from miningnewsUranium money looks for Tanzanian home...

from miningnews

Uranium money looks for Tanzanian home
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Thursday, 2 August 2007


ANOTHER piece has been found and placed in the great uranium jigsaw puzzle. The Outcrop with Robin Bromby.

One thing worth watching during the present market turmoil - and last night's wild and volatile performance on Wall Street suggests that uncertainty is far from over - is whether money begins to dry up for junior mining IPOs.

And, particularly, for new uranium floats. Not only will investors be nervous if they think the market is going to tank, and that usually means severe hair cuts for anything considered speccy, but the four-week decline in the uranium price and its standstill at US$120 a pound in the fifth week, must also have potential investors scratching their heads.

Those who remember the post-1987 crash will have vivid memories of how parlous things became for the gold stocks after the big correction. In 1986 and into 1987 they were floating and pumping. Then things came apart.

I remember reporting on the state of gold juniors - unable to raise money, trying to stretch what cash they did have and just clinging on to survive. The overall market regained its momentum in relatively short order, but the gold sector took much longer to recover.

One company that sticks in the mind is Yinnex NL - its reserves were as low as $50,000 at one stage. It was one of the worst affected, but tales of woe were common in the gold sector.

Uranium could be the 2007 version of the 1987 gold story. Not that the analogy is complete: uranium in 2007, and in the years to come, will be greatly more in demand than gold was in 1988. But the frenzy element has been just as great, if not more so.

So it will be critical for investors to hold every story up to the light. Uranium companies will, essentially, be worth only as much U3O8 as they can mine.

So an interesting piece of news this week was that Tanzania is working to formulate policies to control uranium mining, the government expecting that activity to not only get underway but that U3O8 will become a mineral export for the country on the scale of gold and diamonds.

News reports indicate that recent uranium discoveries have aroused great interest in the global mining sector, and that many more companies could move into Tanzania to join the uranium hunt.

If this does happen and finds live up to expectations and hopes, Australian companies that have already taken a position in that African nation would be congratulating themselves. It's not by any means an Australian-only show - London-listed Uranium Resources is there and an unlisted Canadian company, Tanganyika Uranium Corporation, is also on the ground. In mid-July, Toronto-listed Uranium Hunter Corp appointed as director of exploration a geologist with 25 years experience in this east African nation.

Uranex is one of the more advanced companies based here. Its most recent announcement reported assays from the Bahi project have continued to indicate extensions of the high grade calcrete uranium mineralisation. The highest of the recent grades was 0.239 per cent. Uranex has so far tested only a small portion of its 13km anomaly.

Western Metals is another company whose work in Tanzania has buoyed support for its shares, and it recently reported it had discovered multiple and thick sub-surface uranium zones.

Atomic Resources is a new entrant. Last month this recently listed company bought a further 5200 square kilometres of ground, adding to the 800sq.km in southern Tanzania which it took to market in its IPO.

Also last month, Globe Uranium cut a deal with an African coalbed methane explorer to acquire 90 per cent of uranium rights over a project in Tanzania and two in Zambia. Mantra Resources has just picked up 770sq.km of uranium tenements in the Bahi catchment.

This is not to say any of these projects will culminate in mines being developed. But, given the attention about to be focused on Tanzania, these companies are at least among the first movers.

And the development is something solid for investors who are looking to see how all the pieces in the uranium jigsaw fit together.