quakes99 wrote: You make some interesting points, sudzie. Not sure I agree with some of them but one stands out as the answer to a question that others keep posting... "IF PLS is so great then why have we had zero takeover bids so far, other than Denison?"
For well over 2 years it has been poster after poster saying that there will be No takeover offer until AFTER a PEA has been done. And here we are... 10 days AFTER a PEA whose Full Report should be filed this week on SEDAR, at which time the full details on the contained studies will be available to other potential acquirers.
As we learned a week ago, only Fission and Denison management are able to review and analyze the full report before it's filed on SEDAR. Once filed, then other potential buyers will be able to analyze the assumptions, proposed mine plans, CAPEX and OPEX determinations, metrics of the Economic Analysis, as well as the detailed MET studies, Infrastructure proposals, Geotechnical data with respect to hydrology and underground mining, potential for extracting the associated metals like Gold, and on and on. Once the complete PEA has been released, then its quality and recommendations can be fully assessed by those potential suitors still sitting on the sidelines.
But the point you raise about U3O8 prices is a valid one. It may be that, as you say, potential buyers of PLS (that would plan to take it into production rather than continue developing the assets for a possible sale to another party at a later date) want the U3O8 price risk as low as possible. They want some certainty that Japan is going to restart a lot of reactors so that they will not be dumping 90M lbs of U3O8 onto the Spot Market over the next few years. The current world consumption is 147M lbs/year for existing nuclear power stations. If Japan were to dump their stockpiles onto the market, it would take U prices down well below the lows of the past couple of years. It would push the supply/demand imbalance well beyond 2025.
So, given that, are potential buyers willing to pay $1B for PLS assets, and invest another $1.1B into building a mill and infrastructure, and develop a mine, while uncertainty over the Japan restarts situation continues to weigh on the U market, keeping Utility buyers on the sideline waiting for the signals from Japan that no further U3O8 dumping is going to occur?
Therefore, I would argue that there have been zero offers on an outright sale of PLS because the risk analyes done by the major producers still shows uncertainty with respect to Japan and the details (fine print) contained in the PEA. Once those risks have been set aside then the potential for offers will increase significantly.
Will that happen before the vote? Impossible to say at this time. A rally in U prices and glowing reviews on the quality of RPA's work on the PEA would certainly increase the chances. And with Japan now loading fuel into Sendai 2 it is looking more and more likely that Japan is going to restart a significant number of reactors, as well as continue to expand their nuclear power program as they have previously stated.
Just my own thoughts and opinions....
Cheers and hope you are having a good weekend. ;-)
sudzie191 wrote: Actually, the first extensive report by Raymond James January 12, 2015 assumed US$70/lb uranium long term and US$0.87/C$ exchange rate to get NPV C$890 or C$2.20 per share.
So in effect same as FCU PEA since lower exchange rate, and same report says uranium supply falls into deficit in 2020, a long wait.
In effect, Raymond James report told the market last January this deposit is uneconomic until uranium gets to US$70.
Dev and Ross knew this before the September PEA came out. THey also knew that noone was willing to take the share price up beyond that $1.20 to $1.30 level, and the short crowd ensured they were ready to jump all over it.
They kept putting out good drill results, but no impact on price because this Raymond James report is out there, and likely all the fund managers, larger inverstors had read it.
Dev and Ross also would have known that the profitability of the deposit was much more sensitive to uranium price increase rather than lbs in the ground increase.
So what to do? Discontinue drilling until price rises in 2017 2018 or explore something else.
None of the confidentiality companies were eager to do anything. Cameco the most obvious, had the Federal Gov't on thier backs for some taxation issue so they not eager, and still not, certainly until election is over and that is settled or forgotten.
Talks began with DML, and it appeared that FCU would need a PEA to verify the Raymond James numbers which it did. And DML and FCU knew that back in July when they signed the deal.
The PEA was expedited to have some basis for the circular coming out this Friday.
And DML folks have been busy writing thier circular which also comes out.
What each of these says about each other and the deal in the circular, and what analysts think about it, large shareholders we should find out a bit after the circulars are issued.
What the NO crowd here think is a forgone conclusion, lol
Quakes has meticulaously given you a lot of very helpful information in the library, and has done some sensitivity analysis to show you that we basically need price increase of uranium more than lbs increase.
A yes vote avoids putting FCU on care and maintenance until the price increase occurs, because of the combined treaury of Mergco have about $40 million.
THats enough to carefully budget exploration programs for DML assets and FCU to get us to uranium price increase around 2017 2018.
In the meantime, if the taxation issue goes away for Cameco after the election, they might get antsy for the Mergco and take it out with a stock offer at a premium to todays intergrated price, and as the price of uranium rises, so will your Cameco shares, so that in effect you may very well see that $2.20 for your current FCU shares by early 2017 but in the form of Cameco shares.
THis is a possible outcome that to me certainly looks better than the care and maintenance scenario for FCU for a couple of years. Anyone thinking Dev and Ross go back to a big drilling program and the price rebounds imediately is dreaming big time.
What DML essentially wants is not just Dev and Ross but that very successful exploration team of about 12 people to turn loose on DML assets and to continue on FCU. That is the key thing and thye have a proven record that they will perform. I have met that team and they are a good bunch, very qualified and capable of expanding those DML assets.
We c.............................. sudzie191 wrote: When all the analysts were falling over each other with price targets of $2.20 one upping each other with $2.40 etc, did any of them say when price might get there?
Were any of them smart enough to link their price targets with uranium price?