Uranium - Turn $1,000 into $1 Million Investing In Quality Uranium Stocks

Big money will go to experienced teams with high-grade deposits near people, roads, and other mines

Can you turn $1,000 into $1 million in just a few years?

You can if you time a bull market in uranium stocks correctly

In September 2003, an Australian uranium company, Paladin Energy, traded for just 1¢ per share. Things were horrible for the uranium industry.

Back then, uranium sold for around $11 per pound. But it cost the industry $15 per pound to produce. That meant uranium companies lost $4 on every pound they sold. Except for expert contrarian investors, nobody wanted to own uranium stocks.

But 2003 was the very beginning of a huge bull market in uranium. By 2005, the uranium price had climbed to $20... By the end of the year, it was selling for $35 a pound. Investors went wild for uranium plays.

In January 2005, Paladin Energy was up to 47¢. That's a 4,600% gain from 2003 levels. By the end of 2005, it hit $2 per share… a 19,900% gain in just 30 months.

The uranium bull market peaked in 2007. Paladin topped out at $10.40 per share… an incredible 100,000%-plus gain. Every $1,000 invested turned into more than $1 million.

The uranium bull died in June 2007, thanks in part to the global economic collapse. The ride down was steep. Uranium fell from $136 per pound to $40 per pound in just two years.

But there's a new bull market getting started right now. The price just broke out to a new 52-week high. And the next Paladin is getting ready to take off. Before I get to that, let me explain what's driving the new move in uranium prices...

The bull case for uranium – the chief fuel for nuclear reactors – is simple: Emerging Asian nations, particularly China and India, are Westernizing. Their populations want air conditioning, refrigerators, iPods, and YouTube. That means electricity.

To meet its growing electricity demand, China plans to build 60 new nuclear reactors within the next 10 years. China's high-growth cousin, India, needs 40 new reactors in the next 20 years. That would increase the number of nuclear power plants in the world by 23%.

This new Asian nuclear boom is expected to be the largest period of nuclear power growth since OPEC's oil embargo. At its peak, back in the 1980s, the nuclear industry started up a new reactor every 15 days. By 2015, we could see a new reactor coming online every five days.

Both China and India understand the implications of that growth. According to Bloomberg, both countries are stockpiling the fuel. China could purchase more than twice as much uranium as it will use this year. The proposed reactors in China alone could consume more than 30% of the uranium mined today. That's why the country signed a 10-year, 10,000-ton deal with giant uranium miner Cameco.

But there is a real lack of new, near-term uranium production. That means supply won't increase as much as demand... and uranium prices will rise.

In fact, it's already begun. A small uranium firm I just recommended to my S&A Resource Report readers has climbed 50% for us in just two months. Many other uranium plays, like blue chip uranium miner Cameco (NYSE: CCJ, Stock Forum), are entering uptrends as well. But it's still early days and the masses haven't caught on. That's our opportunity. It's unlikely you'll score an unbelievable 100,000% gain... but hundreds of percent gains are easily within reach.

We have time to sleuth out the great junior miners and buy cheap. Focus on the little things: management's experience, burn rate (the amount of cash spent versus amount of cash in the bank), and projects.

The big money will go to experienced teams with high-grade deposits near people, roads, and other mines. That's what the expert contrarian investors are looking for now.

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AusAmerican Mining Expects To Raise $8.5m (ASX- AIW)

Published on Tuesday Oct 26 2010

 

PERTH, Oct 26 AAP - AusAmerican Mining Corporation Ltd says it expects to raise $8.5 million from a capital raising that will fund its ongoing exploration for rare earths,specialty metals, uranium and gold in the US.

3 Monthly Performance Chart - AIW

The junior explorer last week said it had finalised a book-build for a share placement that would raise over $5 million and also intended to undertake a share purchase plan that could raise up to an additional $3 million.

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Chairman Jim Malone said about 40 per cent of the book-build had been supported by investors in Canada, where the company was considering a listing on the Toronto Stock Exchange.

"We may end up with $8.5 million from the raising," he told AAP on Tuesday.

"It allows us to have a real crack at these projects."

Mr Malone said there were plenty of opportunities in the US where the mining sector was heavy with majors that only sought big projects, leaving smaller viable projects available for junior players.

"The US in many ways had a fairly thriving mining industry until about 20 years ago and then they abandoned it to go overseas for cheaper imports for a lot of commodities.

"Surprisingly, the Canadians haven't jumped on the US - they've got so much to explore for in their own country and in Latin America.

"We find a lot of opportunities that the US has let go."

Mr Malone said the US had introduced legislation to assist in the development of rare earths and uranium projects given China controls almost all of the world's rare earths supply and the US contains one quarter of the world's nuclear reactors.

Mining and exploration permits were becoming easier to obtain as once-active environmental groups became more subdued and the nation battled to address high levels of unemployment, he said.

"We're finding that all of the problems of doing business in the US have gone away due to necessity," Mr Malone said.

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Southern Uranium (ASX:SNU) MD John Anderson Speaks With Brian Carlton at Symposium Roadshow

Published on Sunday Oct 24 2010

 

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LYNAS CORPORATION LIMITED (NPV) Analysis For This Stock

Published on Sunday Oct 24 2010

Special Note* This is not to be taken as Financial advice
Independent Analysis reveals a NPV of $3.29 per share at a 12% discount rate

Based on following assumptions

- The basket price of Lynas's REE remains at US$50/t until the end of 2012, by which time the light REE fall in price by 20% and remain at this price until the end of the project. It is assumed that heavy REE remain at the same price for the life of the project.

- The company has 17,490,000 tonnes of reserves at an average grade of 8.1%. This is derived from the Duncan Deposit (7.6m tonnes at 4.8%) and the Central Lanthanide Deposit (9.88m tonnes at 10.7%)

- The AUD/USD exchange rate is 1:1 until the end of 2012, by which time it remains at 0.80AUD/USD for the remainder of the mine life

- Production is 11K tonnes p.a, increasing to 22K tonnes p.a. by mid 2014

- Phase 2 expansion costs $120m and is entirely debt funded at a 10% interest rate

- Mine costs are $7.70/t, increasing by 2.5% p.a.

- Royalties are 5% ad volorum

- There are 1.65b shares on issue for the life of the project

- I have not considered the impact of LYC's holding of NTU or any other potential acquisitions

- LYC will have to pay corporate income tax in Australia based on the 'arm's length price' of the concentrate it ships to Malaysia. Determining the arm's length price for rare earth concentrate is quite difficult, given that the market is dominated by China. As such, I have not considered Australian corporate tax in my calculations. Presumably the company will have carried forward losses anyway

- LYC has a 10 year tax holiday in Malaysia. I have not considered what tax would be payable after this period. At any rate, the Present Value cost of this tax would be minimal.

- Corporate overheads are $5m p.a.

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Uranium Spot Price News Update Oct 21-2010

Published on Thursday Oct 21 2010

 October Spot Hits US$51.50P/Lb. 
US$2.00 increase overnight.

Indicative Weekly Spot Ux U3O8 Price as of October 21, 2010

Trade Date: 21/10/2010
U3O8 Price (lb) US$51.50 [ +US$2.00]

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AusAmerican To Raise Up To $8m To Advance Uranium, Rare Earth, & Gold Projects

Published on Monday Oct 18 2010

Australian-American Mining Corporation Limited (ASX: AIW) has finalised a book build for a share placement which will raise over $5 million. 


The company is also pleased to announce it will be undertaking a Share Purchase Plan (“SPP”) which could raise up to an additional $3 million for a total of up to $8 million before fees.

Highlights:

• A share placement for $4.5 million, managed by DJ Carmichael, was oversubscribed
• It is anticipated that up to approximately 40% of the placement will be taken up by North American investors pursuant to a best efforts offering being led by Paradigm Capital Inc. of Toronto, Canada
• Existing shareholders will be able to participate in a Share Purchase Plan (“SPP”) over the next month on the same terms as the placement. The record date for the SPP is close of business Friday 15th October 2010
• Funds will allow the company to continue its aggressive exploration programme which has recently commenced and includes (i) Drilling at its four brown field uranium projects which collectively have an exploration target of an additional 35-40 million pounds, (ii) exploration and drilling its specialty metal and rare earth projects in Arizona, (iii) drilling at its Bernard gold project; and (iv) further project acquisition.
• 
  

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Denison To Sell White Canyon's Uranium

Published on Sunday Oct 17 2010

Australian Junior Uranium miner White Canyon Uranium (ASX-WCU)Ltd says Canada's Denison Mines Corp has agreed to handle the sale of concentrate from its Daneros mine in the United States.

Shares in White Canyon surged 1.8 cents, or 24 per cent, to 9.3 cents.

"It is anticipated that sales could commence as early as December," White Canyon said in a statement on Friday.

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"Denison's White Mesa Mill is expected to commence toll milling of the company's ore in coming weeks with an expected yield in excess of 200,000 pounds of uranium oxide."

Perth-based White Canyon, which is listed on the TSX Venture Exchange as well as the Australian bourse, began mining ore at Daneros in 2009 after receiving the first mining permit issued in the US state of Utah in 30 years.

Denison Mines is a mid-tier uranium producer that operates the only uranium/vanadium mill in the US near the city of Blanding, Utah.

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Northern Uraniums HREE Browns Range Project Looks Promising

Published on Tuesday Oct 12 2010

Positive Early Results from HREE 

Browns Range Project

Northern Uranium (ASX: NTU) has rewarded shareholders who participated in last month’s renounceable rights issue with the conformation of mineralisation which identifies Heavy Rare Earth Elements (HREE) at Browns Range/

The HREE anomalies will be tested by further exploration activities commencing later this month, along with proposed field work to more accurately define drill targets.

Rock chip samples have been collected from the Wolverine, Gambit and Area 5 North Prospects, to allow Northern to commence a small scale characterisation study of the mineralisation.

The study will investigate the separation and recovery characteristics of rare earths from the Browns Range xenotime mineralisation.

This information is essential in determining the viability of the project.

Northern said initial sizing results are favourable and indicate the liberation size of the mineralisation may be in the relatively coarse at the 100-200 microns range.

With the onset of the northern wet season expected in November, it is anticipated that drilling will commence at Browns Range in the first quarter 2011. 

KNOW YOUR RARE EARTHS

Light rare earths -- more abundant

Lanthanum (uses: hybrid engines, metal alloys)

Cerium (auto catalysts, oil refining)

Praseodymium, samarium and gadolinium (magnets)

Neodymium (laptop hard drives, hybrid engines, wind turbines)

Europium (provides red colour for TV, computer screens)

Heavy rare earths -- less abundant

Terbium (phosphors, magnets)

Dysprosium (magnets, hybrid engines)

Erbium (phosphors)

Yttrium (fluorescent lamps, ceramics, metal alloys)

Holmium (glass colouring, lasers)

Thulium (medical X-rays)

Lutetium (petroleum refining)

Ytterbium (lasers, steel alloys)

Geologist Analysis Of Browns Range 

HREE Formation

The rock formation at Browns Range is Arkose (pronounced arkous). 


1 Arkose is a detrial formed from particles of pre-existing rock through weathering and erosion. To be defined it must contain at least 25% Feldspar. Usually it is up to 60% plus quartz, which as we know is a crystal. In simple terms Arkose is a relatively soft sandstone rock generally surrounded by its own sand. Uluru is an Arkose rock.

2 The Feldspar group of minerals are a family of silicates of over 20 members, which occur in igneous rocks. Feldspars crystallize from magma (molten rock in the earth's crust) into the sandstone as veins and are readily identified in the photographs shown in NTU literature (clusters and light brown in colour). See photograph on Wikipedia. Xenotime is part of the Feldspar group.

3 Xenotime is a rare phosphate mineral whose major component is yttrium orthophosphate (ypo4). It forms into a solid solution and may contain traces of arsenic as well as silicon dioxide and calcium in its final composition.

4 The expressive secondary components of Xenotime are the heavy rare earths dysprosium, erbium, terbium and yterbium and may sometimes contain metal elements like thorium and uranium (all replacing yitrium). Occasionally gemstones are also cut from the finer xenotime crystals. NTU continually provide %-components of these HREE in their reports to shareholders.

FLOTATION BENEFICIATION TECHNIQUE

First of all think coal mining. The coal is removed from the mine and crushed. The dirt is separated from the coal using a water wash medium. Then through a series of processes using water chemicals carbolic acid an alkali metal or ammonium salt thereof the coal is cleaned. Flotation beneficiation has resulted in a better product freer of impurities and thus more marketable.

Northern Metals believe using a related process they can remove the xenotime from the arkose at the mining site and thus provide a concentrated material suitable for refinement - a compound of heavy rare earths that can be easily transported

For some ideas on how such a process would work, google the word HYDROCLONE and look at some of the engineered hydroclone systems from chemindustrial situations. The process and equipment is much more advanced to that used in the early days of coal cleansing.

Take special Note that early indications are that between 65-75% of Northern Uranium's Brown Range, Rare Earth Project consists of more valuable HREE(Heavy Rare Earth Elements)

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Northern Uranium Raise A$9.5m For Aggressive Exploration

Strong shareholder support has allowed Northern Uranium (ASX: NTU) to raise A$9.5 million for aggressive exploration on the rare earth projects at John Galt and Browns Range in Western Australia, and the Gardiner-Tanami uranium project in the Northern Territory.

The company can now follow up the high grade rare earth rock chip assays identified at Browns Range, with the company planning to continue ground based reconnaissance exploration and metallurgical testwork in the final quarter of this year.

Northern added funding has been committed to the John Galt project, which was acquired in April 2010, which displays similar geological characteristics as Browns Range, with indications of high value rare earth elements.

The funds raised comprised a rights issue with 96% shareholder acceptance, with the remaining 4% underwritten by the lead manager Patersons Securities.

The A$9.5 million included A$2.1 million from the conversion of listed options.

RC drilling is also scheduled for several uranium targets at the Gardiner Tanami Project which the company expects to begin this week.

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Rare Earths Race Begins

Amidst the latest flare-up in the centuries-old Sino-Japanese spat, Beijing made an unexpected move last month when it halted exports of a little-known commodity group, "rare earth metals," to Japan.

Ostensibly, this was news affecting only an obscure sliver of commodities markets -- rare earths, a group of 17 chemical elements used in tiny amounts in high-tech products. But China's gambit sparked a swift response. The almost $2 billion rare-earth market went wild -- focusing government and investor attention on a stunning global imbalance in an underappreciated but highly significant market

Rare earths are essential to the production of many of the goods that are, in turn, essential to modern life. They are used to create the glossy screen on your flat-screen TV, for instance. They are also needed to produce many of the more important "green" technologies, from hybrid cars to wind turbines. And perhaps most notably, rare earths are used produce a variety of modern military devices and weapons, including guided missiles.

Demand for these elements has grown at a remarkable clip over the past decade. The main beneficiary of this growth has undoubtedly been China, which has strategically positioned itself to control some 97% of the rare-earth market.

How China cornered the market

Before the digital revolution and the green technology movement, rare earths were hardly a staple of modern industry. As recently as the 1980s, the sector was worth less than $100 million, and budding boom markets in rare earths were continually displaced by cheaper alternatives. That's why, when China ramped up its efforts to control the industry, other countries happily ceded the market. In 1992, Deng Xiaoping compared China's rare earths to the Middle East's oil. But no one paid much attention until last year, when prices really started to soar.

The global market for rare earths has grown at an annual rate of about 8% to 11% over the last decade, according to the World Trade Organization, but this pace has spiked in the past twelve months. Consumers around the world -- particularly in China and emerging Asia -- can't buy new Apple (AAPL, Fortune 500) iPads or Toshiba flat-screens fast enough.

Yet for the past five year China has been quietly imposing OPEC-style quotas, cutting exports by 5% to10% each year, and pushing up prices. In 2009 an index holding shares of 12 rare-earth miners rose by more than 600%. Countries like Japan, which depend on rare-earth imports in order to produce electronics, have been the hardest hit.

A global response

Governments, to put it mildly, have taken note. In June, in light of inconsistent statements coming out of China about its rare-earth quotas, the European Commission issued a report saying it was imperative that a complete supply chain be developed outside of China. In July, China announced it was cutting exports by another 40%, and rumors swirled that it had nearly filled its export quotas by the end of August. In fact, some analysts say Beijing might have needed to slow rare-earth exports to Japan regardless of their diplomatic standoff, and that the timing of the move just happened to be politically convenient.

In either case, the move has prompted a genuine rush to secure alternative supplies by companies and governments. "Japan was already aware of the situation," says Xiaomai Feng, an analyst with Macquarie Group in Tokyo. "But no one thought it could turn this political this fast."

Over the weekend, Japan and Mongolia agreed to explore Mongolian rare-earth reserves together. Japan is ramping up efforts to figure out how to recycle rare earths from used electronics. Japanese car companies like Honda (HMC), Toyota (TM), and Nissan have long been trying to switch to lithium-ion batteries, which don't require rare earths, in electric cars. But experts say that rare earths are so widely used by advanced economies -- particularly in missile technology and wind turbines -- that they won't be easy to substitute for in existing industrial processes.

"Even if China didn't have any restrictions on its exports, there would still be a shortage of rare earths around the world," says Dr. Steve Ward, CEO of Arafura Resources, a company developing its own rare-earth project in Australia, which hopes to open shop in 2014. "The challenge for the industry is whether they'll be able to supply enough."

A bill to jump-start U.S. research and development passed the House of Representatives last week, a companion to a bill introduced in March to create the first U.S. stockpile of rare earths. Both the Pentagon and the Energy Department are slated to release reports within the next month about the future of the U.S. supply.

The development race

Perhaps the most troubling part of this story is that building a new rare-earth supply chain outside of China would probably take the better part of a decade, if not more. The infrastructure takes years to build -- many experts say between seven and 12 years -- and billions of dollars.

Lynas Corp. in Australia appears to be the furthest along in production. It launched the process of developing a rare-earths business line in 2001, and says it plans to open production at its plant in Malaysia in late 2011. It already has a few customers lined up, and it signed a new contract with a Japanese company last week. Although the company struggled during the financial crisis, it is now reaping the benefits of betting on a rare-earth boom. Lynas's share price has more than doubled in the past three months.

A U.S. firm named Molycorp is another mining company to watch. Through its July IPO, the company raised nearly $400 million to reopen a mine it closed in California in 2002 due to low Chinese labor costs and challenges from environmentalists, who say rare-earth mining can be dangerous and environmentally hazardous. Molycorp hopes its mine will produce 20,000 tons of rare earths annually by 2012. Interestingly, state-owned Chinese companies have tried to buy both Molycorp and Lynas at least once since 2002.

There is also a push inside China to head off these challenges and maintain its position in the rare-earth market. Rachel Ziemba of Roubini Global Economics says the development of China's domestic industry is "partly complicated by a power play between state-owned producers and private-sector operators." China is beginning to see a wave of consolidation in which state-owned businesses are buying up smaller operators, which is allegedly slowing rare earth production.

In February 2010 the government of the Chinese province of Inner Mongolia granted permission to Baotou Rare Earth to build reserve facilities capable of storing 200,000 tons of rare earths, or more than a year's worth of production. Some analysts worry that China could flood the market in order to push down prices and put companies like Lynas and Molycorp out of business.

China is also moving away from being a low-cost manufacturing hub and is ready for an increased level of domestic consumption, says Ziemba. This, too, could pinch international importers -- as well as fuel the race for industrial development in years to come. 

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