Sunday, April 09, 2006

Apr 9 Uranium Stocks Update: sxr Uranium One (TSE:SXR)

Here's a nice little update on SXR Uranium One (TSE:SXR) from Creamer's Mining Weekly. Since it's a long read, I only took out the most relevant parts:

Froneman reveals that the extent of the progress that has been made in fast-tracking this project is evident in that the first draft of the final feasibility study has just been completed– one month ahead of schedule – and the commissioning of the Rietkuil Dominion Uranium project is on track for the first quarter of 2007.

Analysis: This is very good news. Investors in the still-speculative uranium sector are much more willing to pay a premium if the uranium company lays out a firm timeline and then actually makes their deadlines. Just look at Paladin Resources..

Although it is unusual for the construction of mine infrastructure to commence before the completion of a final feasibility study, Froneman explains that this was an essential component of the company’s strategy to fast-track the project.“Because this is not a marginal project, we took a decision to fast-track this project, through the initiation of construction, in June last year,” explains Froneman.

Analysis: Clearly, SXR Uranium One is not expecting their feasibility study to be rejected, and nor should they, because all indications have been positive thus far.

Production is estimated to begin at an annualised two-million pounds a year of uranium oxide, ramping up to four-million pounds a year by the end of 2010.

Analysis: SXR's Dominion mine will be producing uranium oxide a little later than Paladin's Namibian mine, thus explaining why their market cap sits at $1.0 billion compared to Paladin and Urasia at $1.8 billion. The potential for SXR to join the other two will be dependent on future reports delineating exactly how much reserves sxr Uranium One has at Dominion. If it's anywhere near the 150-200 million lbs of uranium they think they might have, watch out!



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