http://www.mineweb.co.za/mineweb/view/mineweb/en/page72103?oid=102518&sn=Detail&pid=102055

URANIUM
Are uranium stocks oversold?
Despite a breezy longer term outlook, the sector has been on the backburner for months, if not years.
Author: Barry Sergeant
Posted: Friday , 09 Apr 2010
JOHANNESBURG -
Relative to most mining subsectors, listed uranium stocks have rendered a poor performance, for some years now, inviting examination as to whether this area is oversold. Commodity pricing here moves in a disjointed way, with little relation to variables such as the value of the dollar.
Spot uranium prices peaked at close to USD 140/lb in mid-2007 on the prongs of a three-headed mania: the end of Russian dumping, roaring apparent increases in demand from an energy-hungry world, and lots of liquidity via hedge funds and participation certificates, plus, factor four, the difficulty of valuing uranium stocks.
Over the past 12 months, the price has churned broadly between USD 55.00/lb and USD 40.00/lb, and is currently priced around USD 41.75/lb, according to UX Consulting; the latest peak was seen in mid-2009 at around USD 54.00/lb. Contract prices have been higher than spot prices for years, at closer to USD 70.00/lb, but have hardly been exciting for some months now, according to industry sources.
Canada's Cameco, the global bellwether in the relatively small uranium sector, saw its stock price fall from around CAD 60.00 in mid-2007 to close on CAD 15.00 towards the end of 2008. The stock is currently around CAD 27.00 a share, leaving buy-and-hold investors which bought the stock across 2006 and 2007 deeply in the red.
The Nuclear Energy Agency (NEA) of the Organisation for Economic Cooperation and Development paints a healthy growing demand for uranium, especially in the longer term, and the World Nuclear Association reckons that where mine supply was about 44,000 tonnes (about 20% each from Canada, Kazakhstan and Australia) in 2008, demand is likely to increase to 74,000 tonnes by 2015. Most, if not all, of the gap, would need to be filled by increased mine production.
This is all very well and cheery, but equity pricing indicates that investors are hardly happy with potentially fuzzy estimates, and the timeframes involved. On the contrary, investors have been taking uranium equities profits off the table, and pushing them into hotter near term stories such as coal and iron ore.
Pricing for Australia-listed Extract Resources peaked out in mid-2009, after its Rössing South discovery in Namibia proved to be the story of the year, or two. Namibia's more recent potential was startlingly highlighted by the August 2007 purchase by French transnational Areva for USD 2.5bn of Uramin, for the Trekkopje in-build mine.
At the time of the takeover, Ian Stalker was at the helm at Uramin; in November 2009 he moved from London-listed Niger Uranium to bourse companion Berkeley Resources, which currently ranks as one of the world's top performing uranium stocks. Berkeley has an impressive uranium oxide resource at its Spanish projects; analysts familiar with the company reckon the resources will potentially expand several fold in 2010 as Berkeley moves onto the Toronto Stock Exchange, and into production at around 2m pounds a year by 2012
Berkeley's Salamanca project would be the restart of an old mine, one shut down in 2000 by Spanish state company ENUSA following sustained low uranium prices. Relative to other projects with a similar deposit base, Salamanca rates as very low cost on capital expenditure, with operating expenditure likely to be around USD 30/lb.
There are also good performing stocks in Australia's Summit Resources, which, however, is also invested other areas such as vanadium, iron ore and phosphate resources, and Impact Minerals, with tenement holdings in Australia and Africa, a portfolio of six projects with the potential for economic deposits of nickel and significant deposits of gold and uranium.
And there are also Canada's Fronteer (whose various interests include 100% of Aurora Energy), and Mindax, but with a diversified portfolio of iron, uranium, gold and copper projects in Western Australia's Yilgarn Craton, and East Asia Minerals, where the main investor attraction appears to be in gold and copper, and London's Obtala, which is also diversified.
Uranium remains a big story in Namibia. Major miner Rio Tinto, which has long operated the original Rössing mine, has stakes in Extract, and also Kalahari Minerals, which holds 38.85% of Extract. Good stock price gains have also come from NWT Uranium, which holds 34.06% of Niger Uranium, which in turn owns 15.06% of Kalahari Minerals. Polo Resources has also taken a stake in Extract.
Paladin commissioned Namibia's Langer Heinrich in 2007 on time and on budget, and continues with 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 this year. Further names active in Namibia include Australia- and Namibia-listed Deep Yellow, which has delivered one set of solid drilling results after another; Forsys, proceeding to the mining stage at Valencia; Bannerman, with Etango, Xemplar, West Australian Metals, Pitchstone Exploration, and Toro Energy.
Paladin owns 20% of Deep Yellow and 20% of NGM Resources, which holds agreements covering uranium exploration projects in Niger, and metal exploration projects in Madagascar. Mantra Resources holds a uranium resource in southern Tanzania, across the border from recently opened Kayelekera mine in Malawi, owned and operated by Paladin.
Selected uranium stocks
Producers Stock From From Value
price high* low* USD bn
Cameco
CAD 27.10 -22.6% 32.8% 10.641
ERA
AUD 19.51 -31.0% 10.5% 3.462
Paladin
AUD 4.35 -21.2% 27.6% 2.902
Uranium One
CAD 2.72 -33.2% 76.6% 1.597
Denison
CAD 1.56 -46.2% 36.8% 0.530
PriarGunsky

East Asia Minerals
-30.8% 36.9% 19.131
Weighted averages -25.9% 30.0%

Developers & other
First Uranium
CAD 1.30 -83.8% 22.6% 0.217
UEX CAD 0.84 -53.3% 7.7% 0.166
Uranium Part. CAD 6.02 -29.0% 5.1% 0.516
Summit Resources
AUD 2.16 -9.2% 32.6% 0.655
Mega Uranium
CAD 0.65 -71.5% 18.2% 0.160
Alliance Resources
AUD 0.50 -49.5% 23.8% 0.157
Bannerman
AUD 0.56 -62.6% 35.4% 0.104
Forsys
CAD 4.30 -35.8% 26.8% 0.340
Greenland Minerals
AUD 0.49 -48.1% 142.5% 0.104
Laramide
CAD 1.27 -50.0% 13.4% 0.086
Mantra Resources
AUD 5.89 -8.3% 175.2% 0.695
Energy Metals
AUD 0.69 -41.0% 43.8% 0.086
Deep Yellow
AUD 0.25 -47.9% 69.0% 0.257
Extract Resources
AUD 7.95 -30.6% 149.2% 1.796
Strateco Resources
CAD 0.71 -45.0% 9.2% 0.087
Strathmore Minerals
CAD 0.70 -14.6% 112.1% 0.061
UR-Energy
CAD 0.93 -33.1% 36.8% 0.087
Thor Mining AUD 0.02 -73.1% 12.5% 0.004
Uranium Resources USD 0.73 -61.4% 40.4% 0.041
Uranerz CAD 1.93 -28.0% 171.8% 0.124
Hathor Exploration
CAD 1.88 -26.3% 44.6% 0.189
Marenica
AUD 0.16 -44.6% 55.0% 0.066
Marathon Resources AUD 0.50 -54.2% 41.4% 0.035
Impact Minerals
AUD 0.18 -40.7% 224.1% 0.019
Kalahari Minerals
GBP 1.72 -21.0% 82.4% 0.593
Arafura Resources
AUD 0.65 -49.8% 95.5% 0.174
Uranium Energy
USD 3.40 -18.3% 553.7% 0.205
Dios Exploration
CAD 0.35 -6.7% 311.8% 0.012
Tournigan CAD 0.24 -53.9% 27.0% 0.029
NGM Resources
AUD 0.13 -53.7% 150.0% 0.024
White Canyon
AUD 0.17 -62.9% 10.0% 0.031
Southern Uranium
AUD 0.21 -8.7% 320.0% 0.022
Uranium Equities
AUD 0.13 -53.6% 30.0% 0.025
Obtala
GBP 0.28 -2.6% 156.8% 0.084
Berkeley Resources
GBP 0.88 0.0% 186.9% 0.140
Xemplar Energy
CAD 0.16 -71.8% 10.7% 0.019
JNR Resources
CAD 0.20 -51.8% 2.6% 0.019
Crosshair Exploration CAD 0.20 -45.8% 39.3% 0.024
A-CAP Resources
AUD 0.43 -29.2% 93.2% 0.064
Fission Energy
CAD 0.73 -39.2% 386.7% 0.047
Curnamona Energy
AUD 0.28 -53.3% 12.0% 0.017
Thundelarra
AUD 0.56 -28.2% 433.3% 0.076
Khan Resources
CAD 0.87 -19.4% 241.2% 0.047
Vane Minerals GBP 0.04 -32.7% 10.0% 0.012
Energy Fuels CAD 0.22 -66.9% 13.2% 0.017
Azimut Exploration
CAD 0.77 -16.3% 156.7% 0.016
Desert Energy
AUD 0.19 -24.0% 216.7% 0.018
Pancontinental Uranium CAD 0.12 -52.9% 166.7% 0.006
Pepinnini Minerals AUD 0.20 -64.2% 30.0% 0.014
Nuinsco Resources
CAD 0.09 -33.3% 157.1% 0.021
Atom Energy
AUD 0.06 -52.0% 215.8% 0.012
Pitchstone Exploration
CAD 0.35 -33.7% 109.1% 0.012
Canalaska Uranium CAD 0.16 -34.0% 55.0% 0.027
UraniumSA
AUD 0.27 -14.3% 527.9% 0.028
Bitterroot Resources
CAD 0.08 -66.7% 15.4% 0.006
Encounter Resources AUD 0.35 -27.1% 288.9% 0.026
Calypso Uranium
CAD 0.14 -30.8% 107.7% 0.007
Energy & Minerals Australia
AUD 0.24 -42.7% 20.5% 0.085
Atomic Resources AUD 0.16 -13.5% 81.8% 0.015
Titan Uranium
CAD 0.17 -74.2% 3.1% 0.017
Uranex
AUD 0.31 -46.6% 31.9% 0.028
Red Hill Energy CAD 0.77 -12.5% 156.7% 0.041
Pele Mountain
CAD 0.19 -40.3% 117.6% 0.019
Crossland Uranium AUD 0.16 -34.0% 210.0% 0.017
Monaro Mining
AUD 0.09 -45.2% 46.6% 0.011
Epsilon Energy AUD 0.07 -47.9% 97.3% 0.018
Eromanga Uranium AUD 0.04 -71.2% 16.1% 0.005
African Energy
AUD 0.11 -54.2% 340.0% 0.029
Toro Energy
AUD 0.13 -54.4% 18.2% 0.125
NWT Uranium
CAD 0.19 -13.6% 90.0% 0.024
Cash Minerals
CAD 0.04 -66.7% 60.0% 0.006
Apollo Minerals AUD 0.18 -56.3% 16.7% 0.019
Forum Uranium
CAD 0.15 -37.5% 130.8% 0.017
Wealth Minerals CAD 0.69 -6.8% 187.5% 0.021
Alara Resources AUD 0.12 -52.0% 166.7% 0.009
Uracan Resources CAD 0.23 -53.6% 32.4% 0.024
Niger Uranium
GBP 0.19 -52.2% 5.5% 0.020
Unor
CAD 0.04 -42.9% 166.7% 0.006
Purepoint Uranium
CAD 0.12 -55.6% 41.2% 0.009
Nortec Ventures CAD 0.14 -38.6% 50.0% 0.015
Int'l Enexco CAD 0.31 -55.7% 19.2% 0.007
U3O8 Corp. CAD 0.43 -44.2% 32.3% 0.010
Silver Spruce CAD 0.10 -42.4% 111.1% 0.007
Altona Energy
GBP 0.16 -22.5% 443.9% 0.098
Rum Jungle Uranium AUD 0.07 -53.3% 40.0% 0.009
Solex Resources
CAD 0.13 -51.9% 136.4% 0.009
Uravan Minerals
CAD 0.15 -40.0% 25.0% 0.004
Universal Uranium
CAD 0.05 -52.4% 66.7% 0.002
Oklo Uranium AUD 0.07 -36.5% 97.3% 0.010
Hawk Uranium CAD 0.10 -23.1% 185.7% 0.006
Macusani Yellowcake
CAD 0.24 -41.3% 56.7% 0.014
Nimrodel
AUD 0.04 -66.4% 10.0% 0.004
Contl. Precious Minerals
CAD 0.78 -46.9% 95.0% 0.040
Blue Sky Uranium
CAD 0.77 -18.1% 541.7% 0.042
Aura Energy
AUD 0.27 -8.5% 237.5% 0.032
Empire Resources
AUD 0.08 -44.4% 87.5% 0.006
Marmota Energy AUD 0.11 -48.8% 133.3% 0.015
Int'l Montoro
CAD 0.07 -38.1% 160.0% 0.003
North Atlantic Resources
CAD 0.25 -28.6% 733.3% 0.009
Uran AUD 0.03 -71.4% 13.0% 0.003
Alberta Star
CAD 0.54 -62.1% 8.0% 0.012
East Asia Minerals
CAD 6.30 -7.1% 1382.4% 0.421
Black Range Minerals
AUD 0.04 -59.0% 16.2% 0.026
Fronteer
CAD 5.62 -9.5% 128.5% 0.673
Portal Resources
CAD 0.19 -31.5% 270.0% 0.005
Eso Uranium
CAD 0.07 -26.3% 100.0% 0.004
Bearclaw Capital
CAD 0.07 -40.9% 85.7% 0.002
Forte Energy
AUD 0.14 -38.6% 55.2% 0.072
Mineral Commodities
AUD 0.04 -73.3% 48.1% 0.005
Mindax
AUD 0.47 -15.5% 43.1% 0.057
North American Gem
CAD 0.19 -9.8% 236.4% 0.026
Developer averages/total -40.4% 129.8% 10.137
Weighted averages -37.5% 84.1%
Overall averages/total -39.6% 124.8% 29.268
Overall weighted averages -30.4% 44.8%

Diversifieds with uranium
Areva
EUR 395.55 -16.7% 28.5% 18.160
Rio Tinto
GBP 39.63 -3.4% 117.8% 141.002
BHP Billiton
GBP 22.78 -2.9% 78.7% 214.309
AngloGold Ashanti
USD 40.70 -14.4% 38.6% 14.748
Equinox
CAD 4.28 -8.7% 141.8% 3.026