A soaring uranium price performs magic for many of the companies who have begun developing their uranium assets and moving toward production. Nearly all are Canadian-based. Now they have begun listing on U.S. stock exchanges.
Three years ago, one could only find Cameco Corp (NYSE:CCJ) trading on the New York Stock exchange. As of late November 2006, Energy Metals Corp (EMU) began trading on the NYSE ARCA. Energy Metals is currently developing their Texas uranium in situ recovery mine for production in either late 2007 or early 2008.
One tier down on the American Stock Exchange is the Fronteer Group (FRG), which is a hybrid gold company holding uranium-mineralized assets. A recent entry to the American exchange is first pure-play uranium company to trade on this exchange: Uranerz Energy (NYSEMKT:URZ). Uranerz is now the second publicly traded company, after Cameco Corp, in which investors can also trade stock options. The announcement was made at the end of January.
After those, there are a number of different companies with some prospects better than others. However, before reviewing those, let’s look at what could well become the world’s second largest uranium company, by market capitalization, after Cameco Corp. On early Monday morning, Canada’s Globe and Mail newspaper published a report that Johannesburg- and Toronto-listed SXR Uranium One [TSE:SXR] planned to acquire TSX- and AIM-listed UrAsia Energy [CVE:UUU] for approximately $3 billion. In what has been announced as a friendly take-over, SXR Uranium One plans to issue some $3.1 billion in stock to buy UrAsia. Before the announcement, SXR was valued at less than CDN$2 billion.
In previous interviews with SXR Uranium One chief executive Neal Froneman, he has repeatedly told us he wishes to list on a U.S. stock exchange. If and when the acquisition closes – it was announced that it should by mid May of this year – the new Uranium One would hold uranium properties on four continents: Africa, Australia, Asia and North America. SXR’s Dominion uranium mine should begin producing this March. UrAsia Energy is currently producing in Kazakhstan. SXR’s Australian ‘Honeymoon’ in situ leach uranium operation is scheduled to start producing in early 2008.
According to Canada’s national newspaper, the combined companies have the potential to annually produce some 19 million pounds by 2012. That’s about what Cameco Corp’s Cigar Lake was expected to produce before the mine flooded this past October. Since then, Cameco has delayed in announcing when the company believes its uranium mine will actually be in shape to produce uranium.
Based upon our conversations with Neal Froneman, and in light of this new business combination creating the world’s second largest uranium mining company, it shouldn’t be too far into the future when Uranium One announces it plans to list on the New York Stock Exchange. The headline of their February 12th news release announced, “Uranium One and UrAsia Energy Announce Combination to Create Emerging Senior Uranium Company.” Aside from Cameco Corp, there really is no other senior pure play uranium company.
As for the rest of the companies now trading on the over the counter bulletin board, we have reviewed two which offer hope to investors. Uranium Energy (URME.OB) plans to mine uranium using the in situ recovery [ISR] method. Chief operating officer Harry Anthony appears to be one of the boys in the ISR club with decades of experience behind him. He lives and works in south Texas.
After extensive interviews with Mr. Anthony it became evident to us that if Anthony couldn’t get an ISR operation functioning in Texas, that no one else on the planet was likely to do so. From what we understand, Uranium Energy could be producing uranium by 2009 on its Goliad property.
Another newcomer seems to be doing very well, Yellowcake Mining (OTC:YCKM). While it appears to be a ‘new company,’ the company’s property is not. Yellowcake Mining acquired the Juniper Ridge (Wyoming) property from Strathmore Minerals [CVE:STM] on January 30th. Previous drilling through 1979 outlined up to 15 million pounds of uranium. Plans were made in that year to build a 2000-ton/day mill. But, that was the year when uranium demand fell off, and the mill was never built.
There are two other major uranium companies, both with market capitalizations in excess of C$1 billion: Denison Mines [TSE:DML] and Paladin Resources [TSE:PDN]. Both are producing uranium companies and highly respected in many circles for their separate achievements. The business combination of International Uranium Corporation and Denison Mines has gone smoothly so far. Dissatisfied with producing in just Namibia, Paladin now hopes to mine uranium elsewhere in Africa and possibly in Australia. Both foreign companies are candidates for future U.S. stock exchange listings.
In 2006, uranium prices nearly doubled. While 2007 has seen uranium slowly creep higher – now at US$75/pound, many analysts believe uranium could trade above US$100/pound before this year ends. If that’s the case, then we can expect a greater number of uranium companies listing on both the New York and American stock exchanges in 2007 and 2008. Cameco Corp's misfortune at Cigar Lake opened the door to a number of companies aspiring for its Number One position in the uranium space.
Disclosure: Author has no position in any of the above-mentioned securities.
Uranium pricing last 3 years: