Bayswater Uranium Corp fka BAY

[sumisu]

Bayswater and Kilgore Merging Into Promising Uranium Play

By Todd Flagg

20 Mar 2007 at 04:07 PM GMT-04:00

St. LOUIS (ResourceInvestor.com) -- Uranium explorer Bayswater Uranium Corporation [TSXv:BAY] and Kilgore Minerals Ltd. [TSXv:KAU] announced a merger Tuesday, to create a company with 10 million pounds of historical uranium resources and have $40 million of operating cash.

News of the merger caused share prices to increase for both companies. Bayswater share price increased 8 cents per share or 5%. Kilgor Minerals increased by 7 cents per share or 4.7%.

Robert Bishop, editor for the Gold Mining Stock Report, said the merger will combine the exploratory project of Bayswater with the resource-rich assets of Kilgore.

"The merger of Kilgore and Bayswater is a marriage of a deep value play with a broadly diversified exploration company, a company with a far-off-the-market's-radar-screen profile with a company whose market profile has been high and now can be expected to be higher," said Bishop.

The resulting company will control Bayswater's dominant land explorations in four sites in Canada and one in Africa, as well as Kilgore's four sites in the United States that have historical uranium resources with near-term production potential. The merger will also combine base metal and gold asset mines in Ireland and California.

Based on a 1:1 share exchange, the premium that Bayswater commanded over Kilgore peaked out at 89% on February 23, and commonly traded in a band between 45 and 65%. At the time of the announcement the premium stood at 7.4%, according to Bishop.

"For those unhappy with the seemingly disappearing premium, it's worth noting that Kilgore made another new annual high this morning-$1.73-and Bayswater is currently trading 32% below its high of one month ago," he said.

What Bayswater brings to the table is seven projects in various stages of development.

The Labrador, Canada project is a searching for the right to obtain 1.1 million acres in the Central Mineral Belt uranium district. A $3.2 million exploration program comprising airborne surveys and follow-up prospecting in 2006 identified numerous uranium mineralized zones which will be drill tested this year.

Its Athabasca Basin project is 1.7 million acres produced 62.5 million pounds U3O8, and the high grade Shea Creek uranium deposits. A $4.5 million exploration program is planned for 2007 including a deep penetrating VTEM survey in order to identify favourable basement conductors, followed by targeted ground geophysics, prospecting and up to 10,000 metres of drilling.

The Thelon Basin project is 3.7 million acres representing 33% of the available ground in the basin. An $8.1 million exploration program is planned for 2007 to identify additional favourable targets by airborne geophysical surveys and to evaluate targets by ground geophysics, prospecting and up to 10,000 metres of drilling.

The company’s Newfoundland project is in 418,000 acres in southwest Newfoundland. An airborne survey over a portion of the property in 2006 identified numerous low level radiometric anomalies. Further airborne surveying is planned for 2007 with follow-up prospecting of high priority targets and drilling if warranted.

The Niger, West Africa project is searching for the rights to acquire 100% interest in 2.0 million acres in two separate blocks of prospective uranium exploration concessions are anticipated to be granted shortly. Once the concessions are granted, Bayswater plans a $1.8 million program of airborne surveying and follow-up prospecting and mapping to define drill targets.

Aggressive planned exploration expenditures of approximately $20 million on Bayswater's uranium properties in Canada and Niger in 2007 should significantly advance projects towards the resource stage, according to the company.

According to the Kilgore Mineral Ltd. website, the company has 12 uranium properties in the U.S. The average grade of U308 being pulled from the sites is 0.141%. Of the four main sites in Montana, Nevada and California, Kilgore and historical uranium reserves of about 10 million pounds.

Bishop said that Kilgore’s release of uranium before the market of “approximately 10 million pounds ... is a conservative figure that can be expected to grow substantially.”

"I believe this is a conservative figure that can be expected to grow substantially, assuredly from within Kilgore's existing portfolio, as well as from any measure of success on Bayswater's aggressive 2007 exploration program," he said.

According to Bishop, the Bayswater/Kilgore merger is a case of “opposites attract.” He said that Kilgore has been a company of unknown assets, but always a considered a good value under president Norm Burmeister.

The merger will combine the solid assets of Kilgore with the exploritory and financial backing of Bayswater, a company's whose stock price has ebbed and flowed during the past three years.

“Those who have recovered at least their investment from Kilgore can either go for the ride with the new Bayswater, post-merger in May, or take profits into strength. Except perhaps for those who have deferred any profit-taking in Kilgore, there is no urgency to take money off the table,” Bishop said.

“As in the past, the stock can be expected to be a volatile trader, and taking money out of Kilgore should be limited to periods when the market is rewarding Bayswater for the market visibility that Kilgore never enjoyed,” he added.

Bishop also said it's also not a great leap to expect that the combined company could obtain a listing on a more senior stock exchange, perhaps even in the U.S.

“It will be Kilgore's assets, not Bayswater's collection of speculations that will make this possible,” he said.

The merger comes at time when the price of uranium is going through the roof. The spot uranium price has risen 152% since starting 2006 at $36/lb. So far this year, the price has jumped almost 26% now at $91/lb.

The demand for uranium has increased largely because of the boom for nuclear energy. Twenty-nine nuclear-power plants are being built worldwide with over 100 more in the planning stages.

China's plans call for 15 to 30 new nuclear plants by 2020, while India is building seven more plants and has been promised U.S. help to triple its collection by 2020. Japan, already with 59 reactors, plans to build 11 more by 2010.

http://www.resourceinvestor.com/pebble.asp?relid=30000