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Canadian Uranium: Rising Stock Prices Lead to Investor Interest

Rising stock prices fuel lucrative private placements

uranium ore

The relentless rise of the spot price of uranium over the past six months from $40-to-$60/share has had a positive effect on uranium stock prices. Of eleven firms in FCW’s selected stock table, five have closing stock prices on Dec 7 within 90% of their 52-week high.

Put another way, if you invested in 100,000 shares for each of these firms last June, for a stake worth $3.2 million, six months later your investment would be worth $5.87 million for a capital gain of $2.65 million.

Rising stock prices lead to investor interest

Canadian uranium firms are taking full advantage of the rising stock prices to raise capital for exploration and development of their Canadian properties. Here’s a brief rundown in date order.

Nov 25 – Athabasca Uranium (CVE:UAX) raised $2.2 million at $0.23/share to fund exploration programs at its McCarthy Lake, Webb River, and McGregor Lake uranium properties in northern Saskatchewan. However, on Dec 7, due to investor interest, the firm increased the size of the offering to $3.1 million. Of that amount, $1.2 million was acquired by MineralsFields Group, an investment firm that manages tax shelters for high net worth individuals. On Dec 13 the stock opened at $0.25/share or $0.02/share higher than the offering.

Nov 26 – UEX Corporation (TSE:UEX) raised $9.1 million at $1.65 share underwritten through Dundee Securities and Middlefield Capital. Funds will be used for the firm’s exploration of property in the Hidden Bay project. On Dec 13 the stock opened at $2.29 for a gain of $0.64/share over the offering.

Hidden Bay is host to three uranium deposits which have recently estimated N.I. 43-101 compliant resources: Horseshoe, Raven and West Bear. At a cut-off grade of 0.02% U3O8, global N.I. 43-101 compliant Indicated resources on the Hidden Bay property now stand at 41.62 million pounds U3O8.

Dec 2 – Titan Uranium (CVE:TUE) in a nonbrokered private placement raised $6.9 million, at $0.30/share, for licensing and permitting of its Sheep Mountain property in Wyoming. On Dec 13 the stock opened at $0.38/share for a gain of $0.08/share.

The Sheep Mountain mine hosts a NI 43-101 compliant Probable Reserve of 14.2 million pounds U3O8 (6.4 million tons at an average grade of 0.111% eU3O8). The mine is a past-producer of uranium and the preliminary feasibility study will provide the necessary documentation required to amend the present mine permit. The company plans to develop the project with both conventional underground and open pit mining, followed by heap leach extraction of the uranium with a solvent extraction recovery plant producing up to 1.5M pounds of U3O8 per year.

Dec 3 – Fission Energy (CVE:FIS) raised $13 million via a syndication of underwriters led by Dundee Securites at $0.80/share. The firm has entered into a 50/50 three-year, $30 million, exploration program with South Korea’s KEPCO at the Waterbury Lake property in Saskatchewan. It is adjacent to the Areva/Denison Midwest uranium deposit.

Dec 7 – Uravan Minerals (CVE:UVN) completed a private placement worth $2.26 million at $0.30/share. Of that amount, $1.75 million was subscribed by the MineralFields Group. The funds will be use for exploration of Uravan’s properties in the Athabasca Basin. General surveys were completed in 2010 along with chemical sampling. A drill program is scheduled for 2011. On Dec 13 the stock opened at $0.33/share for a gain of $0.03/share.

Dec 7 – Kivalliq Energy (CVE:KIV) raised $5.0 million, at $0.70/share, in a private placement. The proceeds will be used to explore and develop the firm’s Lac Cinquante uranium property in Nunavut, Canada. On Dec 13, the stock opened at $0.76/share for a gain of $0.06/share.

So far the firm has invested $9 million in exploration and drilling at the Angilak site which it acquired in 2008. Drilling results reported Dec 13 at two holes show 0.83% U308 at 34 meters and 0.6% U3O8 at 72 meters.

Dec 9 – Denison Mines (AMEX:DNN) closed a private placement of $65.45 million through a syndication of dealers led by GMP Securities and Scottia Capital. The funds will be used exclusively for work on the firm’s Canadian properties in order for investors to accrue certain Canadian tax advantages. The firm’s Wheeler River property has NI 43-101 results, released Nov 9, showing 18% U3O8 for Indicated resources of 35.7 million pounds U3O8.

Uranium One closes Russian deal

Uranium One (TSE:UUU) announced it has closed its sale of two mines in Kazakhstan and properties in Wyoming in the U.S. to JSC Atomredmetzoloto (ARMZ) for $610 million. The primary interest ARMZ has in Uranium One is in two mines in Kazakhstan which are the Akbastau and Zarechnoye mines.

At market open Dec 13 the stock traded at $4.82/share making the ARMZ stake worth $857 million or a gain of $247 million over the closing price inked on Jun 8 of this year.

The deal also includes Uranium One’s NRC licensed Irigaray-Christensen ranch ISR mine in eastern Wyoming. A brief political tempest in a teapot took place in October when four House Republicans protested the sale on the grounds uranium from the Wyoming property might be sold by Russia to Iran. The NRC said in a statement these concerns were unfounded as the U.S. subsidiaries of Uranium One lack export licenses to sell their product overseas.

This is my extended coverage from Fuel Cycle Week, 12/16/10, V9:N405 published by International Nuclear Associates, Washington, DC.

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