Hi See Shasta, A while back you had expressed an interest in uranium miners. Have you seen the following essay by Fields? The real message there, of course, is Aflease..... but might be worth your time.
Free Call Option on Uranium
By: Alf Field February 4, 2003
Afrikander Lease (quoted as AFKDY.PK on Nasdaq and AFL in Johannesburg) owns large uranium deposits and is effectively a call option on uranium as well as being a small gold mining and exploration company. Depending on how one values this company’s gold assets, Aflease could be a free call option on uranium.
Why be interested in uranium in the first place? The doyen of investment letter writers, Jim Dines, has proclaimed that uranium is in a long-term bull market and has been recommending accumulation of uranium shares. The Dines Letter is available by subscription at $195 per annum either from the web site www.dinesletter.com or from James Dines & Co. Inc, Box 22, Belvedere CA 94920 USA. Telephone (407) 9755230.
Dines states that:
“It is not our place to decide whether nuclear power is good or bad, especially since oil reserves will be used up in this century and there is no replacement in sight yet. At the end of last year there were 441 nuclear reactors in operation worldwide, with another 34 under construction. Six new reactors began commercial production in 2002 throughout the world, (three in China, two in South Korea and one in Japan), with construction having begun on six reactors in India and four in South Korea. Six units that had been mothballed in Canada are expected to return to service, with more units coming from Finland,
Russia, Ukraine, Romania, Brazil, and Bulgaria. China and India have made clear that they intend to commit more resources to nuclear-generated electricity.”
The price of uranium has doubled from $7 to $15.50 per pound over the past year. There is obviously a shortfall in the supply of uranium. Dines talks of the “coming uranium melt-up” and makes the following points:
Current annual demand for uranium is running at 155m lbs per annum (excluding growing usage by China and the old Soviet Union) compared to current supply of 94m lbs. There are no additional pockets of supply that can come out and shock the market. The price of uranium needs to rise by another 50% to over $22.50 to spur exploration and development. Even then it would take many years to discover new deposits and bring them on stream. The massive blackout in Canada and the USA in August 2003 has shocked power utilities because when they don’t pay attention, the lights really go out. They have begun immediate investment in long neglected infrastructure. What has been under the world’s radar is that nuclear plants are concerned about a shortage of uranium, because when they run out of uranium, the lights likewise run out. People running nuclear facilities would be out of their minds if they were not concerned about nailing down future supplies of uranium.
I have not been able to check Jim Dines’ assertions but I have no reason to doubt them. Logic suggests that he is right on the button and that the prospect is for a long-term bull run in uranium.
What is obvious is that uranium supplies that are either available now, or that can come on stream in the next few years, will command premium valuations. The premier uranium stock is Cameco Corp (CCJ), which has risen from a low of US$20 in April 2003 to a recent price of US$60. At the current price of US$45, Cameco has a market capitalisation of about US$2.5billion.
Other smaller companies with connections to uranium have seen their share prices soar, (but are not yet recommended by The Dines Letter). The hunt is on for other uranium companies that may have been overlooked. This is where Aflease comes in.
Recently Aflease made the following corporate announcement
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