RE: Is .01% GoodBut ultimately, grade may be the most important factor of all. Or, put another way: are concentrations of the metal in rock high enough that the material can be mined at a cost lower than it can be sold for? At the right grade, almost any mining obstacle can be overcome. Conversely, if a deposit is too low grade, then if the “pounds in the ground” are found deep in the earth, or are bound in hard rock, then the odds of those pounds seeing the light of day are slim to none… and slim just caught a train out of town.
Many junior uranium companies would rather you didn’t know this. That’s why they spend most of the time waving their arms about the number of pounds they have, while mumbling under their breath when it comes time to discuss grade. But a quick calculation – using the current uranium spot price of $30.20 a pound, with a comparison to the gold grades that most resource investors are familiar with -- shows how grade affects the economics of a deposit:
0.03% U3O8 = $20 a tonne/rock (equivalent to 0.045 oz/tonne gold)
0.3% U3O8 = $200 a tonne/rock (0.45 oz/tonne gold)
3% U3O8 = $2000 a tonne rock (4.5 oz/tonne gold)
30% U3O8 = $20,000 a tonne/rock (45 oz/tonne gold!)
As just mentioned, the position of the decimal is critical in determining the viability of a junior uranium company’s longer-term prospects… which is to say, its ability to generate enough interest within an increasingly discerning investor base to move your shares higher.
A company can have all the pounds in the world, but if the market comes to understand that its flagship properties can’t be economically mined, your investment will be like a burning match, waiting only for the promotional hype to die down before flaming out.