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Strong charts fuel PLS project takeover speculation: Canadian uranium

Tommy Humphreys
0 Comments| July 31, 2013

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Rumours are circulating on Howe and Bay Streets that someone may soon move on the PLS project in northern Saskatchewan, a 50/50 joint venture held by Fission Uranium (TSX: V.FCU) and Alpha Minerals (TSX: V.AMW), fuelling demand for the shares of both companies.

Click to enlarge

These are unsubstantiated reports, but the PLS project is an outlier because of its high grade and proximity to surface and roads.

Let’s discuss a few potentially interested parties.

Denison Mines (TSX: T.DML), the Lundin backed uranium producer, is an obvious suitor. Lundin Group Chairman Lukas Lundin told me in May he was impressed with PLS, and that Denison is looking to expand in the Athabasca Basin.

While impressive results are coming out of Denison’s Wheeler River project, the company likely regrets not buying Fission’s 50% interest in PLS as part of a partial takeover of the Fission predecessor last winter. PLS could add life to the Denison story, whose shares last traded at $1.37, down from over $15 in 2006 and 2007.

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PLS Area Play Map

Cameco (TSX: T.CCO), Canada’s largest uranium company, is another potential suitor. Cameco was first to bid for Hathor’s Roughrider deposit in 2011 but lost in a bidding war with mining conglomerate Rio Tinto. Cameco would likely not move on PLS without a resource estimate completed on the project (scheduled for 2014), but it’s still a possibility.

Caution has cost the company before (Roughrider).

When Rio Tinto bought Hathor it was the giant’s first move in the uranium business. Gaining a toehold in Saskatchewan’s Athabasca Basin was a strategic objective for the company. My point here is, there are other mining companies, end users, state owned enterprises or other investors who could take a run at PLS, and Canada’s suffering investment bankers are probably pitching the idea.

PLS is not yet at the size of Hathor’s Roughrider deposit, or even close to Cameco’s MacArthur River, but it has the right attributes at an early stage. Shares in Alpha Minerals have climbed from $.20 to $5.60 in under 12 months.

Long term readers may remember my July 2011 prediction for Hathor to be taken out, which incidentally happened just six weeks later.

I was a big believer in Hathor because after the Fukushima nuclear disaster in March, 2011 shares in other uranium junior companies cratered, but Hathor remained strongly bid. HAT CEO Mike Gunning also made a pretty compelling case.

In the context of the current junior mining market, the charts of both Alpha and Fission definitely stand out. Whether a takeout is looming or not the momentum behind the PLS discovery is inspiring.

If the PLS project gets taken over the Canadian uranium exploration spotlight will move to NexGen Energy (TSX: V.NXE), with exploration programs underway adjacent to both PLS and Roughrider, as well as other smaller players in the basin (map).

Worried you missed the boat on a discovery (again)? Last week’s Alpha Minerals buyers, myself included, still see upside (do your own due diligence).

Here’s another reason to be optimistic: There’s always a new train leaving the station.

PLS Photos (FCU).

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Disclaimer: These are opinions and NOT investment advice. Do your own due diligence. Readers are responsible for their own actions.


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