Namibia's red hot uranium winners
Namibia's red hot uranium winners
One country’s uranium diggers and explorers top the ladder during a tumultuous year for uranium oxide prices.
Author: Barry Sergeant (Mineweb)Posted: Friday , 14 Dec 2007
JOHANNESBURG -
A list of 20 selected uranium stocks currently sit at an average of 45% below 12-month high prices, after a tumultuous year for uranium oxide prices. Some uranium stock prices have declined by 70% and more; as a rule of thumb, those stocks with assets in Namibia, generally ranked as the finest mining investment destination in Africa, have lost the least.
Namibia perhaps emerged as Africa's hottest destination for would-be uranium diggers after Areva (the world's third biggest uranium producer) took out UraMin in September this year for $1.9bn. The transaction was part of a composite $12bn Areva deal with state-owned China Guangdong Nuclear Power Corp. CGNPC agreed, inter alia, to buy 35% of the uranium production of UraMin, holding deposits in South Africa, Namibia and Central African Republic.
Rio Tinto (RTP LN, £52.94 a share) owns the Rössing mine, known to uranium specialists as the "grand old lady" of the Namibian uranium industry. Rössing lays claim to 140mlb historical production over 30 years, with current production running at around 8% of global uranium oxide output. Rössing boasted an initial resource of 373m tons grading 0.03% to 0.05% uranium oxide; remaining resources of 250m tons at 0.025% uranium oxide are contained in the monster 5km long, 500m wide and 350m deep open pit.
Paladin (PDN AU, A$6.67) is currently commissioning its 104mlb resource Langer Heinrich project in Namibia, with fully commissioned annual production projected at 2.6mlb a year. Meanwhile, Bannerman (BMN AU, A$3.97) boasts a 27mlb JORC compliant resource in Namibia, at 0.022% grade and also boasting the "alaskite" mineralogy known at the Rössing mine. Bannerman has already found its mark on the uranium radar screen, given market recognition for its Goanikontes project (adjacent to Rössing and Langer Heinrich and discovered by Elf Aquitane a half century ago). Bannerman also holds the Swakop River project, around Langer Heinrich, seen as highly prospective for calcrete hosted secondary uranium oxide mineralisation
On September 17 this year, Bannerman announced a detailed scoping study into the economic viability of its Goanikontes project. The study has confirmed that, "subject to the delineation of the target resource base, a viable operation with strong cash margins could be developed". The uranium ore would be mined in a conventional open pit at a rate of 15mt a year. Annual production is put at between 6.4mlb and 8.8mlb uranium oxide with a mine life of 12 to 15+ years. The target commissioning date is late 2010, with full production anticipated by mid-2011.
| Uranium oxide production 2006E (mlb) |
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| Cameco | 21.5 | 20.1% |
| Rio Tinto | 18.4 | 17.2% |
| Areva | 13.7 | 12.8% |
| KazAtomProm | 9.6 | 9.0% |
| TVEL | 8.5 | 8.0% |
| BHP Billiton | 7.5 | 7.0% |
| Navoi | 5.9 | 5.5% |
| Uranium One | 2.6 | 2.4% |
| Other | 19.1 | 17.9% |
| Total | 106.8 | 100.0% |
| Source: World Nuclear Association, Ux Consulting, |
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| Areva, RBC Capital Markets estimates |
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Xemplar Energy (XE CN, C$6.22) is seen by specialist analysts as an interesting early stage exploration play in Namibia; it already boasts one of the highest market capitalisations among uranium developers. Xemplar has only been around for a year but has secured ground all the way from Namibia's northern border with Angola to the southern border with South Africa, where Xemplar's lead "Warmbad" property can be found.
A note from Canaccord - which has visited the site - discusses six distinct mineralised radiometric alaskite bodies, about 12km apart, within an area covering 40km by 12km. Grab samples from the six sites run from 0.03% to 0.13%. Then there is Extract Resources (EXT AU, A$1.12) and its Husab exploration license, immediately south west of Rössing. Extract is known to be hoping for a 10-15mlb JORC compliant resource by February, and up to 30mlb by mid-2008.
The "Rössing South" deposit, 10km south of the monster Rössing deposit, lies under 30m of cover, but cannot now be ignored, with spot uranium trading higher than $90 a pound. An alternative entry is via Kalahari Minerals (KAH LN, £0.34), which holds 36% of Extract.
On November 1 this year, Forsys Metals Corp (FSY CN, C$3.81) announced an MOU with Korea Electric Power Corporation over possible joint venture arrangements for the future exploration and development of Forsys' Namibian uranium properties, including Valencia.
| Selected uranium stocks |
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| Stock | From | Value |
| Producers | price | high* | US$m |
| CAMECO | C$37.10 | -38.1% | 12760 |
| URANIUM ONE | C$9.32 | -50.0% | 4310 |
| PALADIN | A$6.67 | -38.2% | 3561 |
| ERA | A$19.75 | -30.9% | 3318 |
| DENISON | C$9.10 | -45.1% | 1710 |
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| Developers |
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| FIRST URANIUM | C$10.50 | -21.4% | 1299 |
| AURORA | C$13.14 | -34.6% | 951 |
| XEMPLAR | C$6.22 | -14.8% | 737 |
| MEGA | C$3.21 | -64.3% | 572 |
| LARAMIDE | C$6.59 | -60.5% | 380 |
| BANNERMAN | A$3.97 | -4.1% | 446 |
| UR-ENERGY | C$3.44 | -36.9% | 313 |
| FORSYS | C$3.81 | -62.6% | 289 |
| EXTRACT | A$1.12 | -17.4% | 181 |
| STRATHMORE | C$2.37 | -56.9% | 170 |
| TOURNIGAN | C$1.24 | -72.4% | 150 |
| BERKELEY | £0.62 | -32.8% | 147 |
| URANIUM ENERGY | $3.43 | -63.3% | 129 |
| KHAN | C$1.31 | -76.8% | 70 |
| WEST PROSPECTOR | C$0.96 | -84.6% | 43 |
| Average |
| -45.3% |
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| * 12-month high |
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