James Dines Showcases Top Uranium Picks
By Jon A. Nones
17 May 2006 at 05:49 PM EDT
NEW YORK (ResourceInvestor.com) -- James Dines, Editor of “The Dines Letter,” and the self-proclaimed “original uranium bug,” returned to front stage at the New York Hard Assets Investment Conference yesterday to conduct yet another class on uranium and “make you rich.”
When Dines was “screaming uranium” last year at the Gold & Precious Metals Investment Conference in San Francisco, the spot uranium price was in the mid $30s. Yesterday in New York, Dines picked up where he left off with the weekly spot price now at $43/lb.
Yellowcake prices were $7.10/lb in December 2000 and have more than tripled since 2003.
“A currency crisis is coming, the dollar is dipping,” he said. “But I foresee higher uranium prices regardless of whether the currency goes down.”
Stephen Leeb, Editor of the “Complete Investor,” and outspoken doomsday forecaster, presented earlier in the day, telling the audience to beware of an approaching energy crisis.
“I think the situation today is about as critical as it can be…and we’re doing nothing to solve the energy problem,” said Leeb.
According to Leeb, every Wall Street firm out there is forecasting oil to go down. Wall Street doesn’t get it; the government doesn’t get it, he said.
“Civilizations collapse when they don’t have enough resources,” he said. “This is economic; it’s not a political crisis.”
Leeb said we’re going to have to look at uranium as an alternative in the not-too-distant future, recommending investors take a look at nuclear utilities firm Exelon Corp. [NYSE:EXC].
In a presentation entitled “Dines Letter’s Top Uranium Picks,” Dines invited four companies at the conference to the panel: Pinetree Capital Ltd. [TSX:PNP], Laramide Resources [TSXv:LAM], Alberta Star Development Corp. [TSXv:ASX; OTCBB:ASXSF] and Continental Precious Minerals [TSXv:CZQ].
Pinetree Capital
Sheldon Inwentash, Chairman and CEO of Pinetree Capital, a financial advisory and merchant banking firm, simply said uranium is the logical alternative solution to carbon-based fuels.
The world currently obtains 16% of its energy through nuclear power and this could to easily increase to 60%, he said.
According to Inwentash, Russia has indicated that it would like to divert as much as 23%-25% of its energy to nuclear power. This is saying something, given the vast amounts of oil and gas supplies in the country, said Inwentash.
Pinetree largely focuses on uranium miners in Australia, since the country has 30% of the world’s known reserves, he said. So one stock Pinetree recommends is Mega Uranium [TSXv:MGA], which has properties in Argentina, Mongolia and, of course, Australia. He estimated Mega Uranium to have a total resource of over 25 million pounds U3O8.
Pinetree’s portfolio contains about 50 small-cap companies, many in the uranium sector, but also in oil & gas and oil sands.
“We are very much in the whole energy complex,” said Inwentash.
Inwentash concluded by saying there has been no significant price correction in uranium for the past five years. Although the price fell back slightly last week, Inwentash said “buying pull-backs has always been a good policy.”
Laramide
Marc Henderson, President and CEO of Laramide Resources, immediately noted the tightness in the market, saying a lack of new deposits and all the red tape is creating a shortage.
Currently, the gap between uranium production and estimated reactor requirements is more than 70 million pounds U308, the largest in history and will lead to rapid depletion of overhanging inventories for future reactor use.
In 2004, the world produced about 100 million pounds of U308. Of that, the U.S. only produced 2.4 million pounds in 2004, increasing to just 2.7 million pounds in 2005, according to the Energy Information Administration.
“I believe there will be a resurgence of American production capacity,” said Henderson, but it is unlikely it will offset rising demand.
Laramide’s principal asset is the Westmoreland deposit located in Queensland, Australia. Rio Tinto [NYSE:RTP], who held the property from 1990-1998, calculated an inferred resource of 17.4 million tonnes at 1.2 kg/t U308 - approximately a $1.5 billion in-ground value, according to the company.
But according to Henderson, the project has an estimated 50 million pounds of uranium with “huge expansion potential.”
“We’re very, very bullish on moving that 50 million-pound deposit higher,” he said, adding that doubling that was not out of the question.
In addition to Westmoreland, Laramide has two joint ventures with Arafura Resources [ASX:ARU] and Hartz Range Mines for uranium exploration at Laggon Creek and Debbill Debbill Creek in Australia.
In November of 2005, the company bought Homestake’s uranium portfolio in the western United States. The La Jara Mesa property in New Mexico is the most significant property with a resource of 1.15 million tonnes at approximately 0.3% U3O8 for 7 million pounds of uranium.
The last uranium deposit to note is the La Sal project, located within The White Mesa district in Utah, one of only four permitted mills within the U.S. La Sal contains a resource of 440,000 tonnes at 0.312 % U3O8 for 2.7 million pounds of uranium.
Alberta Star Development
Alberta Star owns 100% of the Contact Lake uranium, silver, iron oxide, copper, gold, cobalt, and REE project located in Canada's Northwest Territories.
The Contact Lake Mine is a former past producer of 625,000 ounces of high grade silver and 6,933 pounds of uranium, according to the company.
Alberta Star is fully permitted for drilling in the Sahtu Dene Land Settlement Area at Contact Lake and has been granted a five-year Sahtu Land & Water Board Class "A" Land Use Permit.
President and CEO Tim Coupland said Alberta Star is the only metals company permitted for drilling in the area.
Alberta Star has intersected high grade uranium mineralization in both of its recent drill programs at Longtom Lake in 2003 and 2004, also located in the Northwest Territories. Drilling intersected:
1.68% U3O8 over 1 metre at a down hole depth of 80 metres.
0.16% U3O8 over 1 metre was intersected at a depth of 51 metres in the same hole.
The company is also further exploring the MacInnis Lake uranium claim block located in the Nonacho Basin. MacInnis Lake is known to have widespread surface uranium mineralization, and contains 28 known high grade uranium showings that were discovered between 1954 and 1988.
Coupland said the company has a $27 million budget and plans to “go out and start drilling.”
“We’re quite confident we’ll be able to deliver a number of base metals and especially uranium,” he said.
Continental Precious Minerals
According to CEO and President Ed Godin, Continental has a number of mineral licenses in Sweden, and in 2005, completed a 43-101 filing on eight of these deposits. The deposits contain 13 million pounds of indicated U308 resource and 7.2 million pounds of inferred U308 resource, according to the company’s website.
Continental also holds 18 additional exploration licenses, covering an area of approximately 97.54 square kilometres in northern Sweden, which contain black shale-hosted metalliferous deposits and semi-anthracitic laminae.
In the 1970s to the early 1980s, the Swedish Geological Survey (SGU) drilled 28 holes in an area and analysed the alum shale cores for molybdenum, vanadium, uranium and organic carbon. Godin said the SGU determined that the metals could indeed be separated.
Godin said these deposits could contain as much as 2 billion pounds of low grade uranium, amounting to roughly $40 per tonne. However, he added that the company has yet to complete calculations of resources.
Conclusion
According to Dines, quoted in “The Dines Letter,” uranium is worth a look: “It’s a raging bull that’s only just begun its stampede!”
Pinetree closed today at C$16.19, up 60% from beginning the year at C$6.50. The stock is up almost 90% since this time last year.
Laramide is trading at C$5.74 down from its recent 52-week high of C$8.50 hit on April 18. However, the company is still up 78% from its 52-week low of C$1.28.
Continental closed the day at C$3.55, up an impressive 72% from the start of April! The stock is up 93% from its 52-week low of 0.25 cents.
Albert Star is trading down a bit from its 52-week high of C$2.85, also hit on April 18, currently at C$1.95. But shares are up 0.64 cents or 67% from the start of the year.
“Uranium-mining stocks are just beginning to rise. It’s still early, before they reach historic highs,” wrote Dines.
