7th Uranium Stocks Pick: Forsys Metals Corp (CVE:FSY)

Few are the places in this world where a uranium mine can open within a few short years of applying for a permit. Namibia was one of them as Paladin Resources (TSE:PDN) managed to obtain government approval, perform Pre-Feasibility and Bankable Feasibility Studies, and accelerate their building to the point where they are scheduled to begin producing uranium oxide in a few short months. Investors of Paladin have been greatly rewarded as the company transformed itself into a uranium near-producer; Paladin has basically outperformed every other Australian stock for the last few years.

It did help that Namibia is very amenable to mining in general, and especially, uranium mining. Rio Tinto's (NYSE:RTP) Rossing mine has been operating in Namibia for decades, and currently produces 7.7% of the world's uranium. In fact, the government of Namibia owns 3% of the company while the mine accounts for 10% of the country's GDP. In other words, Namibia is reliant on uranium and quite amenable to further uranium production coming out of their country.

Paladin's Langer Heinrich is only forty kilometers away from Rossing, and claims the status as the imminent second uranium mine in Namibia. This, along with visionary leadership, experience with mining uranium, and clear communication with investors has vaulted Paladin as the preeminent uranium junior, with a market cap even beyond that of uranium producer Urasia Energy (CVE:UUU).

Now, the astute investor would wonder, is there a third prospective mine in uranium-friendly Namibia? Indeed there is, and the company aiming to put it all together is Forsys Metals Corp. (CVE:FSY).

The company's main uranium interest lies in the Valencia deposit, about the same distance away from the Rossing mine as it is away from Langer Heinrich. An NI 43-101 report verified what Goldcorp had discovered a few decades ago when they had drilled 108 holes into Valencia:
(1) there was a lot of uranium (>20 million lbs)
(2) that it was easy to mine out, being mostly near the surface
(3) unsurprisingly, the mineralization is similar to the Rossing mine and amenable to open-pit mining.

With this in mind, the company initiated a Pre-Feasibility Study in mid-November of 2005. Forsys has drilled 18 holes to date and results have been encouraging. In addition, with $25 million in cash, the company projects to be able to complete the Bankable Feasibility Study without having to raise more capital.

In evaluating a uranium junior, one would want to know who the management is and what they've been doing on the insider market.

Duane Parnham, Chairman & CEO
Ownership: ~ 3 million common shares
Last Insider Activity: April 25, 2006 acquired 15,000 shares @ 2.10

Wayne Isaacs, President
Ownership: ~ 440,000 common shares
Last Insider Activity: October 21, 2005 acquired 10,000 shares @ 1.26

Rick Bonner, Exploration Manager: 25 years with BHP & Diavik
Ownership: ~ 1.7 million common shares
Last Insider Activity: April 27, 2006 sold 10,000 shares @ 2.48

Roger Laine, Director, 15 years experience with COGEMA

Allan Walden, Project Manager: former Namibian mining commissioner

With 45 million outstanding shares, Forsys has reasonable insider ownership. While Forsys does not have a bankable name to fall back on like Urasia has with Ian Telfer or Ur-Energy has with William Boberg, the company has assuredly the right people in place with the right connections to facilitate a smooth transition into eventual uranium production in Namibia.

When one considers that Paladin currently has a market cap of 1.9 billion and Forsys that of 87 million, the upside potential of the latter is made immediately obvious. Of course, Paladin's uranium projects are much more advanced than Forsys', but that difference can mostly be attributed to time, and not fundamentals. Forsys essentially IS Paladin, just at a previous stage. Paladin rushed through their Bankable Feasibility Study in 2 years and is doing their best to fast-forward into uranium production within a year of finishing their BFS. Forsys would be wise and is indeed following that same path as emblazoned by Paladin. Long-term investors should give this company a hard look as it is reasonably priced compared to its more famous uranium junior counterparts like Alberta Star or Western Prospector.