Uranium and Beryllium Stock Picks from James Passin

We sat down recently with James Passin of Firebird Management LLC. Firebird manages $3.5 billion in eight funds dedicated to equity investment in emerging markets, with an emphasis on the former Soviet Union and emerging Eastern Europe, and exotic sectors worldwide. Excerpts from the interview:

TGR: Can you give us some background on when and why you became interested in uranium as an investment?

PASSIN: I started investing in uranium stocks in 2001 when uranium was trading at a record low of $7 a pound. I made it the core focus of my hedge fund, and subsequently invested in physical uranium in 2005, paying approximately $21 a pound. These investments were based on my very clear understanding of the powerful supply-and-demand fundamentals that would support a higher uranium price, and my absolute belief in the inevitability of the nuclear renaissance. I was fortunate enough to be invested in the right stocks and the right area. These stocks proved to be very successful.

TGR: The drivers are compelling, and the price has skyrocketed. Are you still as heavily invested?

PASSIN: I did monetize many of my uranium positions during what I would characterize as the uranium bubble. I sold my physical uranium at $135 per pound, which was one of the highest recorded prices in the history of uranium trading...

TGR: Do you want to give us a few names of uranium stocks you still own?

PASSIN: One uranium stock that I still own is UEX Corporation [Toronto: UEX]. What I like about it is that it’s well funded. The largest shareholder is Cameco Corp. (CCJ), the world’s largest uranium producer. UEX, through its joint venture with AREVA (Paris:CEI.PA), has made a spectacular discovery on the Shea Creek exploration project. The scope of the project, based on the width and the extent of the mineralization, suggests to me that Shea Creek has the potential to a world-class uranium mine.

TGR: What opportunities do you see in the industry these days?

PASSIN: I am finding a lot of opportunities in those companies involved in nuclear power plant construction and the nuclear fuel cycle. It's as exciting to me now as the uranium exploration and production story was five years ago...

TGR: What opportunities do you see in the industry these days?

PASSIN: I am finding a lot of opportunities in those companies involved in nuclear power plant construction and the nuclear fuel cycle. It's as exciting to me now as the uranium exploration and production story was five years ago.

The materials needed to build these nuclear reactors are going to be very important, and one of the most important materials is beryllium...

There is one company that has emerged as a de facto beryllium monopoly, which is Brush Engineered Materials (NYSE: BW). Brush controls 60% of the global production of beryllium from mines, and they control a lot of the processing.

Another interesting beryllium stock is International Beryllium Corporation (TSX.V:IB). IBC is independently building up a vertically integrated beryllium business. I am very excited by the exploration team and about the prospects for the company. IBC has acquired an exploration project adjacent to the world’s largest beryllium mine. I think that IBC stands to play a unique role in consolidating the beryllium industry.

I should also mention Vangold Resources (TSX.V:VAN), a development-stage mineral exploration and oil and gas production company, which has a confusing number of unrelated projects, including a strategic 26 percent stake in International Beryllium Corp. I think the value of the stake is going to be worth multiples of Vangold’s current market capitalization.

The value of Vangold’s oil exploration portfolio is hidden within the company and probably masked by the concealing number of investments Vangold has made in a number of companies. Vangold is a resource incubator that has successfully incubated and spun out a number of resource companies, such as IBC.

TGR: Any other companies in this arena that interest you?

PASSIN: There is a company with a long history, based in Idaho Falls (the heart of nuclear fuel research in the U.S.), that controls the intellectual property around a technology called the Fluorine Extraction Process. This company, International Isotopes (INIS.OB), has successfully tested the technology at its plant, which I have visited. It has begun to commercialize the technology.