URANIUM URANIUM STAR CONFIRMED Namibia's uranium bull market Extract Resources, a global top stock performer, among all stocks, is finding that grades improve as it drills deeper at the (already) world class Rössing South project.
Author: Barry Sergeant Posted: Friday , 27 Mar 2009
Extract Resources put it this way on Friday when announcing its latest assay results: "Rössing South is the highest grade granite hosted uranium deposit in Namibia and potentially one of the largest uranium deposits in the world".
In Australia, certainly, the long lamented bull market in listed uranium stocks seems to be back - certainly, again, for those names on the right pieces of ground in Namibia. Extract's stock price has exploded over the past few months, not least on news that major miner Rio Tinto (and world No 2 uranium miner) has raised its stake in Extract to 15.6%.
The Extract stock price is currently nearly 500% higher than its recent lows, seen in November 2008. Kalahari Minerals, which holds 38.85% of Extract Resources, has seen its stock price rise by 269%; the two names rank as among the best-performing in the world, across all equity subsectors. Rio Tinto has also acquired a 15% stake in Kalahari Minerals.
The latest news from Extract on Rössing South, which lies immediately south of Rio Tinto's Rössing mine, can only be classified as confirming a world class deposit. In January Extract announced an initial resource of 108m pounds of uranium oxide at a grade of 430 parts per million at zone I of its Rössing South project. The very latest numbers include 53 meters at 794ppm U3O8, 65m at 1,056ppm and 20m at 3,351ppm, from 90 meters to 247 meters depth.
Rio Tinto owns 69% of the Rössing mine, known to uranium specialists as the "grand old lady" of the Namibian uranium industry, with a claim of 140mlb historical production over 30 years. Rio Tinto also holds a majority stake in ERA, and ranks overall as No 2 uranium miner in the world, after, of course, Cameco.
More broadly, the latest upbeat news from Extract once again highlights uranium names busy in Namibia. Paladin delivered first production from its key asset - Namibia's Langer Heinrich - in 2007 on time and on budget, and continues with the process of ramping production to what could amount to 6m pounds of uranium a year, at a cash cost of $25/lb by the second half of 2010. Uranium spot prices are currently around $42.50/lb; term prices sit around $60/lb.
Paladin's Kayelekera, a second low risk open pit operation, located in Malawi, is expected to begin producing during the first half of 2010, ramping to a run rate of 3.3m pounds a year by 2011. Paladin is seen by a number of specialist investors as offering among the most viable growth profiles in the industry, one of the best cost structures (with all-in costs second only to the ISL (in situ leaching) projects of Kazakhstan), and is an easily traded stock in both Canada and Australia.
Mantra Resources, which ranks among the top performing uranium developers, holds a 36m pound uranium resource at 360ppm in southern Tanzania, across the border from Kayelekera; the Mkuju River project is headed for mining. Attention has increasingly been drawn to Mantra by the endorsement and 20% shareholding of Highland Park - an investment vehicle representing the ex LionOre team which picked the top of the nickel market to sell LionOre to Norilsk for $5.5bn in 2007.
Back in Namibia, possible consolidation in the uranium fields looms ever larger.
Uranium-related activity and development in Namibia gained a relatively high profile in August 2007, when Areva paid $2.5bn for Uramin, formed just two years previously to acquire and develop mineral properties, predominantly uranium, in Namibia, the Central African Republic and South Africa. Further names now present in Namibia include Bannerman, Deep Yellow (in which Paladin owns 19.3%), Xemplar, and Forsys, which may be acquired by George Forrest International Afrique S.P.R.L. for C$579m.
Selected uranium stocks
Producers Stock From From Value
price high* low* USD bn
Cameco CAD 22.47 -49.4% 56.8% 7.163
ERA AUD 20.59 -17.5% 120.2% 2.743
Paladin AUD 3.57 -46.9% 119.0% 1.555
Uranium One CAD 2.79 -46.1% 365.0% 1.064
Denison CAD 0.94 -89.7% 36.2% 0.173
Producer averages/total
-41.6% 116.2% 12.698
Weighted averages
-47.2% 84.6%
Developers & other
First Uranium CAD 6.74 -15.0% 560.8% 0.937
UEX CAD 0.87 -82.9% 93.3% 0.130
Uranium Part. CAD 6.52 -37.9% 44.9% 0.383
Summit Resources AUD 1.71 -42.8% 28.2% 0.251
Mega Uranium CAD 1.60 -41.2% 310.3% 0.243
Alliance Resources AUD 0.53 -68.4% 86.0% 0.101
Bannerman AUD 0.89 -65.6% 295.6% 0.097
Forsys CAD 4.88 -36.1% 144.0% 0.307
Aurora Energy CAD 2.59 -58.2% 212.0% 0.154
Laramide CAD 1.40 -67.1% 145.6% 0.077
Mantra Resources AUD 1.90 -52.5% 239.3% 0.107
Energy Metals AUD 0.48 -69.4% 53.2% 0.039
Deep Yellow AUD 0.15 -61.8% 48.0% 0.114
Extract Resources AUD 4.45 0.0% 493.3% 0.691
Strateco Resources CAD 1.13 -49.3% 182.5% 0.109
Strathmore Minerals CAD 0.38 -79.9% 134.4% 0.022
UR-Energy CAD 0.68 -71.9% 100.0% 0.052
Thor Mining AUD 0.03 -83.3% 130.8% 0.004
Uranium Resources USD 0.59 -92.2% 63.9% 0.033
Uranerz CAD 0.77 -78.3% 51.0% 0.035
Hathor Exploration CAD 2.26 -48.6% 119.4% 0.158
West Australian Metals AUD 0.08 -77.4% 52.9% 0.018
North Atlantic Resources CAD 0.10 -78.7% 400.0% 0.002
Alberta Star CAD 0.13 -71.1% 44.4% 0.050
East Asia Minerals CAD 0.50 -73.0% 316.7% 0.018
Black Range Minerals AUD 0.04 -60.2% 254.5% 0.026
Fronteer CAD 3.25 -46.7% 109.7% 0.002
Portal Resources CAD 0.06 -79.6% 120.0% 0.005
Eso Uranium CAD 0.04 -86.5% 75.0% 0.001
Bearclaw Capital CAD 0.03 -90.0% 20.0% 0.001
Forte Energy AUD 0.08 -50.3% 115.8% 0.025
Western metals AUD 0.04 -65.0% 100.0% 0.018
Mindax AUD 0.37 -28.4% 87.2% 0.033
North American Gem CAD 0.09 -86.2% 80.0% 0.008
Developer averages/total -69.4% 126.0% 5.265
Weighted averages
-55.2% 164.6%
Overall averages/total
-68.0% 125.5% 17.963
Overall weighted averages -49.8% 102.5%
Diversifieds with uranium
Areva EUR 319.87 -61.0% 5.4% 15.361
Rio Tinto GBP 23.82 -66.8% 139.4% 49.540
BHP Billiton GBP 14.61 -33.7% 99.7% 126.219
AngloGold Ashanti USD 38.09 -2.7% 184.9% 13.477
Equinox CAD 1.91 -64.0% 151.3% 0.926
* 12-month
Source: market data; table compiled by Barry Sergeant
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