World’s Top Uranium Project
Best Stock Prospect To Profit From Powerful Uranium Trade Trends
A Canadian company owns a vast uranium mine set to benefit from soaring uranium prices, increased exports to China and Australia's decision to allow more uranium mining.
Energy analysts predict a global uranium shortage over the next decade unless a significant number of uranium mines are quickly brought into production.
According to Pinetree Capital, global uranium demand in 2006 of some 170 million pounds exceeded world uranium production of only 100 million pounds. By 2030, demand is expected to rise almost 50% to 250 million pounds.
Uranium Prices Soar
In just six months, the spot price of uranium has jumped over 100% from US$55 to a record $113. TD Newcrest analyst Greg Barnes writes that uranium’s spot price has increased by $2.73 a week in 2007, almost quadruple the average weekly increase in 2006.
Enticed by lucrative uranium prices, thousands of junior miners are scouring the globe for yellow cake. With hundreds of new companies issuing stocks on exchanges around the world, serious readers study international trade trends and statistics before investing in any companies with "promising" uranium mining projects.
Others speculate that the price of uranium will rise further and buy the likes of Uranium Participation Company (U on TSX), an investment holding company that directly buys and sells uranium.
Australia’s Unique Uranium Trade Opportunities
The Australian government has just signed a formal agreement to supply uranium to China. Worldpress.org quotes China’s ambassador to Australia as explaining that China needs more uranium supplies for its nuclear energy program.
Second in production only to Canada, Australia holds some of the world’s largest untapped uranium deposits, with an estimated 24% of global totals.
Also at the end of April, Australia’s federal Labor party voted 205 to 190 to end its 25-year policy of restricting uranium production to just three established mines. Australia’s state governments will now decide whether or not to allow any new mines within their jurisdiction. The Weekend Australian reports that South Australia is the only state pushing for more uranium mines, although the Northern Territory has indicated support.
Queensland's state Labor party is currently against allowing production at its uranium mines. Although Queensland will hold an election in November, the Labor party won 59 of 89 seats in the last election in 2006, far ahead of the 17 seats for second-place The Nationals.
This year, Australian uranium exports are expected to rise 32% to $725 million this year from US$550 million in 2006. Both the price and volume of Australian yellow cake is expected to accelerate until at least 2009.
Laramide Resources’ New 17 Million Tonne Uranium Mine
Laramide Resources (LAM on TSX) fully owns the Westmoreland Uranium Project, a high-quality development stage uranium asset in Queensland, Australia. Now that the federal "three mine" policy is no longer in effect, Queensland’s state Labor party is under enormous pressure from the powerful Australian Workers Union to proceed with unfettered uranium mine production.
A preliminary scoping study released on April 17 estimates that Westmoreland could generate about 3 million pounds or 1,361 tonnes annually for over 11 years. Production costs are initially projected at an average US$19 per pound. At a uranium price of $113, this leaves a hefty profit margin of $94. The preliminary study appears to include some conservative assumptions, since a modest uranium price of US$50 per pound was used in the calculations.
As well, the company has bought uranium exploration properties in Australia’s Northern Territory. Laramide also owns the Homestake uranium properties in New Mexico.
To improve the valuation of its uranium properties, Laramide will transfer its non-uranium assets to a new issue called NewGoldCo. Laramide’s shareholders will receive a special dividend from a portion of NewGoldCo’s shares.
