SOURCE: Resource Capital Research

September 01, 2005 17:36 ET

Equity Research Report Published on Global Uranium Companies

SYDNEY, AUSTRALIA -- (MARKET WIRE) -- September 1, 2005 -- Resource Capital Research, an equity research company which focuses on small resource companies, today launched a major quarterly research report covering 20 global uranium exploration and development companies with a focus on Australia, Canada and the US. Over 120 junior and mid cap explorers and development companies are identified with a total market capital exceeding US$4.2 billion.

The report covers North American traded companies US Energy Corp, Fronteer Development Group (AMEX: FRG), CanAlaska Ventures (TSX-V: CVV), and Western Prospector Group (TSX-V: WNP).

The report reviews companies active in established uranium districts globally, including the Gawler Craton (Olympic Dam Uranium Mine) and the Frome Embayement (Beverley and Honeymoon) in South Australia, Arnheim (Ranger, Jabiluka) to Westmoreland in northern Australia, the Athabasca Basin in Canada (McClean Lake, McArthur River), the Damara Orogen, Namibia (Rossing, Langer Heinrich) and the Great Divide Basin in Wyoming, USA.

To access the free summary report go to To access the free summary report go to www.rcresearch.com.au/feature. To purchase the complete 68-page detailed report titled "Uranium Sector Review" please email johnwilson@rcresearch.com.au

--  Advanced exploration and development stage companies have yielded most
    consistent share price outperformance
--  Existing producers and development phase companies can take advantage
    of the stronger uranium price
--  Common exploration strategy to reduce risk is to explore in the
    vicinity of known deposits
--  Demand for uranium driven mainly from the power generation sector is
    forecast to outstrip supply for at least the next ten years,
--  Uranium prices have recently tripled to around $US 30/lb
--  Supply is constrained by a lack of new mine production and declining
    inventory
--  Political change is afoot globally
    
John Wilson, author of this report noted:

"After nearly 25 years in the doldrums, the uranium industry is undergoing a major resurgence worldwide with uranium exploration and property acquisition at a high level. The share prices of companies, many of them newly formed, with uranium assets have moved sharply upwards."

Advanced exploration and development stage companies have generally had the most consistent share price outperformance within the uranium sector in the past 12 months, such as Paladin (+760%), Aflease Gold and Uranium (+204%), Energy Metals Corp.(+368%), Western Prospector Group (+757%), Laramide Resources (+735%) and Summit Resources (+1160%).

More mature companies will be able to take advantage shorter term of the stronger uranium price compared with exploration stage companies which are higher risk plays. ERA and Cameco are the key listed pure uranium plays, while BHP and RIO offer diluted exposure to key uranium mines.

Among the explorers, a common strategy to reduce risk is to explore in the vicinity of known deposits. To this end, in Australia, companies are exploring for palaeochannel style uranium mineralisation in the vicinity of In Situ Leach (ISL) projects at the Beverley Uranium Mine and Honeymoon in the Frome Embayement, South Australia. Examples include Giralia Resources, Curnamona Energy, and Southern Cross. Companies active in the US include US Energy, Strathmore Minerals and Energy Metals Corp.

US Energy is exploring around Sheep Mountain in WY, which was previously in production and has announced it intends to reopen its Shootaring Canyon Mill in Utah over the next 2 years. Energy Metals Corp is focusing on development stage ISL projects in The Great Divide Basin, WY. It has 16 properties with historical resources within a 25 mile radius of Rawlins. A number of the properties went through feasibility in the 1970s and some achieved commercial or pilot plant production. A project development scoping study is expected to be completed first quarter 2006. Strathmore Minerals' most advanced projects are at Church Rock and Roco Honda in New Mexico with potential for ISL development. It also holds land in Wyoming near Cameco's Smith Ranch Highland's projects and Cogema's Christenson Ranch.

Almost 20 years have elapsed since the end of the last uranium exploration boom. In that time there have been many technological improvements that impact directly on the methodology of uranium exploration. Some of the key developments include multi element chemical analysis, aerial gamma ray, aerial magnetic mapping, hyperspectral mapping, gradient gravity and electromagnetic surveying.

The recent tripling of uranium market prices to around $US 30/lb is due to the decline in existing uranium fuel inventories plus a burgeoning demand from new international markets to satisfy nuclear power demand.

Demand for uranium is forecast to outstrip supply for at least the next ten years, driven by end users in the power generation market which is urgently trying to secure future supply. Much of the new demand for uranium will come from expanding nuclear power requirements of developing economies with 130 new reactors expected over the next 15 years (IAEA), representing nearly a 30% increase in reactors globally. China has announced plans to build 27 new nuclear reactors by 2020 and India has announced plans to build 17 new nuclear reactors by 2012. This rate of expansion compares with the USA which built over 100 nuclear power plants in 15 years between 1965 and 1980.

Supply is constrained by a lack of new mine production and declining inventory. World demand for uranium is about 77,000 tonnes per year (169 million pounds) while mine production is currently 48,000 tonnes per year (106 million pounds). The balance, 29,000 tonnes per year (64 million pounds) comes from inventory -- primarily the down blending of weapons grade uranium. Mine output is expected to increase to 54,000 tonnes per year (119 million pounds) over the next 3 to 5 years, leaving a significant supply gap to be filled.

Political change is afoot globally with governments speaking out in favour of uranium as a fuel source. There is a strong trend for government policies to prevail in the face of dissenting viewpoints.

Australia is scrapping the ban on uranium exports to China. Ian Macfarlane, Federal Resources Minister will allow new uranium mines in the NT, and has urged the governments of Western Australia and Queensland to review bans on uranium mining. An inquiry is underway by the House of Representatives Industry and Resources Committee into non-fossil fuels.

The USA is lifting restrictions on nuclear power in India. It has extended licenses for existing nuclear power plants. There is a more supportive environment for new licences with incentives for nuclear power in the new Energy Bill.

In Canada, British Columbia has lifted its ban on uranium exploration and development. Ontario has committed to closing coal plants and reopening select dormant nuclear plants.

"It is expected that there will be an expansion of uranium resources from new discoveries and the upgrade of historic resources over the next few years driven by investment funding, innovative exploration techniques against a background of new political support of mining opportunities in the USA and Australia to respond to increased international demand from nuclear power generators," Mr Wilson concluded.

About Resource Capital Research

Resource Capital Research (RCR) (www.rcresearch.com.au) was founded in 2004 and is based in Sydney. RCR provides investors with in-depth reports on current investment opportunities in the mining sector both in Australia and globally. We focus on small resource companies, ranging from exploration stage, through development and production. John Wilson the principal of the firm and analyst has eight years experience analysing mining companies. He worked in Sydney and on Wall Street for major investment banks.

The report is available at www.rcresearch.com.au. The next uranium sector review will be published in the December quarter.

Contact Information

  • For further information please contact:
    John Wilson
    Analyst, Resource Capital Research
    Phone: (61- 2) 9252 9405
    Email: Email Contact