Wednesday, September 06, 2006

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.
 

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