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posted on Jan 27, 2009 02:57PM

URANIUM

MERGERS AND TAKEOVERS AFOOT?

Namibian uranium space buzzing

Extract Resources confirms a big new potential mine, highlighting further potential corporate action in the dry country's resurgent uranium sector.

Author: Barry Sergeant
Posted: Tuesday , 27 Jan 2009

Tuesday's announcement by Extract Resources of an initial resource of 108 million pounds of uranium oxide at a grade of 430 parts per million at zone I of its Rössing south project has long been trumpeted, but the upbeat numbers highlight the increasingly important role Namibia plays in uranium. Amid stricken markets, uranium stocks are among the most favoured of mining equities, after gold and silver stocks.

In the uranium universe, second only to Cameco, the world's biggest uranium producer and leading listed stock, Paladin has all but established itself as uranium's bellwether, with daily value traded around CAD 30m over the past 52 weeks. Having delivered first production from its key asset - Namibia's Langer Heinrich - on time and on budget in 2007, Paladin is in the process of ramping production to what could amount to 6m pounds of uranium a year, at a cash cost of USD 25/lb by the second half of next year. Uranium prices have retraced somewhat recently, to around USD 51/lb, but have been one of the few commodities to rise in price in the past few months.

Paladin's Kayelekera, a second low-risk, open-pit operation, is expected to begin producing during the second half of this year, ramping to a run rate of 3.3m pounds a year by 2011. Paladin offers among the most viable growth profile in the industry, one of the best cost structures (with all-in costs second only to the ISL (in situ leaching) projects of Kazakhstan), and is an easily traded stock in both Canada and Australia.

In the meantime, consolidation may lie ahead in the Namibian uranium space. On 11 September 2008, Rio Tinto, one of the world's biggest uranium producers, acquired a 14.9% stake in London-listed Kalahari Minerals, which holds 39% of Extract Resources; Rio Tinto also took a direct stake of 10.9% in Extract Resources. The transaction took place around the visits by a collection of investment analysts to Rössing (Rio Tinto) and Rössing South, the Extract Resources/Kalahari Minerals project.

Rio Tinto holds a majority stake in ERA, and also owns 69% of the Rössing mine, known to uranium specialists as the "grand old lady" of the Namibian uranium industry, with a claim of 140mlb historical production over 30 years.

Uranium-related activity and development in Namibia gained a relatively high profile in August 2007, when Areva paid USD 2.5bn for Uramin, formed just two years previously to acquire and develop mineral properties, predominantly uranium, in Namibia, the Central African Republic and South Africa.

Peter McIntyre, Extract Resources MD, is on record as saying "Rössing South is the first new alaskite-hosted uranium discovery in Namibia in many years and is shaping up as the most significant discovery since the SJ deposit at the Rössing Mine". Put another way, Rössing South could emerge as the most significant uranium discovery in Namibia in some thirty years.

Other names present in Namibia include Bannerman, Deep Yellow (in which Paladin owns 19.3%), Xemplar, and Forsys, which is due to be acquired by George Forrest International Afrique S.P.R.L. for CAD 579m.

*Selected uranium stocks*
*Producers*	Stock	From	From	Value
	price	high*	low*	USD bn
Cameco	CAD 20.41	-54.0%	42.4%	6.072
ERA	AUD 17.82	-28.6%	90.6%	2.242
Paladin	AUD 2.96	-56.0%	81.6%	1.202
Uranium One	CAD 1.97	-74.0%	228.3%	0.753
Denison	CAD 1.59	-83.4%	130.4%	0.283
Producer averages/total		-59.2%	114.7%	10.551
Weighted averages		-55.4%	63.5%

*Developers & other*
First Uranium	CAD 3.00	-73.3%	194.1%	0.320
UEX	CAD 0.93	-83.7%	106.7%	0.139
Uranium Part.	CAD 7.00	-42.5%	55.6%	0.412
Summit Resources	AUD 1.96	-34.2%	47.4%	0.272
Mega Uranium	CAD 1.14	-68.2%	192.3%	0.174
Alliance Resources	AUD 0.40	-76.1%	40.4%	0.072
Bannerman	AUD 0.61	-80.3%	171.1%	0.063
Forsys	CAD 6.25	-1.3%	212.5%	0.392
Aurora Energy	CAD 2.16	-79.2%	160.2%	0.129
Laramide	CAD 1.83	-59.2%	221.1%	0.093
Mantra Resources	AUD 0.67	-83.3%	19.6%	0.035
Energy Metals	AUD 0.35	-77.4%	9.4%	0.027
Deep Yellow	AUD 0.13	-65.8%	32.7%	0.096
Extract Resources	AUD 1.47	-8.1%	96.0%	0.206
Strateco Resources	CAD 0.73	-73.2%	82.5%	0.071
Strathmore Minerals	CAD 0.40	-81.0%	150.0%	0.024
UR-Energy	CAD 0.75	-72.4%	120.6%	0.057
Thor Mining	AUD 0.02	-89.5%	25.0%	0.002
Uranium Resources	USD 0.75	-92.8%	108.4%	0.042
Uranerz	CAD 0.92	-74.1%	80.4%	0.041
Hathor Exploration	CAD 3.20	-27.3%	603.3%	0.224
West Australian Metals	AUD 0.07	-80.0%	35.3%	0.015
Marathon Resources	AUD 0.36	-82.2%	85.6%	0.018
Nufcor Uranium	GBP 1.45	-50.4%	94.0%	0.084
Kalahari Minerals	GBP 0.43	-12.2%	68.0%	0.109
Pan African	GBP 0.03	-62.9%	53.3%	0.045
Uranium Energy	USD 0.56	-86.0%	249.1%	0.026
West Aust. Metals	AUD 0.07	-80.0%	35.3%	0.015
Tournigan	CAD 0.24	-83.7%	74.1%	0.023
Scimitar Resources	AUD 0.21	-62.0%	105.0%	0.007
Vital Metals	AUD 0.07	-91.0%	40.8%	0.005
Southern Uranium	AUD 0.06	-67.1%	80.6%	0.004
Uranium Equities	AUD 0.08	-73.8%	52.0%	0.010
Black Range Minerals	AUD 0.03	-70.4%	163.6%	0.012
Berkeley Resources	GBP 0.15	-69.8%	52.6%	0.021
Xemplar Energy	CAD 0.33	-94.3%	170.8%	0.032
JNR Resources	CAD 0.36	-75.2%	129.0%	0.024
Crosshair Exploration	CAD 0.20	-88.1%	135.3%	0.015
A-CAP Resources	AUD 0.13	-85.8%	56.3%	0.009
Fission Energy	CAD 0.35	-78.7%	311.8%	0.012
Curnamona Energy	AUD 0.29	-67.8%	114.8%	0.013
Coronation Minerals	CAD 0.05	-88.6%	100.0%	0.004
Khan Resources	CAD 0.36	-80.0%	148.3%	0.016
Bayswater Uranium	CAD 0.12	-81.5%	140.0%	0.015
Energy Fuels	CAD 0.33	-81.7%	200.0%	0.017
Azimut Exploration	CAD 0.57	-87.6%	200.0%	0.008
Desert Energy	AUD 0.06	-84.6%	20.0%	0.003
Pancontinental Uranium	CAD 0.08	-85.5%	45.5%	0.003
Pepinnini Minerals	AUD 0.19	-81.6%	2.8%	0.008
Nuinsco Resources	CAD 0.05	-85.3%	233.3%	0.007
West Prospector	CAD 0.33	-75.4%	230.0%	0.015
Pitchstone Exploration	CAD 0.25	-84.7%	85.2%	0.007
Canalaska Uranium	CAD 0.13	-70.5%	188.9%	0.015
Uranium Power	CAD 0.16	-70.9%	128.6%	0.013
Bitterroot Resources	CAD 0.16	-85.2%	77.8%	0.008
Encounter Resources	AUD 0.07	-83.5%	0.0%	0.003
Calypso Uranium	CAD 0.08	-83.2%	128.6%	0.003
Magnum Uranium	CAD 0.14	-83.1%	100.0%	0.003
Atomic Resources	AUD 0.10	-69.4%	33.8%	0.004
Titan Uranium	CAD 0.27	-72.7%	145.5%	0.012
Uranex	AUD 0.17	-79.2%	50.0%	0.009
Red Hill Energy	CAD 0.39	-59.8%	95.0%	0.015
Pele Mountain	CAD 0.11	-78.1%	75.0%	0.008
Crossland Uranium	AUD 0.08	-64.3%	50.0%	0.006
Monaro Mining	AUD 0.09	-87.7%	30.8%	0.005
Epsilon Energy	AUD 0.05	-94.3%	25.0%	0.002
Eromanga Uranium	AUD 0.03	-84.0%	14.3%	0.003
African Energy	AUD 0.02	-94.8%	80.0%	0.002
Fusion Resources	AUD 0.49	-46.4%	131.0%	0.016
NWT Uranium	CAD 0.08	-84.4%	275.0%	0.008
Cash Minerals	CAD 0.05	-88.1%	150.0%	0.005
Apollo Minerals	AUD 0.19	-62.0%	52.0%	0.012
Forum Uranium	CAD 0.05	-91.1%	100.0%	0.003
Wealth Minerals	CAD 0.25	-82.4%	150.0%	0.006
Santoy Resources	CAD 0.11	-75.3%	144.4%	0.008
Uracan Resources	CAD 0.30	-59.5%	150.0%	0.022
Niger Uranium	GBP 0.12	-70.4%	213.3%	0.019
Unor	CAD 0.05	-80.4%	80.0%	0.005
Purepoint Uranium	CAD 0.10	-78.7%	171.4%	0.006
Nortec Ventures	CAD 0.11	-68.6%	29.4%	0.006
Int'l Enexco	CAD 0.30	-81.7%	47.5%	0.005
U3O8 Corp.	CAD 0.40	-66.7%	135.3%	0.008
Silver Spruce	CAD 0.15	-84.0%	200.0%	0.006
Triex Minerals	CAD 0.30	-85.4%	81.8%	0.005
Rum Jungle Uranium	AUD 0.06	-72.5%	52.8%	0.005
Solex Resources	CAD 0.05	-87.7%	80.0%	0.002
Uravan Minerals	CAD 0.14	-84.4%	27.3%	0.003
Universal Uranium	CAD 0.04	-91.5%	100.0%	0.002
Oklo Uranium	AUD 0.04	-73.3%	60.0%	0.003
Hawk Uranium	CAD 0.04	-87.7%	100.0%	0.002
Macusani Yellowcake	CAD 0.35	-50.0%	250.0%	0.009
Great Australian	AUD 0.02	-88.8%	0.0%	0.002
Cont'l Precious Minerals	CAD 0.50	-64.8%	122.2%	0.019
Blue Sky Uranium	CAD 0.06	-90.5%	100.0%	0.002
Aura Energy	AUD 0.19	-43.9%	68.2%	0.005
Empire Resources	AUD 0.03	-86.7%	50.0%	0.001
Northern Continental	CAD 0.10	-76.7%	66.7%	0.004
Int'l Montoro	CAD 0.04	-83.7%	60.0%	0.001
North Atlantic Resources	CAD 0.07	-89.2%	225.0%	0.001
Uranium City	CAD 0.02	-91.8%	100.0%	0.001
Alberta Star	CAD 0.18	-67.0%	94.4%	0.040
East Asia Minerals	CAD 0.24	-87.6%	100.0%	0.020
Black Range Minerals	AUD 0.03	-70.4%	163.6%	0.028
Fronteer	CAD 2.60	-72.9%	67.7%	0.002
Portal Resources	CAD 0.07	-80.0%	160.0%	0.004
Eso Uranium	CAD 0.06	-79.6%	175.0%	0.001
Bearclaw Capital	CAD 0.07	-83.3%	116.7%	0.001
Forte Energy	AUD 0.06	-63.6%	57.9%	0.018
Western metals	AUD 0.03	-72.5%	57.1%	0.014
Mindax	AUD 0.32	-37.3%	229.9%	0.027
North American Gem	CAD 0.07	-90.0%	30.0%	0.006
Developer averages/total		-74.4%	110.7%	3.964
Weighted averages		-69.1%	109.7%
Overall averages/total		-73.1%	109.9%	14.515
Overall weighted averages	-60.2%	74.0%

*Diversifieds with uranium*
Areva	EUR 327.08	-60.1%	3.8%	15.247
Rio Tinto	GBP 16.17	-77.4%	62.5%	32.883
BHP Billiton	GBP 12.19	-44.7%	66.6%	102.848
AngloGold Ashanti	USD 28.02	-31.3%	109.6%	9.905
Equinox	CAD 1.63	-73.2%	114.5%	0.786
* 12-month
Source: market data; table compiled by Barry Sergeant

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