Some excitement as Berkeley Resources takes on Ian Stalker, an industry legend.
Author: Barry Sergeant Posted: Thursday , 19 Nov 2009
JOHANNESBURG - Over the past year, along with platinum miners and oil producers, listed uranium entities of all kinds - explorers, developers and miners - have delivered up among the most miserable of global resources stock price returns. This is relative, of course; returns are now positive for all mining and resources subsectors, but the range between top and bottom dogs is noticeable.
In the uranium space, there has been some excitement over certain stocks, not least Australia-listed Extract Resources, with its Rössing South discovery in Namibia, and, this week, the announced move of Ian Stalker from London-listed Niger Uranium to bourse companion Berkeley Resources. The two stories are linked in some ways, as will become apparent in due course.
Among miners, it's only Canada's Cameco, the world's biggest uranium producer, that has really been able to sustain any kind of convincing stock price return. But good performances are also notable from Summit Resources (uranium, vanadium, iron ore and phosphate resources in Australia), Impact Minerals, with tenement holdings in Australia and Africa, a portfolio of six projects with the potential for economic deposits of nickel and significant deposits of gold and uranium.
And there are also Canada's Fronteer (various interests include 100% of Aurora Energy), and Mindax, with a portfolio of iron, uranium, gold and copper projects in Western Australia's Yilgarn Craton.
Much of the irritation for investors in uranium stocks can be traced to the performance of the uranium oxide price, which has dynamics quite different to any other commodity. The price peaked at close to USD 140/lb in mid-2007 on the prongs of a three-headed mania: the end of Russian dumping, roaring apparent increases in demand from an energy-hungry world, and lots of liquidity via hedge funds and participation certificates, plus, factor four, the difficulty of valuing uranium stocks.
Over the past 12 months, the price has traded briefly above USD 50/lb, and as low as USD 40/lb; current prices are around USD 45/lb, according to UX Consulting. The vast majority of other commodity prices have been on the upward move since late 2008, after the collapse that set in during mid-2008, a year after uranium prices headed south.
With prices providing little comfort or energy, uranium watchers have this year been more focused on ripsnorter finds, taking the story back to Extract Resources. According to the company's own advertisements, this is all about one mother of a discovery. In disclosures to the world, Extract Resources chairman, Steve Galloway, puts it this way: "Exceptional chemical assay results reinforce the view that Rössing South is one of the most significant uranium discoveries ever made". The market value of Extract Resources has been as high as USD 2.6bn, but the stock price has recently shed more than a quarter of its value.
Uranium is a big story in Namibia. Major miner Rio Tinto, which has long operated the original Rössing mine, has taken a stake in Extract, and also Kalahari Minerals, which holds 38.85% of Extract. Good stock price gains have also come from NWT Uranium, which holds 34.06% of Niger Uranium, which in turn owns 15.06% of Kalahari Minerals. Polo Resources has also taken a stake in Extract.
Namibia is mining friendly. Paladin commissioned 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 USD 25/lb, by the second half of 2010.
Further names active in Namibia include Australia- and Namibia-listed Deep Yellow, which has delivered one set of solid drilling results after another; Forsys, proceeding to the mining stage at Valencia; Bannerman, with Etango, Xemplar, West Australian Metals, Pitchstone Exploration, and Toro Energy.
Paladin owns 20% of Deep Yellow and 20% of NGM Resources, which holds agreements covering uranium exploration projects in Niger, and metal exploration projects in Madagascar. Mantra Resources holds a uranium resource in southern Tanzania, across the border from recently opened Kayelekera mine in Malawi, owned and operated by Paladin.
Extract has lost a quarter of its value in the past two months, as "ripsnorter" investors have quit the party. Uranium specialists recall how it was that back in December 2007, Xemplar was the talk of the town, with a lofty CAD 700m market value, compared to Extract's AUD 200m, at the time. With a little help from "Mr. Uranium" - Steve Dattels - who effectively took control of Extract and Kalahari, Extract is now valued at USD 1.9bn and Xemplar at little more than USD 20m.
Namibia's more recent potential was startlingly highlighted by the August 2007 purchase by French transnational Areva for USD 2.5bn of Uramin. Trekkopje will be a big mine. Which all takes the story around to Ian Stalker. He worked in senior executive roles at ZCCM, Ashanti Goldmines, Caledonia Mining, Gold Fields, and was CEO of Uramin from late 2005 until it was acquired by Areva. Stalker turned skill and luck to account when he cashed out of Uramin and will no doubt be regarding Berkeley as an opportunity to build a serious uranium company.
Berkeley has 26m pounds of 450 parts per million uranium oxide at its Spanish projects; analysts familiar with the company reckon this resource will potentially triple in 2010 as Berkeley moves onto the Toronto Stock Exchange, and into production at around 2m pounds a year by 2012.
Berkeley's Salamanca project would be the restart of an old mine, one shut down in 2000 by Spanish state company ENUSA following sustained low uranium prices. Relative to other projects with a similar deposit base, Salamanca rates as very low cost on capital expenditure, with operating expenditure likely to be around USD 30/lb. Dattels is a shareholder in Berkeley.
Selected uranium stocks
Source: market data; table compiled by Barry Sergeant
Click on the link below for the table. Could not get it to format on post. Steve.
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
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