uranium could hit us 140 lb next year

Definetely a re-rate coming up IMHO..... :)

...."West Australian Metals (WME) is another looking for uranium in Africa, the company having a joint venture in Namibia where exploration work continues to improve the potential of the Marenica deposit. RCR suggests further successful exploration could see the stock re-rated in line with its peers."......

March 29, 2007
By Chris Shaw, FNArena.com Business Reporter


coming soon! Print Version
Adobe Reader required click here for free download

Uranium Could Hit US$140/lb Next Year,
Juniors Are Enjoying The Ride



The latest uranium sale saw the price reach a record US$95 per pound, but according to Resource Capital Research (RCR) the good news is far from over in terms of price gains.

In its latest quarterly update on the sector the group has revised its price forecasts, now suggesting levels of US$125 per pound are possible this year and US$140 per pound can by reached by late next year, up from its previous estimates of US$90 per pound by May and US$88 per pound by the end of 2008.

In the group's view there is simply too much running in favour of higher prices, from delays to planned production at Cigar Lake due to flooding and ERA (ERA) declaring "force majeure" on shipments from its Ranger Mine following heavy rain on the supply side, to the ongoing growth in demand as more and more countries consider nuclear power for their energy needs.

This is a key to the industry's outlook, as RCR notes there are currently 48 new reactors expected to be commissioned by 2013, to add to the 435 reactors currently in operation. This expansion in capacity will need to be met by increased production, but as delays continue to emerge at new projects such as Cigar Lake there appears little option but for the uranium price to move higher in the medium-term.

This improved outlook for the uranium price has been a positive for the smaller end of the uranium market, as RCR notes while the market value of the juniors in the sector is unchanged for March it has risen 23% for the quarter and 122% over the past 12 months.

Likely to prove just as important for the smaller players is the expected decision by the Australian Labor Party (ALP) to overturn its current three mine policy at its national conference next month. Any reversal of the party's current policy will open the door for the juniors with advanced enough projects to look at way of bringing them into production, rather than just working to prove up reserves and resources but being prevented from developing what has been found.

Queensland and South Australia are expected to benefit the quickest, as the Western Australian State Government has voiced opposition to the change in policy and vows to oppose its reversal. This should slow the development of new mines in the state, but as RCR notes it will be a difficult stance to maintain in the longer-term.

Looking at the more advanced projects around Australia shows Queensland leading the way with the Valhalla project, a venture between Paladin (PDN) and Summit Resources (SMM) that has enough promise to prompt the former company to launch a hostile takeover bid for the latter. There are also the Westmoreland project of Laramide Resources and the Ben Lomond project of Mega Uranium at relatively advanced stages of development.

In South Australia, Curnamona Energy (CUY) should benefit from any policy change as the company's Oban project is gearing up for a pilot stage trial in the second half of this year.

Leaving aside industry leaders such as Paladin and ERA, Resource Capital Research has provided an update on the developments at a number of the smaller uranium players listed domestically, including Energy Metals (EME). The company is set to conduct a scoping study at its Bigrlyi resource in the Northern Territory later this year, where a recent resource upgrade confirms the upside potential of the project. RCR sees the company as a potential corporate target, noting Paladin has bid for Bigrlyi joint venture partner Valhalla (VUL) and strategic partner Denison Mines of Canada has also been on the acquisition trail.

Equinox Minerals (EQN) is involved in the Lumwana uranium and copper project in Zambia, the uranium portion of the deposit being valued at around $423m. There is some risk here though as the uranium project will only proceed if the copper mine also goes ahead, but RCR notes the chance of this looks okay given there is significant exploration potential.

NuPower Resources (NUP) only listed on the Australian market this month and remains in the early stages of exploration at its projects in the Northern Territory, the most advanced of which is the Lagoon Creek project with Laramide Resources.

PepinNini Minerals (PNN) has geography in its favour in that its most advanced projects are in Queensland and SA, while it has attracted international interest through a proposed joint venture with Sinosteel in relation to its Crocker Well and Mt Victoria projects in Queensland. It also has a solid cash position and potential for developments focussing on other metals such as nickel and gold.

Scimitar Resources (SIM) is drilling in both Western Australia and the Northern Territory on land near known deposits so it offers some exploration upside, but suffers from the likely opposition to allowing uranium mines in WA in the medium-term at least.

The acquisition of the Napperby deposit in the Northern Territory gives Toro Energy (TOE) an advanced project, while the company also has extensive exploration ground in South Australia. The company also appears a potential takeover target according to RCR, as its major shareholders include Oxiana (OXR) and Minotaur (MEP).

Uranex (UNX) is following Paladin's lead and looking overseas for its projects, RCR noting the company has first mover advantage in Tanzania through its interests in the Lake Bahi and Bahi North prospects. It also has some operations in Australia, with drilling expected to commence next month at the Thatcher Soak prospect in Western Australia and potentially later this year at Bynoe in the Northern Territory.

Uranium King (UKL) has targeted the US and is developing a heap leach project in Nevada, where a scoping study is expected to be completed in the June quarter. With exploration prospects in New Mexico as well, the company appears well leveraged to the uranium price if it can fast track any of its prospects.

West Australian Metals (WME) is another looking for uranium in Africa, the company having a joint venture in Namibia where exploration work continues to improve the potential of the Marenica deposit. RCR suggests further successful exploration could see the stock re-rated in line with its peers.

-Chris Shaw, FNArena

http://www.stockinterview.com/News/03302007/Australian-Uranium-Juniors.html