This thread relates to companies, news etc that surrounds ASX listed uranium explorer Extract Resources (ASX:EXT) - http://www.extractresources.com/. Extract's latest investor presentation can be found here: http://www.extractresources.com/DesktopModules/Bring2mind/DMX/Download.aspx?EntryId=3389&PortalId=13&DownloadMethod=attachment . The attractions of Extract are:
a) It has consistently underpromised and overdelivered
b) It has made one of the most significant uranium discoveries in decades, in politically stable & mining friendly Namibia. [It now has Namibian govt linked directors on its Board]. Once fully scoped its undeveloped resources are likely to be at least 550Mlb of U3O8, according to Kalahari's chairman. 292Mlb of JORC resources are currently declared, with exceptional grades for the ore type (439ppm average). An independent estimate, based on drilling results released up to 18Feb2010, suggests that a total of at least 434Mlb should be identified in the next JORC estimate. Recent trade sales indicate a value of US$6/lb is conservative for undeveloped resources - suggesting US$3bn as a conservative valuation.
c) It has attracted the interest of Rio Tinto, who have substantial shareholdings in Extract and Kalahari. If you study the 2007 and 2008 "stakeholder reports" for Rössing Uranium, you will see that the existing Rössing mine is in need to new ore sources: http://www.rossing-com.info/reports/stake_report_2007.pdf and http://www.rossing-com.info/reports/stake_report_2008.pdf
d) The initial scoping study for developing a mine has indicated a target production rate of ~15Mlb U3O8 pa. This rivals production from the world's largest current U mine at McArthur River, Canada (which has reserves of 333Mlb by comparison to Rossing South's resources). Indicative cost figures will also place Rossing South amongst the world's lowest cost producers.
NB: The vast majority of U3O8 is sold on long term contracts and the spot market is small & illiquid.
Long Term Contract U3O8 Price
All the following companies have significant investments in Extract (either directly or via investments in Kalahari, which owns 40% of Extract), hence understanding Extract and goings on surrounding it is rather important, if you have a direct interest or an interest in any of these companies:
NWT Uranium (TSX-V:NWT) http://www.nwturanium.com/ (33.8% shareholder of Niger Uranium)
Regent Pacific (HK:0575) http://www.regentpac.com/index.jsp
Brazilian Gold Corporation (TSX-V:BGC) http://www.braziliangold.ca/home.html
All of these companies have connections with the directors of Uramin, which was sold to Areva for US$2.5bn in 2007. Of particular note is the heavy involvement of Stephen Dattels (see http://www.regentpac.com/template?series=10&article=18) and James Mellon (see http://www.regentpac.com/template?series=10&article=6). See this thread: http://www.stockopedia.co.uk/forum/view/30542/dattels-watch to keep up-to-date on SD's activities (and for further background).
*Ambrian is confident that the resource will exceed 560Mlb. See http://www.kalahari-minerals.com/News/Analyst_Research/New_Zone_of_Mineralisation_-_Zone_4$/News.aspx?id=119
I am now expecting the following newsflow over the next few weeks and months:
- Further drilling results
- 18th March: deadline for submission of bids by potential partners (see http://www.bloomberg.com/apps/news?pid=20601116&sid=aslvEliP7CjY )
- Resource upgrades for Rossing South Zones 1 and 2 are expected Q3 2010
- Definitive Feasibility Study.expected Q4 2010
Links & Further Reading
Paydirt article on Extract's recent history: http://paydirt.com.au/aurora/assets/user_content/File/pdsept09covStory.pdf
Useful Wikipedia articles (these are excellent IMO):
Uranium supply & demand thread: http://www.stockopedia.co.uk/forum/view/30871/uranium-suppy-demand-and-background-information
Illustration of Rössing South resouce drilling and results: http://www.stockopedia.co.uk/comment/view/31678/re-the-extract-complex
A website that dynamically calculates the discounts of KAH, URU and EML to the value of their tangible assets: http://www.freesharedata.com/eml
Recent Presentations by Extract & Related Companies
March 2010 Paydirt Uranium conference, Adelaide: http://www.extractresources.com/DesktopModules/Bring2mind/DMX/Download.aspx?EntryId=3465&PortalId=13&DownloadMethod=attachment
Kalahari update, February 2010: http://www.kalahari-minerals.com/News/Presentations/Company_Update_01_02_10/File.aspx?id=160
Audio Interview with Kalahari's Mark Hohnen: http://www.kalahari-minerals.com/Investor_Relations/Document_Downloads/Audiocasts/Mark_Hohnen_talks_to_Proactive_Investors/News.aspx?id=152
DISCLOSURE: I have shareholdings in Extract, EML and Polo. Together (even after topslicing) these consititute a significant part of my overall portfolio.
The author may hold shares in this company, all opinions are his own and you should check any statements that appear factual and not rely on them before making an investment decision. The author is NOT a qualified analyst nor authorised to give investment advice. Whilst the author is a director of ShareSoc, all views expressed are entirely his own and not necessarily those of ShareSoc.