A great article to show the potential of BLR and that the BOYER deposit DOES show high grade zones running 1200 PPM so for those who continue to banter and talk this stock down, you may just miss out on the big move in BLR this year.....im picking BLR will be re rated once the scoping studies are revealed and also the best type of mining strategy exposed o the investment community.....Price of Uranium will not stay down for too long and I expect an average price of $95/lb for 2008....purely based on the supply demand ratio........Enjoy reading the article below as it gives a few clues as to how significant BLR,S results are to date..........cheers Jam
The Uranium Sector in Perspective Everyone seems to have forgotten the uranium sector for the time being. Maybe there is a belief that the speculative bubble has burst and the easy money has gone. Certainly the hot money has gone – that money which chases the sizzle rather than the sausage – but the smart money should be out there picking up fundamental value. The uranium price, at greater than US$90/lb, offers stunning levels of profitability for those able to deliver yellowcake to the market. Rewards will go to those who recognise this and take positions. Go for the front-runners who have resources and a reasonable chance of production within 2-4 years. USA is a Preferred Country The USA uranium production industry is only a shadow of its former self. Many mines have shut down in times of lower prices but there are plenty of orebodies in States such as Colorado, Nevada, New Mexico and Wyoming. Good geological records exist that have enabled rapid calculation of JORC resources. There are quite a few projects in the hands of Australian companies that offer potential for production levels of 200- 600 tpa of U3O8, at cash costs of US$25-$35/lb. Three companies that come to mind are Black Range, Peninsular, Uranium King (currently merging with Monaro Mining) and Wild Horse Energy. Permitting on mines may be a bit slower in the USA than in some of the more exotic countries around the world, with a two year time frame generally accepted as the standard for a mine. Permitting for a mill or an ISL mine is thought to be more complicated and time consuming, but there is no logical reason for this. The USA probably still suffers from the same paranoia and the misinformation that has paralysed the uranium sector in most of Australia. Political Processes Will Intervene The world is facing a critical energy shortage. Blind Freddy can see that nuclear power is the answer to the power shortage and the future of clean energy and global warming. The strategically critical value of uranium has already been identified by Russians as they seek to build on their power in the energy sector based on oil and gas. The Chinese are scouring the world for uranium resources. The USA is going to be forced to go head-to-head if it is not going to be at the mercy of imports, just as it is with oil. It will be forced to reduce the number of bureaucratic obstacles to the development of mines and processing plants. Black Range Is Well Positioned BLR has done well over the past year, growing from a small uranium position with uncertain economics to be in a position where we can reasonably predict that it will be able to earn very strong profits. When we first looked at it we thought it was overpriced in the market. At its high of 34¢ it had a market capitalisation of about $250m. At the current price of 13.5¢, the capitalisation is $81m (but $90m on dilution for options). Is it good value though? Taylor Ranch Uranium Project - Upgrade On 29/11/07, BLR announced a global resource of 36,000 t U3O8 at a grade of 270 ppm. Given the nature of the orebodies, flat-lying sandstone structures often at depths of 200m, this is of academic interest only. However, there are obvious high grade zones running 1,200 ppm containing approximately 10,000 t U3O8. This represents a serious 131% increase in the high grade section. Much of this comes from the Boyer deposit to the SE of the original orebodies at Taylor Ranch. This now accounts for approximately half of the high grade material (inferred). There is still a considerable amount of drilling to be done as the drill spacing at Boyer is wide at 100 to 250m spacing, whilst at Taylor and Noah it is 30m and 100m respectively, but there seems to be good continuity so far.
BLR started drilling in April 2007, and has had four rigs operating since then to complete 65 holes for 25,000m. Project Economic Look Good Although a scoping study wont be ready for 2-3 months, it doesn’t take a rocket scientist to work out some order of magnitude numbers. We have been helped by the extrapolation of the numbers from the Rio Puerco mine belonging to Uranium King, which as a fully developed, room and pillar underground mine awaiting recommissioning in New Mexico. BLR believes it is looking at a room and pillar mine that will be accessed via either a shaft or a decline. Back in the late 1970s, Kerr McGhee spent US$17m developing a 500,000 tpa mine at Rio Puerco. It would be reasonable to assume that a similar size mine would cost BLR twice this amount i.e. $35m. There may be the opportunity for BLR to truck the ore 30 km to the 500,000 tpa acid leach plant owned by Cotter Corporation, which was operating up until 20 months ago, at which time it closed down due to the need for modification to handle high vanadium values in the uranium ore. If it could use this mill, on a toll payment basis, it may be the key to fast tracking production i.e. inside of three years. If it trucked high grade ore of 1,200 ppm, and achieved recoveries of 90%, it could produce a tad over 500 tpa U3O8. A reasonable cash operating figure of US$35/lb is possible provided the owners of the mill play ball. At US$90/lb, it could be generating a cash profit margin of 157% or US$55/lb. Annual cash generation could be $70m p.a. or 11.6¢ a share (pre-dilution for options or financing). This is certainly very impressive. The Bottom Line There is obviously more work required to firmup numbers, but we know enough now to say that the numbers are cheap. There is nothing that suggests that additional information will do anything other than improve the scenario. A balanced uranium portfolio should really have some BLR share in it, and shareholders should be prepared to sit and watch the company grow from here. The cash position is approximately $14m. Far East Capital was sufficiently impressed with the prospects for the company that it acquired a modest holding in anticipation of a re-rating.
BLR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held