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Uranium investors clear out! Aussies refuse to take the lead

By: Andrew Mickey, BreakAway Investor

-- Posted Monday, April 30 2007 | Digg This ArticleDigg It! | Discuss This Article - Comments:

The results are in. After months of waiting, uranium investors can finally breathe a sigh of relief. On Saturday, Australia’s Labor party held its annual meeting and took a vote that would determine the fate of the country’s burgeoning uranium industry.

And the uranium industry won by the skin of its teeth. The final vote came in at 205 for and 190 against disregarding the party’s policy of not allowing another uranium mine within Australia’s borders.

You see, for more than 30 years Australia has had an official “three mines” policy when it came to uranium mining. And they’ve stuck to it. With the exception of BHP Billiton’s Olympic Dam project started in 1987, which holds the world’s largest known uranium reserves along with massive reserves of silver, gold and copper, the Labor party has stuck to its guns.

Now that’s all about to change. On Saturday, the Labor party, which is in power in all six of Australia’s state governments, lifted its ban on new uranium mines. And the uranium mining industry is set to go wild across the country that holds 24% of the known uranium reserves in the world.

But it’s not smooth sailing from here on. With such a slim victory for the pro-uranium members of the party, there are going to be a few Labor party members dragging their feet as the 100-plus Australian uranium-mining companies apply for mining licenses.

However, the worst is behind us. If the anti-uranium camp could have mustered just eight more votes, uranium prices would be headed to another new high this week and 97% of Australian uranium stocks would have been crushed.

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Something similar happened when the United States cut off online poker players’ ability to fund their gambling accounts. Every online poker stock plummeted at least 60% following the announcement of the law and they still haven’t recovered.

But that’s not a concern anymore. What’s left now is to figure out which Australian uranium stocks are going to be the best ones to put your money in going forward.

It’s bound to be the ones that are close to already existing uranium mines in Australia. Even though the vote to lift the ban won with a slim majority, it is certainly not a law and it will still be up to the six states and two territories to decide if they should actually allow uranium mining or not. Already, a few state governors that are members of the Labor party have vowed to continue with the policy of no new mines. Western Australia’s premier, Alan Carpenter, for one, has vowed there will be no uranium mining in his state while he is in office. New South Wales’ premier, Morris Iemma, voiced similar sentiments

Clearly, it would be wise to steer clear of any of the uranium mining stocks with properties in those two states. Instead, focus on uranium miners in the Northern Territory and South Australia. Northern Territory Chief Minister Clare Martin and Environment Minister Marion Scrymgour voted to in favor of eliminating the country’s “Three Mines Policy.”

The Northern Territory is home to Energy Resources of Australia’s (ERA:ASX), whose Ranger uranium mine was first discovered in 1969 and accounts for about 11% of the world’s current uranium supply.

Australia’s two other uranium mines can be found along the southern coast in Southern Australia: Olympic Dam and Beverly. The government of Southern Australia has been an ardent supporter of lifting the ban.

These are the two territories where you should be placing your uranium investment dollars. With more than 100 uranium-mining companies now in Australia, most of them are likely to run into roadblocks and become entangled in reams of red tape laid out by the local governments that weren’t onboard with lifting the mining ban.

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Don’t forget the measure only passed by a slim 205-to-190 margin and was far from the landslide victory the investment world was hoping for. Most of the investment community was hoping for a much wider victory with broad sweeping support for uranium mining across Australia and its vast uranium reserves.

Saturday should have been the start of a uranium free-for-all in Australia, but the vote and local pockets of resistance cast a dark cloud over what was supposed to be one of the biggest turning points in the uranium industry. With 38 more nuclear reactors expected to come on line within the next five years and current demand for uranium outstripping supply by 2-to-1, uranium prices are looking cheap at $113 a pound.

And investors have already started pulling their money out of Australian uranium stocks, especially since 97% of them had their futures hanging on Saturday’s vote. Now, the best places to put your uranium investment dollars are in the pro-uranium mining regions in Canada (notably Quebec), United States, Kazakhstan and Africa. While Australia drags its feet, these places will be giving more and more leeway to the uranium miners and allowing them to bring new production on line.

That’s all for now,



By Andrew Mickey
Editor in chief, BreakAway Investor

P.S. You can keep tabs on all the happenings in the moly, uranium, and base metals sectors by signing up for my free daily e-letter, Fear & Greed, here.

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About BreakAway Investor:


BreakAway Investor is a monthly financial advisory newsletter published by the Taipan Group LLC, a division of Agora Inc. BreakAway Investor seeks to uncover investment opportunities in companies that are actively expanding market share within growing markets. The compounding returns created by these two elements of growth have historically proven to achieve superior investment results.


BreakAway Investor uses a unique set of investment principles to uncover tremendous growth opportunities that offer limited risk. The top-down analysis of BreakAway Investor analyzes a broad range of industries in order to identify the most attractive opportunities. The system intends to identify the future leaders within their respective industries by focusing on technological development, competitive landscape, and the potential disruptive nature of a new technology that has already started transforming a major customer’s operations.


For the latest BreakAway Investor investment strategy, click here.

-- Posted Monday, April 30 2007 | Digg This ArticleDigg It! | Discuss This Article - Comments:

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