranium

High: Colorado Black Range Minerals, Hungary WildHorse Energy

The writer implies no investment recommendation and this report contains material that is speculative in nature. Investors should seek professional investment advice.

http://www.theaustralian.news.com.au/business/story/0,28124,25466603-36418,00.html