Even with the recent share price rise, BLR is still significantly undervalued compared to its peers with a market cap of less than $50 million.
They currently have a JORC resource of 60mlbs and will most likely have access to another 30mlbs at Hansen by 25 February 2011. That's a total resource of 90mlbs in the next 8 days.
To give a rough idea of how undervalued BLR is compared to its peers, Mantra (MRU) has approx. 100mlbs and its market cap is more than $1 billion. Deep Yellow (DYL) has just under 100mlbs and its market cap is just over $400 million.
Some of the reasons why I suspect the share price of BLR has underperformed is due to the following:
1) The most obvious reason why the share price is so low is due to the uranium price which crashed in 2008 and took BLR's and other uranium companies share prices with it. However, eventhough the uranium price has recovered from a low of 40cents to 70cents now, BLR's share price has been slow to respond accordingly. This IMO is due to the additional points below.
2)Lack of progress, disgruntled shareholders and loss of confidence BLR has taken a long time to get to where it is today mainly due to problems with the local community raising their environmental concerns about the project. These delays have given shareholders the impression that nothing is happening and have resulted in shareholders losing confidence in management's ability to get things done. I suspect that a lot of shareholders have lost their patience and have moved on resulting in further pressure on the share price.
Based on what I have researched though, the local community concerns are not deal breakers as they appear to be solvable problems eg. increased monitoring for water contamination, using alternate routes for transportation of product etc. In fact, BLR had a big win only recently in Nov 2010 with the Fremont County's board of Commissioners granting BLR permission to conduct further exploration at the Hansen Uranium Deposit despite some local community complaints. It is also important to note that there is also a lot of community support for uranium mining in Colorado to increase employment in the area.
3) Uncertainty regarding permitting There appears to be a bit of confusion on whether Colorado is uranium mining friendly. If you listen to the Canary Events presentation by Mike Haynes in 2009, he states that there are some difficulties in getting in-situ mining operations permitted but there has historically been no such problems with conventional mining operations. Taylor Ranch and Hansen are expected to be conventional mining operations. In fact Hansen used to be a fully operational uranium mine before the Three Mile Island incident forced them to shut down due to the crash in the uranium price.
4) Uncertainty regarding the Hansen Deposit Last but not least, delays in securing the Hansen Deposit. The Hansen deposit is considered a key part of BLR's uranium mining strategy as it will provide the necessary economies of scale to improve the profitability of the overall project. This is one of the final crucial pieces of the puzzle and the volume traded of more than 100million shares on the 16 February 2011 shows that some smart people are getting themselves set for a significant revaluation of BLR's share price to truly reflect the massive uranium resource that it will control by the 25 February 2011. As Mike Haynes stated in the Canary events presentation in 2009, everything will start happening after 100% of Hansen has been secured.
All the best to all BLR shareholders. Ultimatum, glad everything's worked out for you in the end re your options.
BLR Price at posting:
6.7¢ Sentiment: Buy Disclosure: Held
