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« Uranium Stocks on the move | Main | Uranium: Spot price stable but futures rise »

Time to buy uranium stocks: Deutsche Bank

Deutsche Bank 01oct 07

Deutsche Bank's Global Markets Research in Australia see now as a time to buy into uranium stocks and suggest Energy Resources of Australia Ltd (ERA) which has the Ranger mine in the Northern Territory and Paladin Resources Ltd as the vehicles best placed to take advantage of the coming price rises in uranium.

We have to agree with them about buying uranium stocks although we do not own either of their recommendations. Maybe someone will write in and tell us why these two stocks offer better value than the other front-runners in this market place.

The article goes to say that:

A revision on a June quarter assessment was that the projected 2007 spot price would average lower at $US101.35/lb, would then average $US128.75/lb in 2008 and be about $US130/lb in 2009 before tapering to $US95/lb in 2010.

A serious imbalance would remain between supply and demand until 2009 "at the very least," the latest report said.

However, "the risks for more potential market deficits beyond then are considerable."

If their projections are correct then it should bode well for all of the quality uranium mining stocks. A slightly more pessimistic study was compiled by resources Capital Research of Sydney, Australia, who are predicting a near term spot price of $90/lb by early 2008 and 120/lb by September 2008.

The above article was alerted to us by one of our readers and was carried by Mineweb if you wish to read the whole thing then just click this LINK.

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Reader Comments (6)

Paladin has a terrific team leading the way with Mr. John Borshoff;he's well respected in the uranium industry.Also when Queensland wakes-up & allows uranium mining, Paladin is now sitting pretty with the buy-out of Summit Resources earlier this year.They're also established in Africa as well as Western Australia (Allen Carpentar needs to wake up as well)..The type of mining they do gives them cheap cost to bring the uranium out of the ground & no mine in deep like Cameco where you can have a major problem.Paladin was in the same class as Uramin before they got taken-out @ a nice premium.Paladin will be the next "major" uranium company to get a buy-out offer.Mr Borshoff will decline the offer unless it's a huge offer.He has stated many times that he's not willing to sell the company that he has built around 30 years ago.He was one of the few who saw the nuclear turn-around 20 years earlier than the rest & went out & bought uranium mines on the cheap;like Valero did 20 years ago when they bought refinery's @ discount prices.We all know what Valero's stock has done in the last three years !!! Once the bans are lifted down-under,established uranium companies will take-off & Paladin has plenty of growth & yes I have 700K invested in Mr. Borshoff's stock (PALAF).I got into the stock on Jan. 27th of 2006 & I'm not selling.That 1st day I got into the stock, it went up 12%.Many more nice things will come from Paladin !!!


Rico Hammer

October 1, 2007 | Unregistered Commenterrico hammer

Energy Resources of Australia (ERA)is 70% owned by Rio Tinto and controls the Ranger Mine (operating) and Jabiluka Uranium deposit. ERA does not receive much press as company announcements are controlled by Rio Tinto (all board members are Rio Tinto employees) and there is speculation that Rio Tinto may want to buy the remaining 30% of ERA at some stage. ERA is only listed on the Australian stock exchange and does not get the exposure of Paladin or the other stocks that you mention. If you do the figures on Paladin and ERA, ERA comes out in front. Thats not to say that Paladin isn't a good buy (as it is), its just that the fundamentals leave you in no doubt that ERA is a better buy. All company announcements can be found at the company website at The latest news is that the main pit is up and running after the flooding that occurred and On 27 Sep 2007 ERA announced a mine extension.

October 1, 2007 | Unregistered CommenterJames Baldwin

Don't you lo0ve it. Just when you get analyst recommendation the sector has a bad day.

October 1, 2007 | Unregistered Commenterari

Hi Guys,

ERA is a long time operational Uranium producer but it is heavily hedged at very low prices per pound, way below todays spot and long term prices. Its for the conservative investor. They do have a very rich and very large deposit in reserver but the local people will not permit them to mine it. If they are allowed to mine this stuff in the future then watch their price go north very quickly. They have RIO Tinto as their majority owner so there are deep pockets sitting behind them. They are also hated by environmentalists.

I made a lot of money with Paladin and everything stated in Comment 1 above is correct. They are worth the investment. If we get another stock market massacre and Paladin drops again below AU $5 then you would be stupid not to buy!!!

Other Aussie Uranium plays to review would be Toro (TOE)which have deep pockets (Oxiana) behind them and a cracker set of managment. Just swallowed up another aussie player and very very cheap.
Wildhorse (WHE), Energy Metals (EME),PEPINNINI MINERALS LIMITED (PNN) are others that look the goods.

I own Toro stock only.

October 1, 2007 | Unregistered CommenterKeclonis

I assume Deutsche Bank (DB) is a colossal banking group and thus you might expect their stock analysts to look from a lofty perch at the ASX uranium sector resulting in their eyes lighting on the two biggest players. ERA is 68% owned by RIO and its Ranger production is locked into legacy contracts at giveaway prices. Despite a whirlwind of activity in the ASX uranium sector in the last 18 months I am not aware of activity by ERA to participate in this. So I see the main point in holding ERA is the future possibility that Indigenous owners might allow Jabiluka to come on stream. PDN has been more active picking up ASX uranium assets but there are a range of smaller companies that might offer better capital gain potential to savvy investors. Although I have a little of both ERA and PDN I am looking to positions in companies like Bannerman BMN and Marathon MTN to do better for me out to 2010.
Just quickly back to DB which I assume is the same DB that invested ~AU$120 million in Crescent Gold CRE back in May at $0.38 per share. Readers can look at CRE reports on the company website;
Reports for all ASX companies can also be read at these pages;
In a September shareholder update advising of commissioning a second ball mill CRE trumpet that production will ramp up to 90,000 ozs of gold PA.
Wow, that will impact the bottom line in Frankfurt.
Do any readers think that DB buying into CRE was a great move ?
If we have faith in DB making a savvy investment in CRE then we should consider getting into CRE while they are still not much above DB's buy in price.

October 1, 2007 | Unregistered CommenterWarwick Hughes

Hmm, it says there's 5 comments but I only see two.

Anyway, joining in the debate here, I have to question Mr. Rico's position in PDN.
Firstly, PDN has a current market cap of over $4 billion US. (Of course, with the US$ falling, this doesn't mean much). However, I doubt that anyone in the uranium industry has enough capital or power to "buyout" PDN, as Mr. Rico suggests; but, that does not preclude some big oil company or other big mining company wanting to get into the game. So it is possible

Secondly, I'm appalled that anyone would invest such a large amount of cash ($700K) in one company. Maybe Mr. Rico has similarly spread his capital around, but it isn't apparent. I do agree that PDN is a producer that will benefit from the nuclear renaisance (sp?) but UUU is bigger, makes better investment decisions, and is growing more rapidly than PDN. I do own some PDN and am happy it is a more stable stock and a good conservative investment.

October 1, 2007 | Unregistered Commenterstoneygulch

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