AUSTRALIAN URANIUM STOCKS IN FOCUS

Uranium is always going to stir passionate debate, but it’s a viable energy source that’s increasingly embraced around the world. Today, about 45 nuclear reactors are under construction, with plans for hundreds more. Most uranium oxide is sold on contract prices, but the spot price has weakened considerably in the past three years, and, according to the UxC consulting company, it was trading at $US42.50 a pound in mid February.

Steven Hing, of Novus Capital, says uranium has a bright future as an alternative power source amid a world wrestling with solutions to climate change. “Nuclear power is already popular in France, Germany, Spain, Switzerland and Sweden,” he says. Hing has established a portfolio of uranium stocks that he expects should reward investors over the longer term in response to growing demand. His portfolio of producers and explorers isn’t a recommendation to buy, but rather potential capital growth opportunities for those willing to heighten their risk for return profile.

Hing says Energy Resources of Australia, one the world’s biggest producers of uranium oxide, booked a net profit of $272.6 million for the year ending December 31, 2009. The 23 per cent profit rise was boosted by higher uranium contract prices and rising revenue of $767.8 million flowing from stronger sales of yellowcake. The company expects higher maintenance and development costs at its Ranger mine in the Northern Territory to impact earnings in 2010, but forecasts production and sales to be broadly in line with recent years. The company’s long-term price indicator is strong, which Hing says paints a bright outlook for producers. Hing says Rio Tinto owns 68 per cent of ERA, which boosts confidence among investors. “ERA is a big player in the uranium space today and tomorrow - it produced more than 5200 tonnes of uranium oxide in 2009” Hing says. “It has estimate reserves of 150 million tonnes of ore for about 150,000 tonnes of uranium oxide.”

Paladin Energy produced a record 987,310 pounds of uranium oxide for the December quarter. Its Langer Heinrich project in Namibia achieved stage 2 production levels, with a 36 per cent increase over the September quarter. Ramp-up at its Kayelekera mine in Malawi was slower than expected, but rapidly improving. Hing says Paladin appeals as a relatively low cost producer with plenty of resource and potentially more export markets. He says the Langer Heinrich project has an indicated resource of 56 million tonnes of ore for 32,800 tonnes of uranium oxide. The project’s third stage should be producing 5.2 million pounds by late 2010. Hing says Paladin recently acquired Valhalla, which holds uranium tenements near Mt Isa in Queensland. “Paladin has a strong foothold in Africa and has plenty of good ground to mine,” Hing says.

Australia has about 30 per cent of the world’s known uranium reserves and about 15 per cent of the globe’s electricity supply is nuclear powered. Australia produces uranium entirely for export markets, and countries must only use it for generating electricity. BHP Billiton’s multi-mineral ore body at Olympic Dam in South Australia produces uranium and has massive reserves, but Hing says you wouldn’t buy BHP Billiton for uranium when it produces so many other commodities. The Beverley mine in South Australia, owned by US-based Heathcote Resources, also produces uranium, but Hing expects more mines to open in future to meet global demand. “By 2015, industry forecasts show uranium demand again exceeding supply as existing mines are depleted,” Hing says. “It’s a great time to be a nuclear power station builder, or indeed a uranium miner or refiner.”

However, outside the big producers, Hing stresses the risk/return equation rises significantly as uncertainty can surround company performance in a global sector laced with politics. “Uranium is one mineral where the investor must take a strong view backed by a stomach for risk,” Hing says. But the right investment can generate immense wealth as shown by Paladin when the share price rose from 5c on January 1, 2004 to $3.66 on March 10, 2006. The share price has been as high as $10.80 on April 10, 2007.

Black Range Minerals is an exploration company focused on growth through acquisition, exploration and development. Hing says Black Range is moving its high-grade Taylor Ranch uranium project in the US state of Colorado towards production. Hing says the company has a delineated JORC (Joint Ore Reserves Committee) code compliant resource base of about 8.9 million tonnes of ore for 23.5 million pounds of uranium oxide. The company has interests in three other uranium projects in the US. Hing says the company has investment potential as it makes the transition to uranium producer at the Taylor Ranch project.

Hing says Mintails Limited proposes to recover uranium from surface tailings resources in South Africa. The mining tailings are located on the West and East Rand areas of South Africa’s historic Witwatersrand Basin near Johannesburg. Hing says the JORC resource inventory on the West Rand includes a uranium resource of 273.5 million tonnes of ore for 25.14 million pounds of uranium oxide. He says the company’s remaining gold resource at West Rand is 316 million tonnes for a gold content of 3.086 million ounces. Hing says Mintails should benefit on higher gold and uranium prices, but the opposite also applies.

Hing says while there’s considerable resistance to the nuclear power argument due to the dangers of radiation and the difficulties of disposing nuclear waste, uranium-based fuel produces few emissions and may relieve climate change. “It’s also a cheaper alternative than clean coal and clean gas,” he says.

Hing says other listed uranium stocks investors can consider are Extract Resources, Toro Energy and Bannerman Resources. Extract’s primary uranium focus is in Namibia, Africa. “This producer’s principal asset is its wholly owned Husab uranium project, which contains uranium at Ida Dome, Hildenhof and Rossing South,” Hing says. Toro Energy focuses on uranium exploration in Australia and Africa and it’s total resource is 21.27 million pounds. Hing says Toro has several projects near Paladin’s Langer Heinrich discovery in Namibia, and retains the option to buy the Napperby uranium project in the Northern Territory from Deep Yellow. Bannerman Resources is a Perth-based uranium explorer and mine development company, with interests in two properties in Namibia and several properties at Botswana.


Company ASX Code Share Price Close February 26, 2010

Energy Resources of Australia ERA $18.37
Paladin Energy PDN $3.61
Black Range Minerals BLR 4.3 cents
Mintails Limited MLI 3.2 cents
Extract Resources EXT $7.25
Toro Energy TOE 11.5 cents
Deep Yellow Ltd DYL 23.5
Bannerman Resources BMN 53.5 cents

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BANNERMAN RESOURCES PROGRESSES DFS AT ITS ETANGO URANIUM PROJECT NAMIBIA

BANNERMAN Resources has revealed its Definitive Feasibility Study (DFS) is underway on its Etango uranium project in Namibia, southwest Africa.

The Perth-based uranium development company says the announcement follows the results received from a range of continuous flotation tests conducted last month and earlier this month.

“These tests followed on from the batch flotation testwork undertaken in 2009,” Bannerman Resources says.

According to Bannerman Resources, further investigations are being undertaken into the metallurgical parameters, prior to progressing to the larger scale pilot plant test work.

Bannerman Resources says it has already completed 284,000m of drilling within the Etango project and expects the inclusion of the latest drilling into the resource model is expected to significantly improve the confidence of the resource.

Bannerman chief executive, Len Jubber says the project is making significant progress.

"We now have greater confidence in our understanding of the Etango mineralisation and are exploring some exciting opportunities to optimise the mining scenario, with the potential to reduce operating costs," Jubber says.

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AUSTRALIA'S WHITE CANYON URANIUM TO BEGIN TRADING ON CANADIAN TSX EXCHANGE

United States-focused uranium producer White Canyon Uranium Limited (ASX: WCU, TSX: WU) has received approval to list on the Toronto Stock (Venture) Exchange.

The Company commenced trading on the TSX-V on Friday under the symbol WU, while the company’s ordinary shares will continue to be listed on the Australian Securities Exchange.

Shareholders can trade their shares on the ASX as they did prior to the TSX-V listing. However shareholders intending to trade on the TSX-V will need to transfer their shares onto the Canadian share registry and establish an account with an appropriate stock broker prior to trading on the TSX-V. The company and their share registrars can provide further details on such procedures to interested shareholders.

White Canyon Managing Director, Mr Peter Batten, said listing on the TSX-V would not only provide White Canyon with increased access to the larger North American capital markets, but he expected the listing would also further raise the profile of the Company within the global investment community.

“The Canadian and US markets have a close understanding of uranium and an enthusiasm to invest in uranium production, particularly uranium production in North America," Mr Batten said.

The listing on the TSX-V was a compliance listing only and no fund raising was associated with the process.

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ARGENTINA'S THIRD NUCLEAR POWER PLANT NEARS COMPLETION

Atucha II Nuclear Facility

BUENOS AIRES, Feb. 9 (UPI) -- Amid deepening economic woes, Argentine consumers have been told they can look forward to more stable electricity supplies from the country's third nuclear power generation plant before the end of this year.

Argentine power consumption has gone up with industrial growth and extension of modern amenities to the country's burgeoning middle classes. But supply has not kept pace with demand, and blackouts and outages in the capital are endemic, costing hundreds of thousands of dollars in lost productivity and perishable foods and other merchandise.

The recent power and water shortages in neighboring Venezuela caused widespread concern in Argentina, which also experienced frequent outages. The government of President Cristina Fernandez de Kirchner played down their severity, but her critics said the shortages pointed to government failures.

The shortages in Venezuela were blamed on chronic drought, but opposition critics of President Hugo Chavez also cited mismanagement.

In Argentina, criticism has centered on inadequate modern amenities in the outlying rural areas due to poor infrastructure and bureaucratic neglect.

Officials insist the impact of outages has been minimal. Opposition critics say the government takes little account of power breaks in the outlying areas of Argentina and refers only to blackouts in the capital.

News of new electricity supply likely to join the national grid was announced by Planning Minister Julio De Vido, who said work had been advanced on the commissioning of the new nuclear power generation plant.

The statement contrasted with his announcement in April 2009 that work on the Atucha II plant could not be finished before 2011.

Argentina's nuclear power generation program dates back to the 1970s but was mired in controversy and environmental and factional politics. Argentina's former military dictators saw nuclear power as a military option and even attempted uranium enrichment and missile production. As a result, the end of the military regime in the 1980s led to the nuclear program being abandoned altogether.

Argentina relaunched its nuclear power program nearly three years ago, as the government could argue for its urgent need amid worsening conventional energy supplies.

The rising prices for oil and gas also enabled the government to make a convincing case for nuclear power. Currently Argentina imports gas from Bolivia and liquefied natural gas from Trinidad and Tobago.

The Atucha II plant is expected to generate about 700 megawatts of electricity, but it is two decades late. Argentina's first nuclear power plant, the 360-megawatt plant Atucha I, came on stream in 1974, and the second plant, the 650-megawatt Embalse, began operations a decade later. However, nuclear power still accounts for no more than 5 percent of Argentina's electricity grid.

De Vido said plans were under way to speed up the commissioning of the Argentine-Paraguayan Yacyreta hydroelectric plant this year. Once finished, the two projects will add 2,000 megawatts to the national power grid, he said.

The completion of the Atucha II nuclear power plant and the hydroelectric plant will increase Argentina's total power generation capacity by about 10 percent, De Vido said.

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Australian Uranium Explorer Northern Uranium Discovers Prized Heavy Rare Earth Elements

Rare Earths

Rare earths are a particular class of elements in the Periodic Table that were once difficult to extract and purify. They are used in many high-technology applications including magnets, rechargeable batteries, electronic displays, lasers, superconductors, catalytic converters, smart bombs, and wind turbines. China supplies about 95% of world production. Given the strategic importance of rare earths, China has been stockpiling them and restricting exports. A Chinese government report has recommended an outright ban on exporting the scarcest of these elements.


NORTHERN URANIUM - NTU

Northern Uranium (ASX: NTU) has followed up December discoveries of significant rare earth elements targets at its 100%-owned Gardiner-Tanami project, with today's news of high concentration of heavy rare earth elements (HREE) in the mineralization.

Heavy REE's have a significantly higher market value on a per pound basis than the more common light REE's.

NTU identified unusually high concentrations of HREE in hydrothermal quartz-xenotime mineralisation in the Browns Range Dome area at Gardiner-Tanami.

NTU has targeted rare earths exploration as a significant focus in 2010 at at the Gardiner-Tanami project, bordering the Northern Territory and Western Australia, in tandem with the company's core uranium project.

The results of an age-dating study pointed to the possibility of large scale HREE ore-deposit potential in the area.

The company's HREE discovery represents an interesting value-adding component for NTU investors and shareholders.

Executive chairman Kevin Schultz said that a further study of the HREE bearing mineralisation at the company's tenements showed that at current REE prices it has extremely high in-ground value.

In fact, analysis to date indicated it has an estimated in-ground value of US$1,270 per tonne.

Xenotime (a yttrium and rare earths bearing phosphate mineral) was first identified in the western Browns Range Dome area in the 1980s by Japanese nuclear energy organization PNC Exploration while exploring for uranium.

PNC named the area of quartz-xenotime mineralisation “Area 5 Prospect” and one of the larger quartz-xenotime veins gave extremely high grade results up to 16% yttrium, 0.2% uranium, 0.5% light Rare Earth Elements (LREE) and 12% HREE.

Then in 2009, previously unknown quartz-xenotime mineralisation was encountered by NTU - 4km to the northnortheast of Area 5 Prospect during Northern Uranium’s uranium exploration program.

These newly discovered hydrothermal xenotime-quartz stockworks, referred to as “NNE Prospect”, are similar to the Area 5 occurrences. Xenotime concentration was recorded as being up to 3-4 wt-%.

Interestingly, the rare earths and Yttrium distribution from assay results of the quartzxenotime mineralisation at NNE Prospect at typical current market prices for rare earth metals, demonstrates NTU's HREE's at Browns Range compares favourably with other major global REE deposits.

The Browns Range Dome area could conceivably become an important new province for highgrade Yttrium-HREE mineralisation.

NTU will proceed with the HREE exploration program, in conjunction with the 2010 uranium exploration programm including review and re-processing of airborne mapping data and airborne radiometrics.

An extensive rare earths target zone has been identified by NTU at the project.

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