RE: Latest Nuke news..Jun 28, 2007 10:40 ET
RCR Equity Research Report on Global Uranium Companies 2Q07
Uranium Company Comparative Charts Highlighted Links
www.rcresearch.com.au
SYDNEY, AUSTRALIA--(Marketwire - June 28, 2007) - Resource Capital Research ("RCR"), an equity research company which focuses on small and mid size resource companies, today launched its major quarterly research report covering 23 global uranium exploration and development companies with a focus on Australia, Canada, USA and the UK. Over 300 junior and mid cap Explorers, development and production companies are identified.
The report reviews companies active in established uranium districts globally, including Australia, Canada, USA, Argentina, Peru, Mongolia, Zambia, Tanzania and Namibia.
To access the free summary report, go to www.rcresearch.com.au. To purchase the complete 90 page comprehensive report, go to www.rcresearch.com.au/documents.
Uranium Highlights - 2Q 2007
Uranium Market:
-- The spot uranium price is US$138.00/lb, up 45% from US$95.00/lb 3
months ago and up 111% from US$65.50/lb 6 months ago.
-- Forward indicators continue to suggest a strengthening outlook for the
uranium price.
-- Current indications suggest the uranium price is heading to US$148/lb
near term, an increase of 7% from the current spot price; and US$165/lb by
September 2008, an increase of 22% over the current spot price.
-- Planned and proposed new nuclear power reactors worldwide have
increased strongly from January to May 2007. As reported by the WNA, this
category has increased from 222 reactors (January 29) to 256 reactors (May
31), an increase of 34 reactors (or 15%).
-- This represents an increase of 67% from 153 reactors 12 months ago to
the 256 reactors currently planned or proposed and with 437 nuclear power
reactors currently in operation.
Uranium Companies:
-- The market valuation of our selection of Australian uranium juniors
(143 companies) is up 5% over the past month, up 31% over the past 3
months, and up 175% over the past 12 months.
-- This compares with a selection of 163 Canadian uranium juniors, down
1% over the past month, up 1% over the past 3 months, and up 75% over the
past 12 months.
-- In situ Recovery (ISR) projects advancing world wide - with focus on
South Australia, Kazakhstan, and the USA (TX,WY)
-- In the USA, in particular there are a large number of small/medium
size ISR projects rapidly advancing through technical and feasibility
milestones, the majority held by juniors.
-- Consolidation in the sector continues with acquisitions announced for
Energy Metals Corporation (EMC) and Uramin (UMN).
-- Namibian projects confirm economic potential of low grade resources
with grades of around 0.015% U3O8 (Uramin, Forsys).
Equity Market Performance
The market valuation of our selection of Australian uranium juniors (143 companies) is up 5% over the past month, up 31% over the past 3 months, and up 175% over the past 12 months. This compares with a selection of 163 Canadian uranium juniors, down 1% over the past month, up 1% over the past 3 months, and up 75% over the past 12 months.
In the past 3 months the majors have had variable performances: Cameco (CCO) is up 22%, Denison Mines (DML) up 4%, Uranium One (SXR) down 13%, Energy Resources of Australia (ERA) is down 18% and Paladin (PDN) is down 2%.
Uranium Price Outlook
The spot uranium price is US$138.00/lb, up 45% from US$95.00/lb 3 months ago and up 111% from US$65.50/lb 6 months ago.
Forward indicators continue to suggest a strengthening outlook for the uranium price. Current indications suggest the uranium price is heading to US$148/lb near term, an increase of 7% from the current spot price; and US$165/lb by September 2008, an increase of 22% over the current spot price.
These expected price levels are revised up from the RCR March 2007 Uranium Quarterly which indicated an expected uranium price of US$125/lb May 2007 and US$140/lb (+18%) by late 2008.
The September 2008 indicator reached an intra-quarter high of around US$210/lb before pulling back to the current level.
(These figures are broadly inline with the futures contract, currently trading at US$140/lb July '07 and US$152/lb January '08.)
World Nuclear Power Reactors - Pipeline continues to grow
Planned and proposed new nuclear power reactors worldwide have increased strongly from January to May 2007. As reported by the WNA, this category has increased from 222 reactors (January 29) to 256 reactors (May 31), an increase of 34 reactors (or 15%). This represents an increase of 67% from 153 reactors 12 months ago to the 256 reactors currently planned or proposed. This compares with 437 nuclear power reactors currently in operation.
The main increases are from China with 77 planned and proposed new nuclear power reactors announced, up from 24 in May 2006 (an increase of 53 units); Russia is up from 9 to 26 units, Ukraine up from 2 to 22 units (adding 20 to the list 1H07), and the USA is up from 13 to 23 units. India has 19 planned and proposed nuclear power reactors.
Asia represents the highest growth region for new power reactors driven by growth in electricity demand.
Australian Labor Party (ALP) overturns the "no new uranium mines" policy
The ALP national conference held in April 2007 overturned the "no new uranium mines" policy as anticipated. The conference sets policy for all levels of the Labor Party (Federal, State and Local) though States have been given the autonomy to make their own decisions on whether or not to adopt the new policy. South Australia adopted the policy immediately; Queensland, in a last minute reversal chose not to; Western Australia, as expected has chosen not to adopt the new policy. The NT is already open to establishing new uranium mines.
In situ Recovery (ISR) projects advancing world wide -- with focus on South Australia, Kazakhstan, and the USA (TX, WY)
ISR projects are advancing rapidly in the world's main ISR districts. In the USA, in particular there are a large number of small/medium size ISR projects rapidly advancing through technical and feasibility milestones, the majority held by juniors. While permitting uncertainties remain, there are reportedly 14 applications pending to the NRC (ISR/conventional).
Events of the past 3 months include:
Industry
-- NYMEX launched the uranium futures market May 7. From July 2, the
range of contracts will increase from 36 to 60 months -- a monthly contract
from June 2007 to May 2012.
-- China will promote nuclear power plant construction as part of its
climate change strategy - according to a report by CNDRC.
Companies
-- Uranium One (SXR) announced a takeover of Energy Metals Corp (EMC)
(US$1.5bn) which follows from its 1Q07 acquisition of UrAsia Energy (UUU)
for around C$3.66bn.
-- Paladin Resources (PDN) takeover of Summit closed June 1 with 81.8%
acceptance. Areva retains a blocking stake (10.46%).
-- Areva made a friendly takeover offer for Uramin (UMN) (~US$2.5bn in
cash). UMN has a 100% stake in the Trekkopje Uranium Project (Namibia).
Production expected 4Q08.
-- AREVA/UEX Corp. announced a decision to develop an exploration shaft
(C$100m) at Shea Creek. The project has potential to be the third largest
uranium production center in the Athabasca Basin behind McArthur River and
Cigar Lake.
-- Laramide Resources (LAM) completed a scoping study for Westmoreland
(QLD, 100%). Target production is 3Mlb pa U3O8 from 3 open pits; Operating
costs range from US$19/lb to US$25/lb. Good resource upside potential -
30,000m drill program underway.
-- Forsys (FSY): The Valencia (Namibia) pre-feasibility study (Snowdens)
released May 2007 shows potential to produce 2.4Mlb pa U3O8. The reserve is
88Mt @ 0.0125% U3O8, (24Mlb U3O8) using a 60ppm cutoff. Financial analysis
indicates an IRR of 70% using a flat U3O8 price of US$75/lb across the life-
of-mine except for the first three years of supply, where the price used is
US$100/lb.
-- CNEA and the Salta provincial government are reported to be reopening
the Don Otto uranium mine, near the western edge of the Salta Basin
(Argentina). (WNN report).
"Juniors globally are making solid progress in advancing projects through technical and feasibility milestones and near term producers continue to trade at a premium. In our view, not only is it the smaller companies with production visibility that have potential to be acquired but larger companies may also now find themselves the target," John Wilson, Managing Director of RCR, noted.
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 and mid cap resource companies, ranging from exploration stage, through development and production. John Wilson the principal of the firm and analyst has over ten years' experience analyzing mining companies in Sydney and on Wall Street including for major investment banks.
The report is available at www.rcresearch.com.au. The next Uranium Sector Review will be published in the September Quarter, 2007.
Abbreviations: WNA - World Nuclear Association, lb - pound, Mlb pa - million pounds per annum, U3O8 - uranium oxide.
For further information please contact:
John Wilson
Analyst, Resource Capital Research
Phone: (+61- 2) 9252 9405
Email: Email Contact