Summit poised to cash in on uranium deal 06 April 2006 By ADRIAN...

Summit poised to cash in on uranium deal
06 April 2006
By ADRIAN BATHGATE

NZX-listed uranium explorer Summit Resources is poised to cash in on Australia's deal to supply China with uranium.


Summit Resources has large uranium deposits near Mt Isa in Queensland, but is relying on a shift in the political wind in Queensland before it can cash in on the Chinese deal.

That has not stopped a surge in Summit Resources' share price to more than $1.60, capping a 725 per cent rise since the start of last year.

Managing director Alan Eggers said while the deal was great news, Summit Resources still faced the problem of an Australian policy prohibiting the development of new uranium mines.

"We're just waiting for the Labour Government to reassess its ban on new mines."

A situation he is confident will happen in the next year.

If that happened, "we would immediately complete a feasibility study with a view to building a processing plant and opening a number of uranium mines".

AdvertisementAdvertisementABN Amro mining analyst Rob Clifford agreed a change in policy was likely but was less sure it would happen as quickly as Mr Eggers would like.

Summit Resources has drilled into eight separate uranium deposits and has another 15 "prospects" in its Mt Isa project.

Summit Resources has confirmed there is about 76 million pounds of uranium oxide in three of its drilled deposits, and Mr Eggers said the number would soon be revised upward once more drilling was completed.

On Monday, the Australian Government announced a deal to supply uranium to China for use in its nuclear power programme.

The news prompted a surge in the price of many Australian uranium stocks. This is coupled with uranium prices that have steadily increased to $US40 ($NZ66) a pound.

Only 14 months ago Summit Resources was mired in "penny-dreadful" territory at about 20 cents.

The rising uranium price saw it hit 80c last August, and $1 in October.

As anticipation grew about an Australia-China uranium deal, Summit went from less than $1 in mid-March to close on Tuesday at a high of $1.64.

Summit is listed on both the New Zealand and Australian stock exchanges.

Mr Eggers said there were about 70 companies either involved with mining or prospecting for uranium in Australia.

This includes industry giants such as BHP Billiton, which is set to sell tens of billions of dollars worth of uranium to China.

But he is confident Summit Resources will not be targeted by any of the cashed-up market heavyweights.

"I wouldn't want to speculate on that, but Summit has a substantial amount of assets, compared to some of the uranium hopefuls that are just exploring."

Mr Clifford said most of the recent rises were based on speculation, and it was unlikely the bigger players would move to take over a company without mining infrastructure.