The Hottest Uranium StoryIs UrAsia "the Hottest Uranium Story This Year"?
By Jon A. Nones
16 Jan 2006 at 08:38 PM EST
ASPEN (ResourceInvestor.com) – As the only uranium company at the International Oil & Gas Investor Forum, UrAsia succeeded in sticking out. However, with $966 million in market capitalization and a 47% share price increase in two months, the company might have stuck out at a uranium investor forum.
Frank Holmes of U.S. Global Investors calls UrAsia “the hottest uranium story this year,” so let’s have a look.
UrAsia [TSXv:UUU] listed on TSX-Venture on November 7 at C$1.60. Today, shares closed at C$3.07 – a quick and rather quite gain of C$1.47. The company has the third largest market cap of a uranium miner behind only Cameco [NYSE:CCJ; TSX:CCO] ($8.5 billion) and Energy Resources of Australia [ASX:ERA] ($1.4 billion).
With the spot price of U3O8 hovering around $37 per pound, and demand surging in Asia and Europe, UrAsia hopes to reap the benefits.
“Nuclear power has been the black sheep of energy for the past 20 years, but this is changing,” said UrAsia President and CEO Phillip Shirvington during a presentation.
The company’s estimated annual production is currently 1.4 million pounds uranium, with a resource base of 84.6 million pounds U3O8. The properties range from about .45% to 1% grade U3O8, according to the company.
Assets
UrAsia operates in Kazakhstan, the third largest producer of uranium in the world. According to the company, Kazakhstan hosts 18% of the world’s recoverable uranium – second only to Australia at 28%.
The company has only one operating mine at present, the 70%-owned Akdala mine. The company plans to increase annual production at the mine to 2.6 million pounds this year at an operating cost of $7.49 per pound using in-situ leaching. The mine has a life of 17 years.
In addition, UrAsia plans to commence development of its 70%-owned South Inkai project as well as the 30%-owned Kharassan project this year with initial production starting in 2007.
The South Inkai project will have an estimated annual production of 5.3 million pounds U3O8 with a potential expansion to 10.4 million pounds for seven years. UrAsia estimates the cash cost at $8.49 per pound.
The Kharassan project has a mine life of 17 years with an estimated production of 5.2 million pounds U3O8 – with an expansion potential of 7.8 million pounds. The company estimates the cash cost of Kharassan to be $8.70 per pound.
UrAsia also has seven exploration licenses in the country where it hopes to begin drilling later this year. Shirvington told Resource Investor that the company could eventually expand to Uzbekistan or even north to Mongolia as well.
Management
Shirvington, who has 40 years experience in the industry, leads UrAsia. However, behind the scenes sits Goldcorp President and CEO Ian Telfer as a non-executive chairman.
As we know, Goldcorp [NYSE:GG; TSX:G] has been very aggressive of late with its deal to acquire certain Placer Dome [NYSE:PDG; TSX:PDG] assets in conjunction with Barrick’s [NYSE:ABX: TSX:ABX] takeover, as well as a deal to obtain Virginia Gold’s [TSX:VIA] Éléonore gold project.
As the ex-head of Wheaton River, Telfer has taken the reins from Rob McEwen and turned Goldcorp into promising mid-tier producer. This shines well on UrAsia.
Conclusion
Demand for uranium will only increase as more countries seek alternatives to fossil fuels – there are currently 23 new reactors under construction, not to mention China’s big plans for 30 more.
According to UrAsia, the supply deficit is estimated to be about 10 million pounds per year, and set to increase to roughly 20 million pounds per year by 2015.
Analysts like James Dines of The Dines Letter have been “screaming” about uranium for years now about the supply/demand curve. With U3O8 rapidly approaching $40 per pound, it seems the analysts were on to something.
Even after surging 47% in just two months, UrAsia could be in for further upside. Shirvington said to watch for an AIM listing in February and a TSX listing later on the in year.