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Peter Spina, Founder UraniumSeek.com, Gold Seek LLC><CENTER><font color=A GEM in Canada, Pele Mountain Returns to the “Uranium Capital of the World”

By: Peter Spina, Founder UraniumSeek.com

-- Posted Wednesday, September 19 2007 | Digg This ArticleDigg It! | Discuss This Article - Comments:

There is a great global hunt for new uranium discoveries. Hundreds of exploration companies are on the march throughout the world staking claims, sinking drills into the ground, analyzing rock and are all hopeful of the assay results.  The great uranium grab continues with the price remaining strong near $100/lb, after the long overdue correction. The resulting reaction was a sharp decline in most uranium stocks. Some of these investments deserved their price haircut with lofty valuations. Others were never fairly valued and consequently provide investors with an excellent opportunity at this time.


Varied forecasts for uranium still hold prospects for another run back to $150/lb or higher. Should prices just stabilize after this pullback; a $100/lb price will create some enormous profits for the first group of companies to bring in new mine supply. Once the highly imbalanced and growing demand worldwide is satisfied, the U3O8 price may begin to ease. After this period, the lowest risk-reward profits will have been made. How many years until this event occurs is debatable, but until such time, one of my most favored advanced-staged uranium properties continues to remain under the radar screens despite their 33 million pounds of uranium, in addition to their other ‘gems’.


When I take a look around the uranium field, I have come across several potential investment choices. Some with interesting properties and others with strong cash flow models.  In the more speculative investment class where large fortunes have been created before, the exploration activity is at historic levels. There should be a period upcoming with multiple discoveries of mineable deposits that will generate a buzz among this sector-class. Should there be a major discovery then expect speculative capital to flood the sector. Yet investors need not to take on unnecessary risks when there are investment choices that are well-advanced in their exploration programs and are trading at low market valuations.


Key Highlights:

  • Excellent Leverage to Uranium
  • Uranium NI 43-101 Resources: 33.05 million lbs
  • Scoping Study Out Shortly
  • Stock Symbol: TSX-V: GEM
  • Shares: 72M | Fully Diluted: 81.2M ($6.5M Cash on Exercise)
  • $4M in Cash | No Debt
  • 12 Month Price Target: $2+

Elliot Lake - Peter SpinaPele Mountain Resources is a Canadian-based company which I have invested and followed for many years. In late 2006, the company’s exploration portfolio took on a major addition – the largest prospect addition yet to their project mix. What became immediately attractive to me when the news broke were the location, the size, the potential, and the leverage of the property. To top it off, uranium was still under $50/lb and about to accelerate its move to and past the $100 mark.


This past June, I went to investigate Pele’s new uranium property in Ontario. I spent some time with Pele’s management team in Toronto and proceeded to Elliot Lake. For those who are unfamiliar with Elliot Lake, one only needs to know this significant uranium fact: Between 1955 to 1989, this “uranium capital of the world” produced over 300 million pounds – at one point home to 11 mines and over 25,000 miners!  There is no better place to add value than a past producing area.


Covering over 20,000 acres, adjacent to several past producing uranium mines, Pele’s uranium property consists of 447 mining claims. Oh yes, add the Elliot Lake Project from the Air benefit of extensive past data, 100% project ownership and a 43-101 compliant reserves and then you have my attention. What does this all mean?


This past January, Scott Wilson Roscoe Postle Associates Inc. released a NI 43-101 compliant report estimating that the deposit contains 30.05 million tonnes grading 0.05-percent U3O8, for a total inferred resource of 33.05-million pounds U3O8, and an additional potential mineral deposit of 25 to 30 million tonnes at grades ranging from 0.04 to 0.05 percent U3O8. When looking at the property on the ground and the data provided by past drilling programs, the potential for a 100+ million pounds deposit is quite possible.


What makes the story even more exciting than the large uranium deposit is the rare earth metals found with it. Drilling at the property has confirmed that for every pound of uranium, a few pounds of Rare Earth Elements (“REO”) are also situated with the uranium. As stated in a press release earlier this year:


“As noted in prior press releases, Scott Wilson RPA is investigating the technical and economic viability of REO recovery as a means of increasing revenues at Elliot Lake. REOs are critical components in many high-tech applications including hybrid motor vehicles, flat screen monitors, and high-power magnets. Although demand for REOs is growing rapidly, over 90-percent of their supply is controlled by China, which has recently imposed tariffs on their export.



Elliot Lake Drill RigThere are upwards of 500 uranium companies available to investors in the US and Canada. Many are just pure exploration plays with just prospective land packages, no compliant resource base. They have a lot of work to do and many will come up empty handed in their expensive quest to find a sizeable uranium deposit. Pele already has a deposit in a past producing uranium district which should be economically mineable at current prices.


The lower grade uranium ore does require firm uranium prices but with Pele advancing the project, they should be within 3 to 5 years in production. This is within my projected timeframe of strong uranium prices and one must also consider the possibility for the company to lock uranium sales in even before production commences. The project also provides investors with terrific leverage to the uranium price. Hypothetically speaking, should the production cost be $55/lb and with uranium trading at $85/lb, then the profit in this scenario equates to $30/lb. Now should the uranium price move to $145/lb, then the profit margin grows to $90/lb – or a triple in profits!


As well, such a timeframe puts them in the class of companies that have a genuine potential to make investors a strong return on their investments. Advanced stage exploration companies like Pele have a much higher prospect to advance their projects into production.  Investors in the mining arena know that mines today can take several years or more to move into production. This provides Pele with a huge head start and thus minimizes the risk. When comparing the company to their peer group – the advanced uranium exploration companies - Pele continues to trade at just a fraction of group valuations!


In the coming few weeks, Pele will be releasing their anticipated Scoping Study. It will provide investors with an update on the project:


“The focus of the ongoing studies is to establish the basis for economically viable, safe, and environmentally compliant mining and processing facilities at Elliot Lake where an inferred resource of over 33 million pounds of U3O8 has been outlined, with the potential for significant upgrade and expansion.”


Pele has seen a vicious correction with the uranium, mining sector over the past months. This has created the opportunity for investors to enter into this company at severely discounted levels from earlier this year. Before Pele announced the addition of the Elliot Lake project, it was trading around $0.20/share, which I thought was discounted based off their other projects. Yet with the announcement of Elliot Lake, the stock soared to over $1.50 a share before resetting to the recent $0.60/share level. Therefore one could infer that the addition of the project is only being valued around $0.40/share! 


Pele Stock Chart, TSX-V: GEM, 1-Year Daily


With current market valuations for Pele, I have made it one of my few selected uranium investments. Combine continued progress at their Elliot Lake project along with a firm uranium price, and we have the ingredients that could re-price Pele over the coming months. Using industry benchmark valuations, I could see Pele moving to record levels. $3 - $5/share valuations do not seem unreasonable at this time.


Pele Mountain Resources - Project Locations - Ontario, CanadaSteady progress continues at Pele and more investors are likely to discover Elliot Lake in the near term. I believe moves to strengthen the board and management team will be necessary and beneficial as the project advances. Interest by other uranium companies is quite possible too; Pele is always a potential target. Despite Pele’s current focus on Elliot Lake, do not overlook Pele’s gold, nickel and diamond projects which are certainly going to add value down the road.


In the end, the risk/reward I attribute to this stock and with the current $0.60/share makes Pele a true GEM of a stock! I recommend investors take a further look at the company. Here are some great resources to do so:


-         Pele Presentaiton: http://www.uraniumseek.com/uraniumcasts/GEM/


-         Bob Moriarty’s Pele Report: http://www.321gold.com/editorials/moriarty/moriarty062507.html


-         Pele’s Website: http://pelemountain.com/


I continue to favor companies with low-profiles as greater opportunities and returns have been made through such investments. I have provided three publicly over the past year or so and here is my public report card:

#1 – WEX.V: Profiled at $1/share. Current Price: $2+

#2 – GORO: Profiled at around $1.50/share. Current Price: $4+

#3 – TBLC: Profiled at around $1/share. Current Price: $3+

#4 - NEW – SMR.V: Profiled here at around $0.90/share. Initial 6-month Price Projection: $2+

#5 - NEW – GEM.V: Profiled here at around $0.60/share. Initial 12-month Price Projection: $2+

You may view my public equity reports here: http://news.goldseek.com/PeterSpina/

I also send out these profiles on my free e-mail list: www.GoldSeek.com/email

If you would like more investment ideas, including fundamental updates on silver and gold, you may find my contributions weekly at:

Silver: www.SilverForecaster.com

Gold: www.GoldForecaster.com


For further research and information:


Contact the Company Directly:

Pele Mountain Resources, Inc.
2200 Yonge Street, Suite 905
Toronto, Ontario M4S 2C6

416 368 7224 phone
416 368 7230 fax
800 315 PELE toll-free



     Quote: http://finance.yahoo.com/q?s=gem.v


 - September, 2007


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The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. The author of this report is not a registered financial advisor. The author has received a compensation fee for research, publishing, distribution along with the marketing services provided on the author’s website, www.uraniumseek.com. Readers should not view this material as offering investment related advice. Author has taken precautions to ensure accuracy of information provided. Information collected and presented are from what is perceived as reliable sources, but since the information source(s) are beyond our control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The information presented in stock reports are not a specific buy or sell recommendation and is presented solely for informational purposes only. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market.

Please note: Pele Mountain Resources Inc. Is a paying client on Uraniumseek.com, Gold Seek LLC. The author holds a position in the company and is providing investor relations work to increase investor exposure in the company. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities & therefore information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. Investors are advised to obtain the advice of a qualified financial & investment advisor before entering any financial transaction.

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-- Posted Wednesday, September 19 2007 | Digg This ArticleDigg It! | Discuss This Article - Comments:


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