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."


Blogger Chunky Hunky said...

Looks like a winner! Ihave been watching the price of this and plan to strenthen my position on pullbacks.

11:59 AM  

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