Thursday, September 28, 2006

Sep 28 Uranium Stocks Update: Forsys Metals (CVE:FSY )

Since my last update on Forsys almost two weeks ago, the company announced that it has received the conditional approval of the Toronto Stock Exchange (TSX) to list the common shares of Forsys on the TSX.

I continue to think highly of this company and, with a TSX listing, institutional investors might start piling in too. As you all know, major financial institutions like RBC, CIBC, Scotia and Deutsche in the last few weeks have all had to revise and raise upward their forecasts for the uranium oxide price. Multiple analysts have remarked that uranium and gold seem to be the safest of resources to invest in because of their uniqueness: uranium has a supply-demand imbalance even worse than zinc and gold trades as money.

Now as I see it, of the several hundred uranium companies listed in Canada, only a fraction are on the TSX while the bulk of them, including Forsys, currently reside in the Venture Exchange. If you screen out those companies that do not have uranium as their primary asset (eg Globex Minerals, a company dealing with gold, copper, zinc, silver, platinum, palladium, magnesium and talc as well as uranium), I can only find a handful of pure uranium plays out there.

The companies that are both largely pure-play uranium and listed in the TSX are the comparative goliaths of the uranium industry; recognizable names like Cameco (TSE:CCO), Paladin (TSE:PDN), SXR Uranium One (SXR.TO), UEX Corp. (UEX.TO), Aurora Energy (TSE:CCO), International Uranium Corp (IUC.TO), Denison Mines (DEN.TO), Uranium Participation (U.TO), Mega Uranium (MGA.TO), Energy Metals Corporation (EMC.TO), and Ur-Energy (URE.TO). I list them in descending order of market cap, with Ur-Energy being the smallest at roughly $196 million.

As far as I can tell, there is only one other uranium pure-play (could be several more, but you get my point) with a lower market capitalization than Forsys ($101.7 million); that would be High Plains Uranium (HPU.TO), a $48.7 million company that is about to be taken over by EMC.

The corollary to this observation is that the all of these companies are either producers of uranium (Cameco, Paladin, IUC, Denison), near-producers of uranium (SXR), or have advanced-stage projects complete with feasibility studies that should let them produce uranium within two to three years (UEX, Mega, Ur-Energy).

So what does this mean for Forsys? Well, if institutional investors start making good on their word about being bullish on uranium, money will be piling into uranium stocks (so far, it's somewhat puzzling why stocks have not nearly appreciated as much as the uranium spot price itself). However, Venture Exchange uranium stocks are a dime-a-dozen. The ones that trade on the TSX generally will receive more attention and investor backing, simple as that.

Monday, September 25, 2006

David Miller on RoBTV

David Miller, President of Strathmore Minerals (STM.V) and contributing editor of the newly-released book "Investing in the Great Uranium Bull Market", was on RoBTV's Market Morning today.

Miller's first prefaced his key observations of the uranium sector by establishing some credibility:

"I started my career in uranium in 1976 in the previous boom"
"I think it's (uranium boom) stronger than in the 1970's"

Key Points

(1) right now, uranium is finally entering the market as a commodity
(2) we've consumed all the excess uranium available
(3) in 1985, consumption started > production
(4) since 1985, consumption steadily increased
(5) half the power generated by nuclear in the US comes from Soviet weapons
(6) demand for uranium comes from ~440 nuclear plants
(7) current production 105 million lbs
(8) current demand 180 million lbs
(9) China, India, Russia main drivers for new nuclear plants
(10) needs to become acceptable around the world
(11) clean, plentiful, no carbon dioxide
(12) spent fuel rods needs reprocessing
(13) need regulation
(14) don't rely on anyone, do your own due diligence
(15) uranium needs organization to be traded as a commodity (futures)
(16) nuclear utilities worried about security of supply, signing long-term contracts
(17) current long-term price $51, spot price $53.5 U3O8
(18) only 4-5 dozen players setting uranium oxide price, small market
(19) cost of uranium fuel very tiny fraction to cost of running nuclear power plants, uranium oxide price can double with minimal impact
(20) uranium not really tied to other energies (coal, oil, natural gas)


Yes, Mr. Miller has been in the uranium business for decades now, and brings along a wealth of experience and insight. The book is probably a good read for newer uranium investors.

However, I'm more curious as to Mr. Miller's company, Strathmore Minerals (STM.V). The company promotes itself as having one of the largest exploration land packages in the prolific Athabasca Basin along with additional holdings in the United States, Canada and Peru. Historical estimates of reserves (some are not NI 43-101 compliant) on several of their properties are impressive but the stock price has staggered along for some months now, even with the publicized backing of Mr. Miller, Sprott (Kevin Bambrough) and Halcorp Capital (Mike Halvorson).

Some months ago, Strathmore and Ur-Energy (URE.TO) had roughly the same market capitalization; currently, Ur-Energy is more or less valued at $50 million more. The difference, in my opinion, lies in the perception that Ur-Energy will be a uranium producer in Wyoming faster than Strathmore will be in New Mexico with its Church Rock Project. Whereas Ur-Energy has set some very definite goals for its Lost Soldier and Lost Creek project, Strathmore seems to be comparatively late in joining the mid-tier uranium junior-to-uranium producer progression that accompanies with it a substantial revaluation in market capitalization.

This is not to say that Strathmore is a bad company. If permitting goes smoothly at Church Rock, the company stands to gain back some ground. Meanwhile, a little publicity for Strathmore and the whole Canadian uranium industry courtesy of Mr. Miller obliges this uranium blogger to thank him.


Sunday, September 24, 2006

Sep 24 Uranium Stocks Update: sxr Uranium One (TSE:SXR)

Several weeks ago, SXR.TO was raised to "speculative buy" from "hold" by Graeme Currie at Canaccord Adams in Vancouver. The analyst cited strength in the uranium market, his firm's bullish outlook for uranium demand and the limited number of companies expected to commercially produce uranium in the next three years.

In addition, five days ago, plant commissioning commenced at the Dominion Uranium Project, one quarter ahead of the Corporation"s previously anticipated schedule.

Neal Froneman, CEO of SXR Uranium One, commented: "Dominion is moving smoothly towards start-up of production. The commencement of plant commissioning is a significant milestone and I am pleased to see that the team has been able to meet this milestone one quarter ahead of schedule. We remain confident that we are well on track to achieve our objective of hot commissioning in the first quarter of 2007."

Impressive. SXR's three months ahead of schedule, even better than Paladin's one month ahead on Langer Heinrich. Watch out for SXR as it seems hellbent on acquiring another North American uranium junior this year.


SXR Uranium One's flagship project in South Africa, with project payback expected to be five years from the start of construction. In addition, Dominion is now proven to have at least 31-million pounds of uranium oxide (U3O8) after the completion of the first-phase feasibility study, and work is now underway to prove more of the estimated 300 million lbs of uranium oxide in Dominion. The average operating cost for the first phase is expected to be $14.50/lb of U3O8, net of gold by-product credits; originally the cost was supposed to be higher but due to the high uranium oxide price, SXR Uranium One plans to mine lower-grade ore as well.

Saturday, September 23, 2006

You Know Uranium Is Hot When..

RobTV has had guests talk about uranium every day of the week for the past week. Just a week-and-a-half ago, I had this to say about the future of uranium stock investing:

"As most uranium investors know, it has been most profitable in the last two years or so to put money into uranim stocks. However, uranium has not been talked about too much outside of a very small circle. It has been only in the last few months that I've seen more and more coverage initiated by such popularity indicators as Report on Business TV (RoBTV). Sprott has been heavily invested in uranium but the company cannot be considered a giant in the financial world. With Deustche Bank and CIBC World Markets now weighing in on the bullish side of uranium, you can bet that your ordinary Joe and Jane will eventually get to know uranium oxide and the benefits of investing in U3O8 stocks."

Now yesterday, listening to RoBTV's host preface Peter Grandich's view on uranium by stating
"uranium as you mention, it's a no-brainer, boy there's no slowing uranium at all, is there?"
Peter Grandich remained extremely bullish about uranium, citing that the price would go up because:

(1) there is no substitute for uranium
(2) uranium prices could double and not really adversely affect the cost of running a nuclear power plant
(3) US Energy Department would like to build 30 new nuclear plants in the United States

Grandich's top pick was Crosshair Exploration (CXX.V) in Central Labrador, citing its proximity to Aurora (AXU.V) and impressive land package.


Keep in mind that CXX, by Grandich's own admission, is his largest personal holding. Furthermore, here's what I pulled out of a Google search:

Crosshair Explorations pays Grandich Publications $1,000 a month U.S., and has issued 200,000 stock options @ $.25; 100,000 options @$.45; and 100,000 @ $1.31 100,000 @ $.25 have been exercised and sold.

The point is, always try to know why an analyst says what he says and exactly at what angle he is trying to play at..

Finally, as if the ordinary Jane and Joe can somehow miss hearing about uranium, David Miller, President of Strathmore Minerals (STM.V), will be on Monday.

Wednesday, September 20, 2006

Sep 20 Uranium Stocks Update: International Uranium Corporation (TSE:IUC)

A conference call was held today by Denison Mines (DEN.TO) + IUC, as well as appearances by both Denison CEO Peter Farmer and IUC CEO Ron Hochstein on RoBTV's Squeeze Play segment. Highlights are summarized for your convenience.

(1) commanding North American milling capacity

(2) stronger equity currency for strategic acquisitions

(3) asset base includes:
(a) McLean Lake Mine and Mill
(b) Midwest Mine,
(c) White Mesa Mill
(d) Colorado Plateau Mines
(e) Henry Mountain Mines
(f) Arizona Strip Mines
(g) Mae Exploration Project (Mae Zone + Wheeler River)
(h) Moore Lake Exploration Project

(4) multiple mines decrease operational risk

(5) JVs with Mongolian government + AREVA on various projects

(6) Equity investments totalling ~$35 million in Fortress Minerals (FST.V), Energy Metals Corp (EMC.TO), Energy Metals Ltd of Australia, JNR Resources (JNN.V, $5.6 million), Santoy Resources (SAN.V, $2.8 million), Erdene Gold (ERD.TO)

(7) Will continue to run Uranium Participation Corporation (U.TO)

(8) 174 million shares outstanding, repriced warrants will be all Denison warrants, 1/3 of which strike price $5.20 expiring Nov, 2009 , other 2/3 expiry 2011 @ $10.40

(9) Working capital $140 million, no debt

(10) 66.7% approval Denison shareholders, 50.1% approval IUC shareholders, lock-up agreement signed by board and management already

(11) 0.5-1.0% ownership by management NOT including the Lundins

(12) $30 million CapEx for McLean Lake expansion

(13) mined U3O8 will come out of White Mesa mill in 2007

(14) Lundins currently own ~20% of IUC, will want to own ~15-20% of combined Denison Mines Ltd.

(15) Topaz Mountain ore will be shipped to White Mesa mill sometime in November. Henry Mountain permitting expected to go through on schedule.

(16) reevaluating Mongolian property to see if they can covert from ISL to open-pit mining, potentially increasing uranium assets by 30 million lbs

(17) AREVA open to Denison-IUC merger, not threatened

(18) Exploration budget in Athabasca Basin for combined company will be around $20 million

(19) Colorado Plateau (Topaz) ~$2.5 million CapEx, small because of existing structures

(20) Tony M Mine + Bullfrog CapEx $35 million, Tony M about 110 miles away from White Mesa mill, not too much of concern

(21) synergy between Denison + IUC in Mongolian projects + Athabasca Basin, higher production IUC @ lower grades, lower production @ higher grades Denison

(22) uranium company stocks have corrected while uranium spot price continually increased partly attributed to technical difficulties bringing production on-line


Monday, September 18, 2006

Sep 18 Uranium Stocks Update: International Uranium Corporation (TSE:IUC)

With today's merger announcement between IUC and Denison Mines (TSE:DEN), a new $1 billion market cap uranium mid-tier powerhouse emerges with the ability to produce 5.5 million lbs of uranium by 2010. Let's take a look at the details taken from various news sources, along with some of my thoughts.

The deal values Denison at about $518 million and its shares at $17.02 based on share prices Monday. IUC has a market capitalization of about $523 million.

The combined company, named Denison Mines Ltd., will have cash and short-term investments of $127 million and no long-term debt. Existing IUC and Denison shareholders will each own approximately 50 per cent of the new company, which will have about 176 million common shares outstanding after the merger.

The CEO of Denison, Peter Farmer, with be the CEO of the combined company while the CEO of IUC Ron Hochstein will be President and COO. The Infamous IUC Lukas Lundin will be chairman of the combined company.

Each company is expected hold a special shareholder meeting in November to vote on the transaction. The deal is expected to close by the middle of December.


While I was slightly disappointed that there was very little premium on IUC, I am at the same time hopeful for the future of this compnay. Denison and IUC made much more sense than a merger between Denison and SXR, for example, partially because of SXR's potential financial constraints secondary to their recent purchases in the past few months.

The Denison-IUC merger allows the Canadian uranium assets of Denison to be melded with the American assets of IUC. The McLean Lake mill, of which Denison owns a stake in, combined with the White Mesa mill of IUC, affords the combined company plenty of milling capacity for their U3O8 production.

Management is also strengthened by the merger, with even more experience and influence concentrated together. Many companies would kill to have the management qualifications of either company, let alone in one. And as always, it's nice to have a Lundin getting your back..

Combined together, Denison-IUC slots nicely in front of SXR and just behind Urasia Energy (UUU.V) in terms of market capitalization, making it the the fourth biggest uranium company listed in Canada, lagging only behemoth Cameco (CCO.TO), Paladin (PDN.TO), and Urasia.

I'm looking for continued M&A activity in the uranium sector, and several uranium juniors including one of my recommendations, Ur-Energy (URE.TO), seem to be prime candidates for a takeover

Sunday, September 17, 2006

Sep 17 Uranium Stocks Update: Uranium Participation Corporation (TSE:U)

Originally recommended in early-March, Uranium Participation Corporation (U.TO) has since climbed from $7.30 to $8.80Cdn on the strength of the ever-increasing uranium spot price. The company, if you remember, basically buys up uranium oxide and holds it in hopes that the price of U3O8 will appreciate. So far it's been a very successful strategy: it's NAV has increased steadily and investors are paying a premium to invest in the company.

In the last few months, others have crowded into buying physical uranium for investment gain, including Nufcor International, a joint-venture between AngloGold Ashanti Limited and FirstRand Limited, which holds over 1,000 tonnes of uranium and trades at around 30 percent above its NAV. Nufcor recently announced it planned to raise another $50-million or so in the next several months to buy more uranium oxide.

This is in addition to around half a dozen hedge funds who own physical uranium as well, including the newly brandished Solios Uranium Fund, consisting of 75% physical uranium and 25% uranium equities, with the equities being used to hedge or enhance returns.

All in all, this secondary uranium demand IS undeniably having an impact on the overall uranium landscape. Of the spot market volume for uranium this year, only about 1/5th of the uranium oxide is being bought out by utilities. You can guess where the other 80% is going.

As uranium production from the ground is still expected to lag behind demand, I predict that the secondary uranium demand created by these funds will serve to benefit every uranium stock out there by drawing attention to its remarkable rise in prices. However, I did note a few months ago the potential danger of this artificial/financial/investment demand secondary to the actual physical demand of uranium oxide. Any mass selling of these uranium stores could potentially wreak havoc on the uranium market and collapse the price of U3O8. It would be highly unlikely for the next several years, but could potentially happen once supply ramps up to challenge uranium demand. After all, the exit strategy for all of these funds is to SELL the uranium oxide back at a profit.

Friday, September 15, 2006

Sep 15 Uranium Stocks Update: Forsys Metals (CVE:FSY )

I first wrote about Forsys back in May and make it my 7th uranium stock recommendation. Back then, I noted the company's strengths, including proximity to Paladin's Langer Heinrich mine and good insider ownership.

Since May, Forsys has continued drilling on its Valencia uranium property, trying to complete the pre-feasability study that it started in November of 2005. Results of the drilling have been given out intermittently and they have remained remarkably consistent:

(1) June 22:
21.48 m grading 0.292 kg/t U3O8 from 24.02 m to 45.5 m + 5.78 m grading 0.289 kg/t U3O8 from 111.88 m to 117.66 m
21.84 m grading 0.204 kg/t U3O8 from 108.89 m to 130.73 m + 7.45 m grading 0.201 kg/t U3O8 from 143.17 m to 150.62 m

(2) July 5:
26.47 m grading 0.214 kg/t U3O8 from 90.64 m to 117.11 m
40.48 m grading 0.414 kg/t U3O8 from 219.55 m to 260.79 m.
4.40 m grading 0.226 kg/t U3O8 from 36.40 m to 40.80 m
6.03 m grading 0.257 kg/t U3O8 from 221.8 m to 227.83m

(3) July 26:
61.60 m grading 0.337 kg/t U3O8 from 26.10 m to 87.7 m
51.74 m grading 0.224 kg/t U3O8 from 144.12 m to 195.86 m
20.62 m grading 0.338 kg/t U3O8 from 93.45 m to 114.07 m
16.72 m grading 0.255 kg/t U3O8 from 188.0 m to 204.72 m

(4) September 14:
29.07 m grading 0.236 kg/t U3O8 from 246.47 m to 275.54 m
84.74 m grading 0.332 kg/t U3O8 from 38.35 m to 123.09 m
10.03 m grading 0.231 kg/t U3O8 from 42.42 m to 52.45 m

Forsys's drilling program should be completed within six to eight weeks. These set of drill results seem to confirm the original November 2005 NI 43-101 report estimating the Valencia uranium deposit average grade of 0.22 kg/t U3O8 using a cut-off grade of 0.17 kg/t U3O8.

Because of a seeming dearth of news, the company's stock price had plummeted to a closing price of $1.10Cdn at the end of June. However, as noted in my original recommendation, Forsys CEO Duane Parnham has been consistently picking up more shares in his own company, and stood at the end of August with 3.1 million shares (Forsys has 46.5 million shares outstanding).

Perhaps as people finally realize that Forsys is fully intending to move from pre-feasibility study to a bankable feasibility study (BFS), Forsys is finally getting the attention it deserves, with the stock price leaping almost 20% today to close @ $2.26Cdn. With uranium grades similar to Paladin's Langer Heinrich property, close proximity to LH, drilling almost finished, and a BFS definite possibility, I remain optimistic that my original assessment of Forsys being an earlier version of Paladin remains correct. This is what I wrote in closing back in May and I will end of this note with the same words:

"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."

Tuesday, September 12, 2006

"Macroeconomic" Uranium Trends

Ever since I started writing about uranium investing nine months ago, I have witnessed multiple corrections in the markets where resource stocks have very quickly slipped and mass panic ensues. Although the supply and demand fundamentals of uranium are different than many other base or precious metals, uranium stocks have always been lumped together with their resource counterparts during times of panached selling. Of course, it does not help that only a tiny fraction of the 140 Canadian uranium stocks listed on PreciousMetalResources are actual current uranium producers; they are clearly not immune to the fickleness of speculators.

However, it is also true that if one takes the long view and chart uranium stocks over the last year or so, there is no doubt that uranium stocks have benefited from the long-term bullish uranium outlook. It is during this difficult time in the Canadian stock markets that I want to reinforce the positive outlook for uranium as encouragement to be patient and wait for this storm to blow over.

Deutsche Bank Initiates Uranium Coverage

A week ago, Deutsche Bank came out with a 21-page article announcing to the world that it too, believed in the future of uranium oxide and its associated investing opportunities. The benefit here is two-pronged: first, a major investment bank lending credence to uranium investing is a joy to behold for all uranium stock enthusiasts. And secondly, the article itself is a very good summary of the current uranium cycle and is a valid analysis on what to expect in the near future in terms of supply and demand, with corresponding implications to uranium investors everywhere.

While it is impossible to summarize 21 pages, here are Deutsche Bank's main points on uranium:

(1) Concern over the availability of supplies has led to a surge in long term contracting in 2005 and 2006, resulting in increased competition and higher spot and term contract U3O8 prices.
(2) These concerns are expected to persist through to the end of 2009 before a significant increase in planned mine production results in a temporarily oversupplied market.
(3) Renewed supply concerns are expected to emerge from 2013 onwards as the US-Russian HEU agreement expires and removes a considerable amount of supply from the market.
(4) As a result, Deutsche Bank is forecasting spot price increases through to the end of 2008. Thereafter, prices are expected to decline until 2013 when the termination of the US-Russian HEU agreement is expected to put renewed upward pressure on prices.
(5) We are forecasting a continued rise in spot uranium prices in the second half of 2006, bringing the annual average U3O8 price to $US45.92/lb in 2006, US$59.00/lb in 2007 and US$63.00/lb in 2008.

CIBC World Markets: Uranium to $70/lb by 2007 End

Hot on the heels of CIBC's Chief Economist Jeffrey Rubin's implication that uranium stocks as viable investments during the coming economic slowdown and initiation of uranium coverage with bullish sentiment by investment giant Deustche Bank, CIBC World Markets came out with a view the uranium oxide might hit $70/lb by the end of 2007.

Rubin states: "Just like we have seen with oil, the appetite for uranium to feed the rapidly growing energy needs of the burgeoning Chinese and Indian economies is straining supply and driving prices up.

Mine production supplies only 62 per cent of the uranium used today. The rest comes from a variety of other sources such as natural and enriched uranium inventories and the reprocessing of spent reactor fuels — and supplies from these secondary sources are steadily declining. Increased demand from Asia will continue to put pressure on prices and the need for more rapid mine development."

As most uranium investors know, it has been most profitable in the last two years or so to put money into uranim stocks. However, uranium has not been talked about too much outside of a very small circle. It has been only in the last few months that I've seen more and more coverage initiated by such popularity indicators as Report on Business TV (RoBTV). Sprott has been heavily invested in uranium but the company cannot be considered a giant in the financial world. With Deustche Bank and CIBC World Markets now weighing in on the bullish side of uranium, you can bet that your ordinary Joe and Jane will eventually get to know uranium oxide and the benefits of investing in U3O8 stocks.

Wednesday, September 06, 2006

CanAlaska Ventures (CVE:CVV) Volume + Price Spike

An announcement by CanAlaska Ventures today resulted in nearly a 20-fold increase in trading volume and a healthy 19% gain to pace the uranium juniors.

The impetus that sparked this particular spike was the unfurling of a JV agreement between CanAlaska and a subsidiary of Japanese-owned Mitsubishi Corp., in which Mitsubishi Development Pty (MDP) can acquire a 50 per cent stake in the CanAlaska-owned West McArthur uranium project by spending $11 million over the next 3 1/2 years.

West McArthur uranium project

CanAlaska's flagship McArthur uranium project is located in Saskatchewan, within kilometers of Cameco Corporation's (TSE:CCO NYSE:CCJ) world-class McArthur River mine.

At the end of May, CanAlaska announced the presence of uranium in the four holes it had drilled on the McArthur property, the best of them containing 0.28% of uranium oxide over 0.2 meters at about a kilometer deep. Continued drilling was deemed to be the next logical step.

In mid-June, the company began its summer exploration program, with four crews, fifty staff, and a $6.5 million budget to further delineate the McArthur property, among other endeavors (CanAlaska has 18 uranium projects in the Athabasca basin alone). A hole 100 meters away from its promising 0.28% U3O8 neighbour was beginning to be drilled late-June.

The Deal

Mitsubishi Development Pty (MDP) is the ferrous raw materials division of its famous parent company. As expected from its Australian roots, its strength lies in coal and MDP has a stake in some 10 coal mines. It is interesting but not necessarily surprising to witness an Australian coal producer committing to a Canadian uranium venture. This deal serves to highlight the escalating interest in uranium worldwide, with the logical progression in the uranium sector now being increasing M&A activity and JVs.

Case in point, as Japan readies new nuclear reactors in the future, several Japanese companies have been actively seeking out stakes in future uranium production. If my readers can remember, Sumitomo Corp. and Kansai Electric Power Co., Japan's third-largest trading firm and second-ranked utility, negotiated a JV with Kazakhstan's state-run KazAtomProm to develop uranium deposit in Kazakhstan.

As for CanAlaska, today's agreement represents a real coup. $11 million dollars is substantial, not to mention the credibility of having a multinational behemoth getting your back; I know of no other uranium junior with a market cap under $50 million who has successfully signed a JV of this size, let alone with a partner like MDP. Still, continued drilling needs to be done and further good results would go a long way in furthering CanAlaska's uranium ambitions.

Sep 6 Uranium Stocks Update: Ur-Energy (TSE:URE)

Ur-Energy was featured as my sixth uranium stock pick back in April. At that time, I commented on the company's potential and drive to become a uranium producer within two years at their Wyoming property:

Production at Lost Soldier is optimistcally set to begin in mid-2008. Of the 26 million lbs of uranium in Lost Soldier, half are indicated and half are inferred. A look at their proposed timeline indicates that several key events must take place for 2008 production to happen: good resources studies, environmental studies + permitting, engineering, financing, and then construction of the actual in-situ leaching ISL wellfield. In addition, Ur-Energy must establish a satellite plant to expedite the ISL operation, and to tie the plant in with an existing uranium-producing company's NRC license, most likely with Power Resources (Cameco-owned).

In the months since, Ur-Energy has seen its share price rise almost 33%. Several key developments have brought about this impetus:

(1) In early June, URE announced results of two National Instrument 43-101 compliant resource estimations that increased the resources on its Lost Creek and Lost Soldier projects from the relevant historic resources; Lost Soldier specifically went from a historic indicated and inferred resource of 10 million pounds U3O8 to 12.2 million pounds U3O8 of NI 43-101 compliant Measured and Indicated Resources with an additional NI 43-101 Inferred Resource of 1.8 million pounds U3O8

(2) In July, URE announced that they had nearly a dozen crews operating at Lost Soldier and Lost Creek, conducting necessary engineering and baseline data studies. Ur-Energy also presented Applications for Permit to Mine to the Nuclear Regulatory Commission with members of the Wyoming Department of Environmental Quality and Ur-Energy contractors AATA International and Hydo-Engineering

This company reminds me of a smaller, earlier version of Paladin Resources (TSE:PDN) in that it is one of the few uranium juniors who present a transparent plan, set deadlines and then aggressively meet them. Their singular drive to become uranium producers in late-2008 is commendable and each successful step in making that a reality is reflected with a revaluation in their stock price.

With sxr Uranium One (TSE:SXR) buying up Rio Tinto's (NYSE:RTP) Sweetwater Uranium mill in Wyoming, there has been speculation that UR-Energy is primed to become a takeover target for SXR. Bill Boberg, CEO of Ur-Energy, intriguingly commented a few days ago that:

"The uranium sector continues to be characterized by a high level of M&A activity. The Company has had preliminary discussions since early 2006 with several companies concerning potential consolidation but nothing has progressed beyond that point."

Whether Ur-Energy ultimately is taken out by a larger uranium company or progresses towards uranium production, its prospects remain bright as long as the company keeps on being aggressively driven towards being a uranium producer.

Monday, September 04, 2006

Sep 4 Uranium Stocks Update: Urasia Energy (CVE:UUU )

Although I was less than impressed with their foreign exchange losses hampering the balance sheet, Urasia Energy has gained in recent days due to its trading in the London Stock Exchange's Alternative Investment market (AIM). Canaccord Adams has maintained its "buy" rating at $4, citing increased investor exposure of the uranium company as impetus.

Urasia's CEO Philip Shrivington spoke at RobTV's Power Breakfast on August 29, 2006, with his key message being:

(1) Akdala continues at full production capacity: 70% of 2.6 million lbs U3O8/lb
(2) further production in Kazakhstan to commence end of 2007, JV with Kazatomprom
(3) uranium production worldwide remains tight, prices will continue to increase due to lag
(4) Kurdistan and Kazakhstan exploration continues
(5) mentioned Urasia's board as being aggressive, citing Goldcorp's lineage
(6) cash @ $100 million
(7) AIM listing to accomodate UK interest and provide another market to raise funds if needed
(8) uranium prices have gone up for two years in a row and will likely not be affected by the coming slowdown in the economy
(9) Urasia is leveraged to uranium price, growth in resource base, and production, implying stock momentum can be sustained.

None of what Urasia's CEO said was too new or surprising. I would have liked to hear a pointed question to him about what Urasia plans to do about its foreign exchange losses, but it seems everything was scripted away from looking at the company's balance sheet. Aside from that, it looks like Urasia remains on schedule and its uranium production model in Kazakhstan is working out.

Friday, September 01, 2006

Sep 1 Uranium Stocks Update: International Uranium Corporation (TSE:IUC)

Seven weeks ago I had written on the significance of IUC.TO reopening its American uranium and vanadium mines. Since then, the stock has rebounded and has broken past the psychological $6.00 mark on good volume.

The company released a MD&A in mid-August so let's see what they have to say in their outlook:

In June 2006, the Company announced the re-opening of a number of its U.S. uranium/vanadium mines. Mining is scheduled to begin during the fourth quarter of 2006 with mined ore stockpiled at the Mill. The Company plans to begin development activities on one mine and commence mining operations at three other mines, all on the Colorado Plateau.

Basically, IUC and Paladin Resources are both going to be producing U3O8 at roughly the same time. Uranium oxide is trading close to the $50/lb mark and vanadium, exclusive to IUC, is around $8-9/lb.

The Mill is continuing to process alternate feed material and is expected to produce approximately 500,000 pounds of U3O8 from the processing of a high-grade alternate feed material, of which approximately 210,000 pounds are scheduled to be produced during 2006. The current mill run began in March 2005 and is anticipated to last through to the second quarter of 2007. The Company does not have any fixed contracts for this material and will evaluate commercial opportunities for sale of the material throughout the year.

Even without the restart of uranium mining, IUC has half a million pounds of U3O8, which at current market price represents roughly $25 million US.

The Company’s exploration programs continue through 2006, both in Canada and Mongolia. Currently, the Company has two drilling programs underway at the Moore Lake Joint Venture and Park Creek project. In addition to the drilling programs, the Company has significant field programs on a number of its properties.

Just today, IUC announced the starting of drilling on Consolidated Abaddon's (CVE:ABN) Sims Lake uranium project in western Labrador. IUC has the right and initial option to acquire a 51% interest in the uranium rights to the Sims Lake property over a period of two years.

With prospects continuing to look bright for IUC, insider buying has also picked up:

Ellegrove Capital Ltd., a Barbados resident company, through its joint actor, has acquired 1,985,500 common shares of International Uranium Corp. As a result of this acquisition, Ellegrove, together with its joint actors, holds as at the date hereof, a total of 12,982,000 common shares, which total holdings represent approximately 14.67 per cent of the issued and outstanding shares of IUC.

Ellegrove is owned by a trust, of which trust's settlor is Adolf H. Lundin.

Lundin is part of IUC's board.

Of all the uranium stocks I have recommended, IUC to me seems to have the greatest disparity between intrinsic and actual value. At $550 million, it behooves me to find it beneath the market cap of a company like Aurora Energy TSE:AXU, who admittedly has great uranium properties but will not mine a lick of it for years.