why miner's price surged

Why miner's price surged
By Chris Moriarty
August 14, 2005
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REPORTS started emerging last week about a little-known mining company called Marathon Resources. Little known to most people, but very well known to a few.

Marathon's share price has surged from as little as 16 cents in April to a huge 91 cents a few days ago. It is back down to 60 cents now.
Mining and resources are booming. We use resources to supply all our energy needs, and for all building materials other than wood.

Dozens of small exploration companies exist. Each raises a few million and goes in search of El Dorado. Most fail. If they succeed, investors make a fortune.

Professional investors accept losses as part of the game; spreading risk by putting money into lots of different explorers.

Last week, Marathon announced it might have found some uranium; the exact words were inferred resource.


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Inferred is official mining lingo. It means there is a lot of evidence coming together pointing to a resource being present.
In Marathon's case, that evidence is complex computer modelling based on data from a number of sources.

The land in South Australia was prospected years ago by a couple of big miners who left behind data plus several drill cores. They weren't looking for uranium.

Marathon's share price run is based on this information.

Its statement clearly said it had an inferred resource based on computer modelling and some old drill cores.

A positive outcome for Marathon is still far from guaranteed.

Next step is indicated resource. What Marathon has to do is go out there and do lots of drilling and prove that the resource actually exists. After that, the next step is measured resource. At this stage, Marathon would be able to say with certainty that the resource is there, and in what quantities.

The final step is to move from a resource to a reserve. This step depends more on the economy than what is in the ground.

A reserve is a resource that can be dug up at a profit.

Marathon's share price has gone up for two reasons.

First, uranium is the flavour of the month. High oil prices mean everyone thinks nuclear power is about to take off.

The word "uranium" sent some punters into a spin.

Second, professional investors view an inferred resource as being a lot better than having no resource at all.

Marathon has taken a step along the path to success.