'no uranium mining' in wa, page-18

uranium is hot, but don't get burnt Uranium is hot, but don't get burnt
By Barry Fitzgerald
April 3, 2006

DURING the dotcom bubble, mineral explorers simply had to state that they were "reviewing possible internet-related investments" to get some pep into their share price.

The current uranium boom is providing a similar opportunity, with daily statements from junior explorers about the possibility of them floating off new companies to hold ground that might just have the potential to host some of the radioactive stuff.

And who can blame them. Oxiana and Minotaur showed what could happen when they floated off their South Australian uranium exploration ground into Toro Energy. At the float price, Toro would have had a market capitalisation of $36 million.

That it had a market cap of $150 million on Friday tells you that these are interesting times for uranium-focused explorers. But junior explorers looking to extract some value from the uranium boom need to tread carefully. Overemphasising their uranium sex appeal can quickly cause market credibility issues.

It happened in the dotcom bubble. Those explorers that chased internet-related opportunities at the expense of their mineral exploration heritage were shunned by serious mining market investors when they did an about-face on the dotcom bubble bursting in 2002.

It is an issue Batavia Mining is dealing with right now. While it is happy for its uranium interests to become what they may, the company is keen for near-term gold/copper development opportunities to remain front and centre in the minds of investors.

Batavia boss Greg Durack hits the roadshow circuit this week, with copper and gold prices at record highs and investor enthusiasm for all things uranium continuing unabated.

Batavia has all three commodities in its portfolio — the first two as part of the Deflector gold/copper project at Gullewa in Western Australia's Murchison region and the uranium as part of an early-mover portfolio of Northern Territory tenements.

Batavia will no doubt be reviewing its options to maximise the benefit of its uranium exploration portfolio for shareholders and a spin-off would not surprise. Given the uranium-friendly NT addresses of the portfolio, it's fairly certain.

But Durack's main reason for the roadshow is to bring the market up to date on progress of the group's scoping study into the development of Deflector. The market expects the study to be released in a week or two.

Durack, a metallurgist and former Normandy executive, has been the main man in the past 14 months in turning around the prospects for Deflector, a project with a chequered history.

Key to the turnaround has been the development of a treatment flowsheet for all three ore-types at Deflector, a challenge that has confounded previous owners of the deposit.

The project has also come into its own from an exploration perspective, with successful deep-drilling programs resulting in a bigger than expected resource upgrade to 775,000 gold equivalent ounces late last year. The metallurgical progress and the resource upgrade prompted Batavia to accelerate the scoping study, which could confirm the viability of a project development costing only $15 million or so thanks to the existing plant and infrastructure at the Gullewa site. Annual production could be more than 40,000 ounces of gold and 2000 tonnes of copper, with first production possible in 2007.

Funding should not be a problem, with the company's interim requirements covered by an $8.9 million raising comprising a $1 million placement to an Asian gold fund and an options issue, involving the early exercise of the company's June 2006 options at 5¢ each. Both the placement and options issue are up for shareholder approval at a meeting in Perth today. Batavia shares closed at 7.5¢ each on Friday.