By: Energy Central
For the week ending May 18th, 2007
An excerpt from the May 18th, 2007 edition of the Energy Central newsletter…..
At the recent New York Hard Assets Conference (May 14-15, 2007), there were a number of companies giving presentations as well as a number of noted newsletter writers giving talks. I can tell you that at any presentation where the topic of presentation was Uranium – there was standing room only and you could have heard a pin drop in the room. Attendees were literally hanging onto every word spoken by the presenters.
The one idea that was common to all was the notion that Uranium spot prices are headed higher, driven so by a glaring supply-demand imbalance. The question, though, that has been nagging at me is how high is too high? At what price inflection point does Uranium as an energy source no longer make sense? This week I finally found my answer thanks to the Canadian Nuclear Safety Association (CNA).
It turns out the cost breakdown of operating a nuclear reactor is 5% related to Uranium and 95% related to things like labor, management salaries, maintenance etc…So with this being the case, we could easily see Uranium prices carry on with their upward trajectory. In fact CNA spokeswoman Claudia Lemieux quoted in the Globe and Mail on Friday May 18th says Uranium prices could go to $1000 per pound and not have a deleterious effect on the operating costs of a reactor. Similar comments by Ux Consulting LLC of
However, investing in Uranium stocks is not a slam dunk, easy-money proposition. Getting at the Uranium mineralization is a challenging issue and remains so. This has been aptly illustrated by the trials and tribulations of Cameco at its Cigar Lake Project in
Of primary importance to investors is the Uranium geological setting. You see, in
In places like the
Investors who have studied the
Newsletter writer Doug Casey is well aware of geological setting issues. He recently made a comment in the Bull and Bear newspaper to the effect that investors now should be starting to focus on those companies that are exploring in areas away from these Basins. And I trust you can see why he would say this. The cost of drilling through the thick layer of sandstone is far from cheap. Any eventual mining or bulk sampling will entail having to sink a shaft which will be prone to a
This week I introduce two Uranium exploration companies. Two are active in the
Uracan Resources (TSXv:URC):
Uracan’s efforts to date have all been focused on its North Shore Property in
Uracan has just released its drill data on 46 of 58 holes drilled over the past several months. The majority of the assay’s had uranium mineralization from surface. However, two holes in particular SS-22 and SS-23 should start creating a buzz in the industry.
Hole SS-23 returned 124M of .55 lbs per tonne with the first 40 metres from surface running .88 lbs per tonne. I don’t know what your math says but to me it spells 124 metres of $65 rock that would probably only cost $20 per tonne to mine (back of the napkin). Find 200 million tonnes of this ore grade and not only do you have one of the largest uranium discoveries in
Additionally, Uracan is also well positioned in
With Uranium prices set to rise even further, the economics of a lower grade deposit such as this start to come into clearer focus. Keep a close eye on this company as it marches forward with determination.
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Charts, analysis and commentary offered in this article are for information only and have been taken from sources believed to be reliable. No guarantee is made as to their accuracy. This article does not constitute a solicitation to buy or sell particular securities. Readers of this article should consult their Investment Advisor for further information on companies noted in the article. The author acknowledges that he owns securities in companies noted in this article.
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