Friday, December 07, 2007

BNN Uranium Stocks, Rob Lauzon (II)

Rob Lauzon Middlefield Capital on Thursday Nov 29

URANIUM ONE (TSE:UUU): they have their own issues; we trimmed half our position around $13 when Kazakhstan government enacted laws that allowed them to change natural resource law. It got me thinking, once Uranium One really starts making cash flow out of Kazakhstan in 2-3 years, will they change their contract. Subsequent to that, company basically reduced production guidance by about 40% due to sulphuric acid shortage in Kazakhstan. Also they are having problems commissioning their Dominian mine as well. This company has had many rosy projections, CEO was talking about $200 uranium, too promotional. They bought Urasia and EMC, two big large acquisitions, question is do they have labour, manpower to integrate. It is underweight, management has to prove themselves to investment community because most of community has been disappointed. Until we see production come on stream sooner, the stock should trade back to $11-12 but we are in wait-and-see mode until then.
UUU 3mo and 2yr charts

UR-ENERGY (TSE:URE): yeah I would buy it at this price. This is an in-situ leach recovery method, more environmentally friendly, lower cost. They have two projects that they are working on bringing into production probably in 3 years, Lost Creek and Lost Soldier. They filed some permits, looks like they are on track. They have about $1 in cash; if you buy it around $3.50, quite insulated. You really want to load up if at $3, currently looks good value. For anyone looking for near-term exposure in US, Ur-Energy is definitely takeover candidate.

URE 3mo and 2yr charts

My Take:

Uranium One is the amalgamation of two of my previous picks, sxr Uranium One and Urasia, with EMC thrown in for good measure. The stock has been battered by production problems in Kazakhstan, where sulphuric acid, a necessary reagent for uranium production, is in short-supply. The company is trying to address the issue and the company uranium producer in the country, government-owned Kazatomprom, is building a sulphuric acid plant, but will not come onto production until 2010. Uranium One is having experiencing similar growing pains as Paladin, but after the tax loss season is over, investors should give a hard look to these new uranium producers who have been rightly discounted by production issues, but whose share prices will appreciate once these growing pains have been addressed.

Ur-Energy is another one of my favorites; its strength of management led by long-time uranium specialist William Boberg and geographic stability in the US, coupled with a matter-of-fact, low-key approach leads me to believe that this stock is worth holding onto long-term.



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