energy boost for uranium juniors

Energy boost for uranium juniors.

| July 17, 2009.
Article from: The Australian.

THE junior end of the uranium sector has sprung to life on renewed interest in yellowcake.

Investors hope they can cash in on the spotlight after Australia's third uranium mine in 20 years was approved this week.

Shares in Uranium Exploration of Australia jumped 65 per cent yesterday to 16.5c on news of early field sampling at its Northern Territory project, which identified a "very significant discovery".

It is still early exploration days for the Adelaide-based minnow, but investors are turning a keen eye to uranium stocks following Environment Minister Peter Garrett's approval of the Four Mile mine this week.

UXA chairman Neill Arthur said yesterday the demand for uranium would continue, and the price would gain strength from limited supply.

"For the past 20-odd years, about a third of the world's consumption of uranium was re-processed Russian warheads, and that agreement comes to an end in the next couple of years, so a third of the current supply for current nuclear power stations disappears," he said.

"There have been a lot of new projects mooted around the world to supply that gap, and they've been delayed or cancelled. There are all kinds of downside on previously forecast new supplies, which means the uranium price will keep going up.

"That's why there's a big focus on new discoveries, particularly in Australia."

Mr Arthur said the company would now focus on geophysics and other tests, leading to a drilling program later in the year.

"We'll give it high priority, because if it's high-grade at surface and extends at depth, it could be an early project into production if we can prove up sufficient resources," he said.

"It's very encouraging at this point."

Nuclear power plants are emerging as a leading alternative energy source, with 64 tipped to be commissioned worldwide in the next six years. China is said to be planning to build at least 20 in the next decade.

"In North America, Europe, China and Japan, there has always been a strong focus on nuclear because it's a very clean way to generate power, without substantial greenhouse gases. And it's part of the mix that's necessary for energy security for any country," Mr Arthur said.

"Australia already has nearly 40 per cent of the world's proven reserves. It would be silly to have 40 per cent of the world's reserves and not be doing anything with it. Finally the federal government is coming up to the mark on that."

The approval of Alliance Resources' Four Mile deposit on Tuesday was the third uranium mine approved in 20 years and has refocused attention on explorers and potential new finds.

Australia has three operating mines: Rio Tinto's Ranger mine in the Northern Territory, BHP's Olympic Dam and the smaller Beverley mine, both in South Australia. Honeymoon, also in South Australia, is targeting production for later this year, and BHP has signalled plans to develop the $17 billion Yeelirrie deposit in Western Australia.

Legal barriers to mine uranium do not apply in South Australia or the Northern Territory, and Western Australia lifted its ban on uranium mining when the state Liberal government came to power last year.

Artemis Resources increased its interest in Western Australia yesterday, with the junior announcing it had acquired an option to purchase shares in Wombat Resources.

http://www.theaustralian.news.com.au/business/story/0,28124,25792676-5005200,00.html