Saturday, July 08, 2006

Uranium Merger..Mania?

Intercontinental uranium marriages between Australian and Canadian juniors are signalling the advent of the M&A phase of the uranium cycle. Canadian junior Mega Uranium (CVE.MGA), with a market cap of roughly $375 million Cdn, offered a friendly bid for Australian junior Redport (RPT.ASX) at about $75 million undiluted. Apparently, Mega wants several of the uranium properties Redport owns in Western Australia, one of the few Australian areas where even the idea of further uranium mining has not met with fierce opposition.

I believe that uranium mergers such as the one being proposed will increase in rapidity. Urasia Energy (UUU.V) has proven that it is possible for a junior to have a viable uranium business model, and they started out less than a year ago. Just looking at a list by market capitalizations of the top fifteen or so Canadian uranium companies, it is not hard to believe that a fair number of them who are already producers or soon to be producers will start to swallow up their smaller uranium junior counterparts, whose market caps usually range in the $20-80 million range, who have great prospective uranium properties but are not interested or have not started to develop them.

Companies to keep an eye out for include my favorites Paladin Resources (TSE:PDN), sxr Uranium One (TSE:SXR), as well as the bigger uranium juniors like UEX Corp (TSE:UEX), International Uranium Corporation (TSE:IUC), Denison Mines (TSE:DEN), Laramide Resources (CVE.LAM), Fronteer Development Group (TSE:FRG), Aurora Energy (TSE:AXU), and Altius Minerals (TSE:ALS)
 

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