Saturday, May 19, 2007

Uranium World This Week

Uranium futures for June traded at $134.90/lb, above the spot price of $120/lb. While on the surface, trading U3O8 futures on the NYMEX has barely created a ripple, uranium bulls believe that anything that serves to focus American investors to yellowcake is a good thing.

Speaking of American-listed Stocks..

Denison Mines, who started to trade on the AMEX under the symbol DNN a month ago in addition to its existing DML listing on the Toronto Stock Exchange, has remained resilient during the May correction that has recently hit other uranium stocks. Whereas its most-oft quoted rivals sxr Uranium One and Paladin Resources have traded mostly sideways and down respectively, Denison’s share price has appreciated, despite reporting a net loss of $5 million in Q1 and slashing uranium production forecast at its shared McClean Lake mine by as much as 40%. With the comparative dearth of available American-listed uranium stocks as compared to Canadian ones, Denison has adroitly positioned itself despite some recent disappointments.

Auctioning off Energy Metals Corporation
A $1.4 billion Cdn uranium play with in-situ recovery (ISR) properties in the United States, Energy Metals (along with Strathmore Minerals) was one of the earliest companies to scoop up potential uranium assets in the States; today it possesses over 350,000 total acres. Besides continuing to grow its uranium resource base, the company is trying to fast-track uranium production. Recently, the company announced a 1.4 million lb sales contract over six years beginning in 2010 for its Hobson/Palangana uranium project in Texas that is slated to start producing in 2008.

Potential suitors for Energy Metals include sxr Uranium One, Cameco Corporation, and French nuclear giant AREVA. So far the company is keeping mum on its negotiating partner, but one thing is for sure: the pace of uranium M&A activity will continue to intensify as in other resource sectors.



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