urg::: Equity Report on Global Uranium Companies
Len Kanaar - FoE Sydney
suscon at foesyd.org.au
Fri Sep 2 07:58:34 EST 2005
Market Wire (marketwire.com)
Equity Research Report Published on Global Uranium Companies
SYDNEY, AUSTRALIA -- (MARKET WIRE) -- 09/01/2005 -- Resource Capital
Research, an equity research company which focuses on small resource
companies, today launched a major quarterly research report covering
20 global uranium exploration and development companies with a focus
on Australia, Canada and the US. Over 120 junior and mid cap
explorers and development companies are identified with a total
market capital exceeding US$4.2 billion.
The report reviews companies active in established uranium districts
globally, including the Gawler Craton (Olympic Dam Uranium Mine) and
the Frome Embayement (Beverley and Honeymoon) in South Australia,
Arnheim (Ranger, Jabiluka) to Westmoreland in northern Australia, the
Athabasca Basin in Canada (McClean Lake, McArthur River), the Damara
Orogen, Namibia (Rossing, Langer Heinrich) and the Great Divide Basin
in Wyoming, USA.
To access the free summary report go to
http://www.rcresearch.com.au/feature. To purchase the complete
68-page detailed report titled "Uranium Sector Review" please email
johnwilson at rcresearch.com.au
-- Advanced exploration and development stage companies have yielded most
consistent share price outperformance
-- Existing producers and development phase companies can take advantage
of the stronger uranium price
-- Common exploration strategy to reduce risk is to explore in the
vicinity of known deposits
-- Demand for uranium driven mainly from the power generation sector is
forecast to outstrip supply for at least the next ten years,
-- Uranium prices have recently tripled to around $US 30/lb
-- Supply is constrained by a lack of new mine production and declining
inventory
-- Political change is afoot globally
John Wilson, author of this report noted:
"After nearly 25 years in the doldrums, the uranium industry is
undergoing a major resurgence worldwide with uranium exploration and
property acquisition at a high level. The share prices of companies,
many of them newly formed, with uranium assets have moved sharply
upwards."
Advanced exploration and development stage companies have generally
had the most consistent share price outperformance within the uranium
sector in the past 12 months, such as Paladin (+760%), Aflease Gold
and Uranium (+204%), Energy Metals Corp.(+368%), Western Prospector
Group (+757%), Laramide Resources (+735%) and Summit Resources
(+1160%).
More mature companies will be able to take advantage shorter term of
the stronger uranium price compared with exploration stage companies
which are higher risk plays. ERA and Cameco are the key listed pure
uranium plays, while BHP and RIO offer diluted exposure to key
uranium mines.
The report covers US traded companies US Energy Corp, Fronteer
Development Group (AMEX: FRG), CanAlaska Ventures (TSX-V: CVV), and
Western Prospector Group (TSX-V: WNP).
Among the explorers, a common strategy to reduce risk is to explore
in the vicinity of known deposits. To this end, in Australia,
companies are exploring for palaeochannel style uranium
mineralisation in the vicinity of In Situ Leach (ISL) projects at the
Beverley Uranium Mine and Honeymoon in the Frome Embayement, South
Australia. Examples include Giralia Resources, Curnamona Energy, and
Southern Cross. Companies active in the US include US Energy,
Strathmore Minerals and Energy Metals Corp.
US Energy is exploring around Sheep Mountain in WY, which was
previously in production and has announced it intends to reopen its
Shootaring Canyon Mill in Utah over the next 2 years. Energy Metals
Corp is focusing on development stage ISL projects in The Great
Divide Basin, WY. It has 16 properties with historical resources
within a 25 mile radius of Rawlins. A number of the properties went
through feasibility in the 1970s and some achieved commercial or
pilot plant production. A project development scoping study is
expected to be completed first quarter 2006. Strathmore Minerals'
most advanced projects are at Church Rock and Roco Honda in New
Mexico with potential for ISL development. It also holds land in
Wyoming near Cameco's Smith Ranch Highland's projects and Cogema's
Christenson Ranch.
Almost 20 years have elapsed since the end of the last uranium
exploration boom. In that time there have been many technological
improvements that impact directly on the methodology of uranium
exploration. Some of the key developments include multi element
chemical analysis, aerial gamma ray, aerial magnetic mapping,
hyperspectral mapping, gradient gravity and electromagnetic surveying.
The recent tripling of uranium market prices to around $US 30/lb is
due to the decline in existing uranium fuel inventories plus a
burgeoning demand from new international markets to satisfy nuclear
power demand.
Demand for uranium is forecast to outstrip supply for at least the
next ten years, driven by end users in the power generation market
which is urgently trying to secure future supply. Much of the new
demand for uranium will come from expanding nuclear power
requirements of developing economies with 130 new reactors expected
over the next 15 years (IAEA), representing nearly a 30% increase in
reactors globally. China has announced plans to build 27 new nuclear
reactors by 2020 and India has announced plans to build 17 new
nuclear reactors by 2012. This rate of expansion compares with the
USA which built over 100 nuclear power plants in 15 years between
1965 and 1980.
Supply is constrained by a lack of new mine production and declining
inventory. World demand for uranium is about 77,000 tonnes per year
(169 million pounds) while mine production is currently 48,000 tonnes
per year (106 million pounds). The balance, 29,000 tonnes per year
(64 million pounds) comes from inventory -- primarily the down
blending of weapons grade uranium. Mine output is expected to
increase to 54,000 tonnes per year (119 million pounds) over the next
3 to 5 years, leaving a significant supply gap to be filled.
Political change is afoot globally with governments speaking out in
favour of uranium as a fuel source. There is a strong trend for
government policies to prevail in the face of dissenting viewpoints.
Australia is scrapping the ban on uranium exports to China. Ian
Macfarlane, Federal Resources Minister will allow new uranium mines
in the NT, and has urged the governments of Western Australia and
Queensland to review bans on uranium mining. An inquiry is underway
by the House of Representatives Industry and Resources Committee into
non-fossil fuels.
The USA is lifting restrictions on nuclear power in India. It has
extended licenses for existing nuclear power plants. There is a more
supportive environment for new licences with incentives for nuclear
power in the new Energy Bill.
In Canada, British Columbia has lifted its ban on uranium exploration
and development. Ontario has committed to closing coal plants and
reopening select dormant nuclear plants.
"It is expected that there will be an expansion of uranium resources
from new discoveries and the upgrade of historic resources over the
next few years driven by investment funding, innovative exploration
techniques against a background of new political support of mining
opportunities in the USA and Australia to respond to increased
international demand from nuclear power generators," Mr Wilson
concluded.
About Resource Capital Research
Resource Capital Research (RCR) (www.rcresearch.com.au) was founded
in 2004 and is based in Sydney. RCR provides investors with in-depth
reports on current investment opportunities in the mining sector both
in Australia and globally. We focus on small resource companies,
ranging from exploration stage, through development and production.
John Wilson the principal of the firm and analyst has eight years
experience analysing mining companies. He worked in Sydney and on
Wall Street for major investment banks.
The report is available at www.rcresearch.com.au. The next uranium
sector review will be published in the December quarter.
For further information please contact:
John Wilson
Analyst, Resource Capital Research
Phone: (61- 2) 9252 9405
Email: johnwilson at rcresearch.com.au
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