Strategic strikes by uranium big guns Robin Bromby November 02, 2006 IT was another heady day for the uranium sector -- two foreign players taking strategic stakes in a new float and two juniors seeing heavy trading after exploration announcements.
Northern Uranium closed its $4 million initial public offering early and oversubscribed nothing new in that, but the real interest was that Canada's Mega Uranium and France's Areva had each taken a 6.25 per cent stake in the company.
It is a further sign that consolidation has a way to run in the already fractured uranium sector, where more than 80 listed companies have that metal as at least part of their portfolios.
Already Paladin Resources has taken over Valhalla Uranium and is rumoured to be eyeing Queensland's big uranium fish, Summit Resources.
Mega has shown a voracious appetite for Australian territory.
Earlier this year it swallowed South Australian uranium explorer Hindmarsh Resources and is now in the final stages of digesting West Australian play Redport.
It is also in joint venture wih Southern Gold in South Australian uranium leases.
French nuclear group Areva, known here as Cogema, has more reason than usual to get involved in future nuclear supplies after its 37 per cent owned Cigar Lake mine in Canada was closed after flooding.
Northern will list on November 15 after going to the market with leases that straddle the West Australian and Northern Territory border.
But investors were also looking for any news from companies that are already trading.
Aura Energy shares jumped 49 per cent yesterday, climbing 9.5c to 29c, on news that drilling had confirmed widespread uranium mineralisation at its project near Mt Magnet in Western Australia.
Its intersections included grades up to 0.04 per cent and most of the mineralisation was within 2m of surface.
But Far East Capital's Warwick Grigor said the share spurt was a further sign of "stupidity" in the market.
He said of the 31 holes drilled, only 20 per cent graded higher than 0.02 per cent.
"A more pertinent release would have said '70 per cent of the holes were very much below economic grades'," Mr Grigor said. "This release, and the reaction of the market, is typical of the naivety we are seeing."
There was also heavy trading in Dioro Exploration shares after it said it had identified uranium anomalies near Newman, Western Australia.
Dioro rose 0.4c to 7.3c.
SMM Price at posting:
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