Tuesday, July 11, 2006

Jul 11 Uranium Stocks Update: sxr Uranium One (TSE:SXR)

SXR has done it again. A day after announcing a deal with Rio Tinto to acquire its uranium assets, SXR is buying most of U.S. Energy Corp.'s (NASDAQ:USEG) assets as well, specifically the Shootaring CanyonUranium Mill (the "Shootaring Canyon Mill" or the "Mill") in Utah and interests in a substantial land package comprising 40,589 acres of uranium properties in Utah, Wyoming, Arizona and Colorado.

This means that SXR will own two of the four conventional uranium mills in the United States and represents a continuation of their aggressive foray into American uranium.

In October 2005, U.S. Energy reported that independent consultants BehreDolbear & Company had estimated the replacement value of the Shootaring CanyonMill to be US $80.5 million.

As you can imagine, the land package itself is neither developed nor sounds all that impressive right now. SXR is basically buying for the mill and the land itself is a bonus. The most advanced uranium asset in USEG's portfolio is a 50% interest in the Sheep Mountain claims, 30 miles away from the Rio Tinto-acquired Sweetwater mill and with a historical (not verified) resource of 8.6 million pounds.

Neil Froneman, CEO of SXR, had this to say today:

We think that these two mills together, once they’re in full production will produce about five million pounds. So. you know, this has the potential to more than double the US output. I have no doubt that there will be other production, other than ours, but certainly five million is quite a decent number for the United States as an incremental value.

Remember, I quoted in my International Uranium Corporation (TSE:IUC) update that John Indall, Uranium Producers of America Executive Director stating that uranium production will head towards 20 million lbs/year in the U.S. SXR producing 5 million lbs and IUC producing another 1.5 million lbs will sure help to help that goal. Other production should follow from promising uranium assets of companies like Ur-Energy (TSE:URE), Strathmore Minerals (TSE:STM), and Energy Metal Corporation (TSE:EMC)

A conference call is scheduled for tomorrow by the company..we'll see what SXR has to say about their recent moves then.


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