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Re: eck post# 5110

Thursday, 01/20/2005 3:05:25 PM

Thursday, January 20, 2005 3:05:25 PM

Post# of 60938
OT: eck, Id be cautious...

unless you know something about margins on uranium relative to
site leases, probability of successful exploration, cost of
recovery, storage and liability. right now they are getting
say 500,000 pounds of uranium per year at its like $7.00 a
pound which mean 3.5Mgross/year there are 125M shares
outstanding, Im sure jim rogers would argue say in 5 years
it will be $20 a pound. But since the industry PE is 20
the stock would have to double output every year for the next
4 years to get up to 8M pounds per year which would mean a
grows (hypothetical) revenue of 160M so if their profit margin
is between 10-40 percent (depending on what margin, pick 20%)
they would have 35M into 125M shares which is say 25 cents
per share for a stock price of 5 bucks....

This all depends on outstanding year over year growth of
100% overy a 5 year period...working backwords...
5->2.5->1.25->.63->.31cents so according to the current
capicity the fairvalue price in the abscence of growh should
be 0.31 cents/share. however %100 percent growth year over
year would be deserving of a PE of 100 or more so thats
5x.31 cents or about a $1.50 (again forward projecting 3x
higher uranium costs per pound)

so your job is to call management and find out what they
expact their year over year growth to be for the next 5 years.
If they expect 100 percent year over year growth and you plan
to hold it for 5 years then its a buy. Note competitors
(use yahoo comparsion page for the stock and link to their
chart) have had a wild run of late...my hunch that though
there might be some favorable TA the valuation on this baby
is a killer... must get a copy of their prospectus to see
their expected growth.

good luck
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