Australian Uranium Outfit Means to Mimic Paladin By Stephen...

Australian Uranium Outfit Means to Mimic Paladin

By Stephen Clayson
21 Jul 2005 at 02:40 PM EDT


LONDON (ResourceInvestor.com) -- Redport [ASX:RPT] intends to stick largely to the development of known deposits, feeling that green field exploration for uranium is too much of a risky business. The company has already assembled an interesting assortment of projects, and intends to rapidly acquire more, locking down prospective ground for future investigation.

In addition, the company has purchased itself a small royalty on the Langer Heinrich uranium mine in Namibia, which should provide it with some steady, albeit limited, cash flow with which to finance its own operations.




Redport has onboard as strategic adviser Malcolm Mason, a man who brings to the company a great deal of experience in uranium thanks to a career in the sector spanning 30 years. Due to the low price induced hiatus in exploration for uranium that meant very little work was done throughout the 80s and 90s, geologists with extensive uranium expertise, particularly in Australia, can be hard to come by - Redport is fortunate to have one.

Australia possesses the majority of the world’s uranium resources, and will remain Redport’s primary locus of activity, though the company is not averse to making acquisitions elsewhere if they are attractive enough. Australia’s uranium mining sector has been perked up significantly by the recent political turnaround that has seen government figures openly exhorting firms to go after the country’s resources.

This change of heart has been driven by a growing acknowledgement on the parts of the public and politicians alike that nuclear power is set to undergo a long overdue resurgence, particularly in Asia, and that in this light Australia’s uranium deposits are resources of substantive value.

Indeed, the government of China has reportedly been encouraging the Australian government to allow the development of its uranium resources in order to help sate the China’s highly significant and growing demand, which is underpinned by its large planned programme of nuclear power plant construction.

The project currently regarded by Redport as its number one priority is the Lake Maitland joint venture, of which the company currently holds 30% with the right to earn up to 80% over time. Lake Maitland hosts a JORC compliant uranium resource of around 17 million pounds, equating to an in situ value of approximately A$600 million. A clearer sense of the viability of this deposit is expected to be obtained by 2006, but current indications are that it is quite low grade, but located near surface and hence may be relatively cheap and easy to extract.

Other interesting projects in Redport’s portfolio include the Mundong Well and Angelo River prospects and the Edwards Creek joint venture. Mundong Well has according to the company yielded some very high uranium grades from vein type mineralisation; although it is still unclear whether the overall extent of mineralisation here would be sufficient to justify exploitation.

The Edwards Creek joint venture stands out owing to its proximity to Olympic Dam, the world’s largest uranium mine, and drilling on gravity derived targets that may reveal similar mineralisation to Olympic Dam is planned for this year. Edwards Creek is the one exception so far to Redport’s policy of avoidance of green field exploration, as here the company feels the potential rewards are worth the risk.

Further acquisitions will be funded from Redport’s A$5 million cash pile, which should be bolstered over time by the exercise of numerous share options. These acquisitions are expected by the company to be at least as significant as its other projects, though are unlikely to supplant Maitland Lake as its top priority.

Also a possibility for Redport is a deal regarding the company’s gold assets, some of which are regarded as quite prospective. Options are a spin-off of the assets as a group into a new listed company, or alternatively a straightforward sale to, joint venture with, or exchange for uranium ground with any interested gold companies.

Redport has already delivered significant growth to early investors, its share price having climbed to A$0.07 from A$0.02 since its inception as a uranium company. However, next to the highly impressive share price records of comparable Australian junior uranium companies such as Deepyellow, Summit and Paladin, this performance remains at the lower end of the spectrum of what may be possible.

What this suggests is that given the strong fundamentals of the uranium market, in which demand is widely projected to continue outpacing supply for some time, if Redport can deliver on its promises and truly make a mark in the sector, then the company’s investors could be extremely well rewarded.