Uranium is the next big thingThe Australian Financial...

Uranium is the next big thing

The Australian Financial Review
Online 03 Mar 2011
Justin Bailey

With the handsome returns delivered by gold companies West African tenements have delivered some handsome returns for investors in recent years,

For the past decade mining companies have been expanding their operations in the one of the poorest parts of the world and Australian corporations have been at the forefront.

In 2010, West African-focused gold companies Perseus, Adamus and Resolute were among the market's best performers. Perseus finished the year up 90.9 per cent, Adamus gained 88.1 per cent and Resolute climbed 35.6 per cent.

Underpinning the gains was the 29.5 per cent rise in gold over the year to $US1420.78 an ounce. But with gold stuck in a trading range between $US1350 and $US1450 over the past five months, there are concerns its advance may have halted.

So investors have begun to look elsewhere for growth and one of the most exciting sectors is uranium. Africa has the third-largest reserves of uranium behind Australia and Kazakhstan.

The majority of these reserves are found in two countries, Namibia and South Africa. Namibia is home to one of the world's largest uranium mines operated by Rio Tinto.

Next door to Rio's mine is the Rossing South project - one the African continent's most exciting uranium developments - owned by Extract Resources. The Rossing South project is on the cusp of production and once fully operational will become one the biggest uranium mines in the world.

Rio Tinto is backing the project, holding a 15 per cent equity stake in Extract. Since the start of September uranium prices have advanced more than 50 per cent to $US70 a pound. Shares in Extract have had a solid run since uranium begun its climb, putting on 55.6 per cent. Elsewhere, Bannerman Resources is in the early stages of developing what it calls "a uranium project of extraordinary scale" in Namibia. The project is known as Etango and boasts a total resource of 212 million pounds of uranium oxide.

The explorer is hoping the project can deliver 5 million to 7 million pounds of uranium per annum from an open-pit mine. The Etango project is located near major infrastructure and ports

Since the beginning of September Bannerman shares have soared, climbing 106.5 per cent. Major mining companies are increasingly choosing to invest in Namibia because of its relative political stability. The country won independence from South Africa in 1990 and has been operating as democracy ever since.

Mining accounts for 8 per cent of GDP in Namibia and the economy is growing at 4 per cent. Namibia's mining.

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