stampede for wildhorse

Stampede for WildHorse
4th November 2006, 8:00 WST

WildHorse Energy investors are sitting on nearly $70 million in paper profits after the heavily-backed uranium stock raced to a fivefold increase in a sparkling debut yesterday.

Winners include James Packer, noted WA resources investors Charles Morgan and Craig Burton, Macquarie Bank, Eddy Rigg’s boutique investment bank, Argonaut, and the State’s biggest owner of trotting pacers, Neven Botica.

Shares in WildHorse, which raised $10 million in an oversubscribed float to develop uranium projects in North America and Europe, joined this year’s growing list of successful uranium floats by closing at a day’s high of $1.08, up 68¢ on their issue price.

While their stock is held in escrow for up to two years, Mr Morgan, Mr Burton, Argonaut, Canadian-based Henry Neugebauer and WildHorse’s other founders are celebrating loudest.

The group collected a combined 20 million shares at just a tenth of a cent in the formation of the company. With WildHorse capitalised at about $84 million at yesterday’s close, their holding has been revalued to $21.6 million.

Macquarie, WildHorse’s biggest shareholder with 15 per cent, paid 20¢ a share for its 12 million shares, while other seed investors paid 10¢.

Mr Packer’s Consolidated Press Holdings bought into the public offer, investing $2 million for a stake which is now worth $5.4 million.

Geiger Fund, a specialist US uranium investor, Resource Capital Fund and former directors of Ranger Minerals, Guy Travis and John Christie, are among the other big stakeholders.

WildHorse’s successful debut follows on the heels of criticism by Paladin Resources founder John Borshoff this week that many of the uranium stocks hitting the market knew little about uranium and were interested in mining only the stock exchange.

But WildHorse managing director Richard Pearce said yesterday his company was not an explorer. It had uranium in the ground and was focused on pushing through to production quickly.

“But we still have a fair way to go in terms of making that into definable resources and I’m sure the market will appreciate we’re three to four years away from having something productive,’’ Mr Pearce said.

The float coincides with a price spike, with a growing demand for nuclear power and an already large gap between demand and supply pushing the uranium price to a record $US60 this week, aided by the closure of Cameco’s big Cigar Lake project in Canada.

But Hartleys resources analyst Andrew Muir said most uranium juniors were years away from gaining any upside from the higher prices. “If the price does drop within three to four years I dare say a lot of these companies will look for other commodities, whatever happens to be sexy at the time,“ he said.

However, Mr Pearce said he did not see the uranium price dropping off to historical levels until around 2012. “There is no question that there is a shortage of supply in the market for the next four to five years and obviously that is when we are targeting to be in operation,“ he said.

The runaway success of Wild-Horse is indicative of investor appetite for uranium.

Other successful floats this year, include U308, shares in which have risen 252.5 per cent since listing in May, Encounter Resources and UraniumSA.

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