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Investors Pursuing Uranium Mining Stocks Once More: A Favorite Shows Up

December 4, 2022 by superuser

Wall Street experienced uranium fever fifty years ago. It had only been a few years since Paddy Martinez, a Navajo shepherd in New Mexico, had initially mistaken some “yellow rocks” on his property for gold. Mutual funds and stocks of uranium mining companies received an avalanche of 1950s dollars, which were far more valuable than the dollars we have today, driving their prices to impossibly high levels. As Yogi Berra once said, get ready for deja vu all over again. Uranium mining stocks, according to trend-spotter and editor of The Dines Letter James Dines, could become just as popular—if not more popular—than the internet stocks of the 1990s. (Note from the editor: On July 20, 2004, James Dines was interviewed by StockInterview.com when he predicted a “buying panic in uranium.”” Spot uranium (U3 08) prices have nearly doubled since that time. Dines has successfully predicted major trends in the price movements of gold, the internet, palladium, and uranium over the past 35 years. And right now, investors are repurchasing uranium mining stock.

A look at the market leader Cameco (NYSE: CCJ), which money manager Robert Mitchell dubbed the “Saudi Arabia of uranium,” reveals a three-year gain of more than 700 percent. Australian-listed Paladin Resources has experienced a meteoric rise in value over the past few years, going from less than a dollar to over two dollars (A$) per share. One reason the price of uranium should keep rising is that producers are just beginning to ramp up in order to meet the high demand, according to a recent Forbes magazine cover story titled Going Nuclear, which examined the recent price surge of the metal. 180 million pounds of uranium are required by utilities worldwide each year, but only 108 million pounds are currently being extracted from the ground.”

A Morgan Stanley institutional report from December 2004 explained that the reason why uranium oxide prices stayed low throughout the 1990s was because surplus uranium entered the market from weapons decommissioning. That extra stock made its way through the market. Because new mining production hasn’t yet started up to make up the shortfall, the Morgan Stanley analyst predicted a “deep supply-side shortage” of uranium. The uranium deficit was predicted to increase from a surplus of 6 million pounds in 2003 to almost 20 million pounds this year, and then soar to a peak deficit of more than 35 million pounds in 2006. Additionally, deficits of more than 30 million pounds were projected for 2007 and 2008. The Morgan Stanley analyst believes that the spot price for uranium oxide, also known as “yellowcake,” could reach $50 per pound.”

Mining Newsletters Favor Strathmore Minerals

What does that imply for uranium stockpiles? As more investors, mutual funds, and hedge funds look for the best returns, higher prices should be expected. Although the majority of capital will likely chase Cameco’s price higher, the stock’s strong percentage gains may have already reached their peak. New money typically looks for junior mining stocks with strong uranium project portfolios that are well-capitalized. Strathmore Minerals Corp, which trades on the Toronto Venture Exchange under the ticker symbol STM.V, is one of those that mining newsletter writers most frequently recommend. In-situ leach mining operations proposed for Wyoming and New Mexico are prominent among Strathmore’s projects, as is an aggressive exploration program in Saskatchewan’s Athabasca Basin, one of the world’s richest uranium regions and the location of uranium mining giant Cameco.

The Canadian company Strathmore Minerals (TSX-V: STM) was recommended in a letter from Resource Opportunities’ Lawrence Roulston in September. He stated, “The company is systematically adding value to the projects most likely to be significant in the near term, especially those with near-term production potential.”” The two deposits Strathmore is developing were “cherry picked” from Kerr McGee’s inventory, who was the largest private uranium explorer before the industry came to an abrupt halt in the early 1980s, according to Resource World contributing editor Alf Stewart in September. Strathmore may be seen as more of a uranium development company than an explorer since these properties have largely been drill-tested.” Money manager Adrian Day recommended uranium stocks in his research report this past June, writing, “So I am focusing on four main areas in uranium, with one or two buys in each” (top exploration companies that have the resources and are likely to put properties into production). Possibly the best is Strathmore Minerals, with technically competent management, a large number of properties, and a solid balance sheet.”

In the Athabasca Basin, a New Uranium Discovery?

Here is one of the more compelling arguments in favor of investors expecting a significant increase in the price of Strathmore’s stock over the next twelve months: In a news release published on November 16 ([http://biz.yahoo.com/bw/051116/20051116005591.html?.v=1]), After completing an airborne geophysical survey on the company’s Davy Lake property, located in the north central region of the Athabasca Basin, Strathmore Minerals announced the discovery of a discrete conductor that is more than 30 miles long. The conductor’s profile response “indicates a deep and in some places, broad source,” the company’s news release states.”

In the Athabasca Basin, almost all significant unconformity uranium deposits are known to be directly related to fault structures connected to graphitic conductors. Drilling electromagnetic conductors located inside magnetic lows led to the discovery of deposits like Key Lake, Cigar Lake, and McArthur River.

Early indications suggest that this conductor is comparable to other well-known graphitic conductors with magnetic lows, according to Jody Dahrouge of Edmonton-based Dahrouge Geological Consulting Ltd., who spoke with StockInterview.com.” Dahrouge gave the Davy Lake conductor a score of ten on a scale of one to ten. “According to Dahrouge, it is a long conductor that is split by structures, has a deep depth, and is linked to a recent fault. “It is a superior conductor that extends deep into the earth and is typical of those occurrences connected to known uranium deposits.” Dahrouge explained how the MegaTem II airborne geophysical survey was able to identify the conductor as shallow as 600 meters and running deep to 1200 meters. In the Athabasca Basin, Dahrouge compared his discovery to other uranium deposits. “According to him, an electromagnetic conductor about 2.6 kilometers long is connected to the Sue Deposit near McLean Lake. “We discovered an 8 km long conductor connected to the Midwest Deposit(s) based on our work at Waterbury Lake. Approximately 13 kilometers make up the “P2″ conductor at McArthur River. In 1984, a ground-based Deep EM Survey made the first discovery of this feature. The Saskatoon Lake Conductor, which has a length of about 25 kilometers, is connected to the Shea Creek deposits, which are found south of Cluff Lake.” These deposits are found at depths similar to what we anticipate at Davy Lake, continued Dahrouge.”

The risk taken by Strathmore in exploring 300 kilometers from the eastern Athabasca Basin, where the most important discoveries have been made, is likely what is most significant. “It was essentially unexplored,’ Dahrouge exclaimed with excitement. “It’s actually untouched land.” Even though there is strong evidence that the Athabasca Basin contains numerous uranium deposits, other junior exploration firms are focusing on the eastern basin’s shallow areas, which are less likely to contain economically valuable uranium ore. Pundit asked sarcastically, “Are they really re-flying old ground that has already been flown a hundred times, or are they just releasing old data to save money?” in reference to some of the ongoing exploration work being done in the Athabasca region.” In light of his belief that Strathmore Minerals’ Davy Lake property in the north central Athabasca Basin may be accurate, Dahrouge noted that the uranium appears to be running deeper for many of the newer discoveries.

The cross-cutting fault zones are significant components of numerous Athabascan uranium deposits. The Davy Lake conductor has cross-cutting fault zones, with a sinistral (left-sided) fault running roughly halfway along its length, according to Dahrouge. A conductor extension that crosses the fault from west to east and “flows out” into a small, sub-circular magnetic low is also present, according to Dahrouge.” The Davy Lake conductor fits the bill, as do many of the Athabascan uranium deposits, which typically are discovered between overlying sedimentary units and underlying basement rocks. According to David Miller, president of Strathmore Minerals, “the 50-plus kilometer geophysical anomaly appears to indicate a basement conductor.”” A geophysical anomaly does not constitute an ore body, Mr. Miller said, tempering the excitement in the room. These promising preliminary findings will be followed by infill geophysical lines, ground geophysics, shallow drilling, and alteration-hunting geophysics. The large rigs will be brought in and the conductor tested at the unconformity once we have narrowed the target to drill.” The Davy Lake conductor continues to excite Dahrouge, who stated that it “clearly” represents an excellent exploration target for uranium deposits of the unconformity type.

What does this all mean? As further exploration more precisely defines how valuable those recently discovered conductors may become, it could help to explain why Strathmore Minerals may very well be on the road to a world-class uranium discovery. The permitting process is currently in its preliminary stages for Strathmore’s properties in Wyoming and New Mexico, which could contain several million pounds of uranium. A utility company that will eventually require the company’s uranium oxide to fuel its nuclear reactor may instantly increase its value for several of Strathmore Mineral’s properties as the spot uranium price moves closer to the widely accepted short-term target above $40/pound.

By StockInterview, Inc., 2007 All Rights Reserved. ALL RIGHTS RESERVED.

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