Original Uranium Bug Says the Sky Is the Limit


LAS VEGAS (ResourceInvestor.com) -- At the annual Las Vegas Hard Assets Investment Conference, there was one thing major investment topic that seemed to emerge over and over throughout company presentations, market analysts and newsletter writers: Uranium.
Uranium, which just last week broke the $50 barrier, and whose spot price has been on a continuous rise, with no downturns is an area where investors may want to look further.
With the issue of finding a renewable, clean, energy source, many are pointing their financial finger at U308, and much of that pointing is coming from energy-hungry China which has plans to bring numerous power plants online within the next two decades.
According to a report today released by CIBC World Markets, Asia energy demand will push up uranium prices to $70 by the end of 2007. The bank also noted that uranium prices have increased more than seven-fold during the past five years.
Chief strategist, Jeff Rubin said in a statement, ''Just like we have seen with oil, the appetite for uranium to feed the rapidly growing energy needs of the burgeoning Chinese and Indian economies is straining supply and driving prices up.''
The report also said that nearly 80 nuclear powerplants are in the works, with more than half of the construction being done in Asia. Rising energy demands, high oil prices, and concern over greenhouse gas have helped the resurgence of nuclear energy.
''Mine production supplies only 62% of the uranium used today,'' said Rubin. ''The rest comes from a variety of other sources such as natural and enriched uranium inventories and the reprocessing of spent reactor fuels - and supplies from these secondary sources are steadily declining. Increased demand from Asia will continue to put pressure on prices and the need for more rapid mine development.''
The Uranium Bug
James Dines, Editor of The Dines Letter, and self-proclaimed original “Uranium Bug,” was open, optimistic and bullish on the yellow metal and uranium mining stocks in general.
Dines said that the demand for uranium will be so insistent and persistent in the coming years that the market is currently no where near its top.
With hundreds of nuclear power plants to come online throughout China in the coming years, the sentiment at the conference was bullish.
Dines held a panel discussion with four uranium miners that were “favourable.”
The four companies included Mega Uranium, Tournigan, Bayswater and Uranerz Energy.
Mega Uranium
Mega Uranium [TSX:MGA], currently trading at C$4.18, has uranium resources in Australia and exploration projects in Argentina, Mongolia, Bolivia, Canada and Australia.
Mega's principal asset, the Ben Lomond deposit in North Queensland holds 43-101 compliant Indicated Resources of 7.9 million lbs and an Inferred Resource of 2.8 million lbs. The deposit also contains 9.8 million lbs molybdenum based on an average grade of 0.15% Mo.
Mega has also began the process to obtain Australian Future Metals and Energy which holds historical reserves of 6.4 million lbs of u3o8.
In Mongolia, Mega entered a 2005 agreement with Red Hill Uranium and their 18 exploration properties totaling 3380km2. Properties are at the early to medium stages of exploration. Both companies have also agreed to cooperate in the identification and acquisition of other uranium projects throughout Mongolia.
Mega also entered into an agreement with Intrepid Minerals in March 2006 in a Bolivian uranium. Mega is slated to earn 75% of the uranium-molybdenum content of 16 exploration properties. The company continues to explore and develop its uranium projects.
Tournigan Gold
Tournigan Gold [TSXv:TVC], trading today at C$2.22 and with a 52 week range of C$1.28 - C$3.25, owns a uranium property in the Slovak Republic with outlined an inferred resource containing 18.2 million pounds of U3O8 hosted within 1.25 million tonnes of materials averaging a grade of 0.66% U3O8 at a cut-off of 0.035%. The company is also currently exploring a number of properties throughout the Slovak Region.
The company is preparing to drill additional in-fill holes to gather more data on the deposit, complete step-out drilling to increase the deposit's strike length, and explore for further mineralization with the goal of moving the deposit into production.
Uranerz Energy
U.S. based Uranerz Energy [AMEX:URZ], trading today at $2.55 and with a 52 week range of 90 cents to $3.25, is focused on exploration and development in Wyoming’s Powder Basin area, Mongolia and Saskatchewan’s uranium rich Athabasca Basin.
The Canadian property comprises two permits with a total of 67,480 hectares. Uranez has entered a JV with Triex Minerals which will be able to earn up to 70% interest in some of the properties by spending nearly $3 million by November 1, 2009.Anticipation for Canadian property follow-up exploration which includes prospecting, is slated soon.
Uranerz has 12 projects in Wyoming and plans to use in-situ leach (ISL) recovery methods, a much cheaper and more efficient way to gather uranium depending on the area. The company has began the process to gather the appropriate ISL permits.
The company also has eight exploration licenses in Mongolia that cover 284,815 hectares. One property, the Khavstal property, has estimates of probable resources of 5.19 million lbs with possible resources of 10.39 million lbs of uranium in the region.
Bayswater
Canadian based junior explorer Bayswater Uranium [TSXv:BAY], trading today at C$1.41 and with a 52 week range of $1.10 to $1.69, has major landholdings in Canada’s Athabasca Basin, the Thelon Basin and the Hermitage Belt.
The Athabasca region is one of the world’s premier uranium mining sites, supplying roughly 32% of the world’s uranium. Bayswater is slated to acquire 1.5 million acres of mineral claims in the region and production throughout the region is expected to increase.
The company also has 7800 sq. km. of uranium concession agreements in Niger.
Conclusion
Dines said on Thursday in another presentation that “we need to look wrong to be right in the stock market,” referring to a number of previous market calls that proved to be the hot investment at the time, even if perceived as wretched by the general market at the time.
Dines also said that eventually he expects to see every uranium stock increase and said that “it’s not too late to get into uranium.” Dines said that he is looking for sky-high prices and that the impact on the uranium industry “will be phenomenal.”
The uranium spot price is currently $52.00, up from last month’s end of $48.50, and many, including Dines, see a continued uptrend and only potential for the metal as energy demand in developing nations continues to grow and the return to using U3O8 for energy demand looks more attractive