One Uranium Company on the Verge of its First Big Score
Source: Mark Whistler, WallStreetRockStar.com (1/30/08)
Here's one micro cap Canadian uranium exploration that might not be a micro cap for long.
I’ve been following the uranium story for a while… Last year, I coauthored the book "Profit From Uranium," while also consulting for several companies within the industry. What’s interesting, is while I’ve been on the nuclear beat for some time now, the story is getting hotter by the day, especially with global warming relentlessly rearing its ugly head.
But there’s even more going on… there’s also a supply shortage underway, which could drive the price of uranium -- even more -- though the roof over the next few years. FYI, since 2005, the price of uranium is up 260%.
What’s happening is this: Current mine production only fills 55% of the world’s reactor needs. Thus, the other portion of the uranium used is coming from secondary sources, like decommissioned nuclear warheads. There simply aren’t enough mines online to fill the world’s demand. And, because it takes five to eight years to bring a new uranium mine online, the process of developing news mines has been tedious, to say the least. The aforementioned supply shortage, coupled with a global rush to build a plethora of new reactors is keeping the price of uranium at stratospheric levels, something uranium exploration companies are well aware of.
Really, it’s as simple as this… If there isn’t enough of something that everyone wants, and you’re one of the guys holding that thing, you can charge a whole heck of a lot for it.
And this could be exactly the case with UNOR Inc. (Vancouver: UNI), a small Canadian uranium exploration coming that’s potentially sitting on massive deposits.
Cashing In On The Last Big Basin
In Canada, all of the uranium presently mined, comes from two Proterozoic basins, the Thelon basin and the Athabasca basin. These two basins hold a very specific type of geology (where uranium is found) called unconformity-style. Mines in the Thelon and Athabasca basin include Cameco’s McArthur River, Cigar Lake, Eagle Point and Rabbit Lake deposits.
However, there is a third basin containing the same type of geology, but has yet to be tapped. The Hornby Bay basin is the third (and final) of Canada’s unconformity-style basins and it could hold some massive uranium deposits. UNOR has the largest presence in the Hornby Bay basin, with 100% owned Coppermine River Group and Asiak River Group uranium mineral properties.
Just to paint a picture of what the company could be sitting on, UNOR states, “Cameco's McArthur River deposit in the Athabasca basin is reported to contain 540 million pounds of U3O8. At US $85.00 per pound, this equates to a contained value of US $45.9 billion. In terms of a gold equivalent, at US $700 per ounce (to be really conservative), the same deposit would have to contain over 60 million ounces of gold to be as valuable.
Even the Rabbit Lake deposit, while smaller, is reported to contain annual production of 12 million pounds of U308 ($1.02 billion each year at current market prices) and is more valuable than a 6 million ounce gold deposit - at US $700/oz.”
Bottom Of The Ninth, Bases Are Loaded
With all of the aforementioned in mind, what makes the UNOR story interesting is the simple fact that the company could easily be sitting on a deposit similar to those in the Thelon and Athabasca basins. And, UNOR could be very close to uncovering a mega-deposit, perhaps as soon as this year.
Initial geo-physical results from the 2007 drilling season showed the potential of a few very promising “pathfinder veins”, which could be alluding to large deposits, just waiting to be uncovered. More proof will come in the next few weeks, when 2007 geo-chemical results come back from the Saskatchewan Research Council, which is a globally respected lab that analyzes core samples from drilling. UNOR will most likely implement a bold drilling plan in 2008, based on the expected geo-chemical results, thus narrowing in on the uranium deposits it has been tracking, since 1996.
Here’s where the story ties back to investors though…
Over the past year, the share price of UNOR has been in a tailspin, due to a lack of significant news on a major finding. Fact is, the company has never been in a more financially healthy position with over $4 million in cash in the bank. (Don’t forget that every time the company comes forward with an offering, Cameco continually buys in to maintain its 19.5% ownership.)
The only reason for the decline in the stock price is simply - a lack of news. But all of that could change this year.
What Wall Street doesn’t realize is exploration takes time and UNOR’s is well into the game. As an analogy, UNOR’s Coppermine claims (100% owned by the company) are sitting on third base, and 2008 could be the year the company scores its first big run.
And, given that shares are sitting near 52-week lows, there’s never been a better time for investors to consider taking positions.
Back to our baseball analogy though, the company’s Lac Rouviere project is presently on second base, in terms of exploration, while the Baffin Island claims have just made it to first.
What all of this means is UNOR isn’t a ‘one hit wonder’ and could provide substantial results for many years to come. And, given that shares are sitting near 52-week lows, there’s never been a better time for uranium-savvy investors to take positions.
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DISCLOSURE: Mark Whistler does not own the above-mentioned stocks. He is the founder of WallStreetRockStar.com and is the author of Trade With Passion and Purpose (John Wiley & Sons, Inc. 2007), Trading Pairs (Wiley, 2004), Profit From China (Investment U/Wiley, 2006) and Profit from Uranium (Investment U/Wiley, 2006.)
Mark’s newest book, The Swing Trader’s Bible (John Wiley & Sons, Inc.) - co-authored with CNBC/Fox News regular guest Matt McCall - will be on shelves in late summer, 2008.
In addition, Mark also writes regularly for TradingMarkets.com and Investopedia.com.