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« Khan Resources: Up 12.18% today | Main | Khan Resources Inc: BUY »
Monday
Mar052007

Aurora Energy Resources: BUY

Aurora Energy Resources

In light of the recent correction in the world markets, and in uranium stocks across the board, we believe that this is a good time to buy Aurora Energy Resources and so we are upgrading this stock to a BUY on our list of uranium stocks.

Aurora is one of the uranium stocks that has been benefiting greatly from the rise in the uranium price, with its stock price going from around $4 to over $17. However the recent sell off in the market has provided a great opportunity to buy into this stock at a considerably lower level than its all time high. The stock has come back down from above the $17 level to closer to the $14 mark.

The technical indicators are also showing that that this uranium stock is currently at an attractive entry price. The RSI, MACD and STO have all come down from the top of their range and have moved down towards the lower levels, indicating that this stock is currently at a good point to purchase. The stock chart analysis for Aurora is shown below.

Aurora Energy Resources Stock Chart Analysis

The most attractive thing about Aurora is that it is the sole owner of one of the largest undeveloped uranium deposits in Canada. The Michelin deposit contains enough uranium to provide power for over 1 million homes for 67 years, and this could only be the tip of the iceberg as there could still be a great deal of uranium under the ground that is yet to be discovered.

Aurora Energy Resources controls 800 square kilometres in the historic uranium district called the Central Mineral Belt of Labrador, Canada. Although this land includes a total of five uranium deposits, the largest is the Michelin deposit which has been advanced to the feasibility stage. Based on the drill results of 2005, the new 43-101 estimate for the Michelin uranium deposit has increased notably from 18.3 million pounds to a Measured and Indicated Resource of 22.2 million pounds with an additional Inferred Resource of 13.4 million pounds. At the current uranium price of $85/lb, this has increased the value of Aurora's uranium reserves by $300 million to $1.887 billion in measured and indicated uranium resources, as well as an additional $1.139 billion in inferred resources. This comes to grand total of a possible $3 billion worth of uranium in the Michelin deposit. Remember that Aurora is currently trading for less than $1 billion...

With such a large land position, containing such a large amount of uranium, Aurora energy will benefit greatly from the rising uranium price and could even be a possible takeover target. Larger uranium mining companies may be interested in such a large deposit in Canada, a politically stable country that encourages mining. Obviously when takeovers are mentioned in the uranium industry, everyone immediately looks towards Cameco, as they are the biggest player in the uranium market by far at the moment. It is possible that Cameco could be interested in buying Aurora, but there are other companies that are interested in what the Aurora team, led by Dr. Mark O'Dea, are doing. Fronteer Development, which is also a BUY on the uranium stocks list, have already acquired a large position in Aurora as they currently own a very significant 47.25% stake. Therefore it is possible that Fronteer could indeed buy the more of the remaining 52.75% so that they could own more of this uranium deposit or even perhaps a merger could take place between these two stocks. However if Fronteer does not do anything more with Aurora, they will still benefit from the rise in Aurora's stock price and if Aurora are taken over, Fronteer will come away will a significant profit.

Uranium is at the end of the Aurora rainbow

Even without any takeover talk, Aurora is still doing very well indeed. With a quoted market value of $936,805,169 Aurora is no longer a small player in the uranium stocks market. A problem that we often come across here at Uranium Stocks is that although we may like a company a great deal, many just do not have enough volume to make it possible to trade in and out of the stock as we please. This is not the case with Aurora as millions of dollars worth of Aurora stock is traded everyday, unlike many exploration companies, where you are lucky if any trading takes place in one day!

So in conclusion, Aurora Energy Resources is now been marked as a BUY by Uranium Stocks and it has been added to our Uranium Stocks Buy list. The stock's recent correction provides a good entry point to buy into Aurora and their interesting uranium deposit in Canada.
Aurora Energy Resources trades as AXU on the TSX.


05 March 2007

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Reader Comments (10)

Hi Bob et al,

Just to clarify this article a bit; Fronteer (FRG:TSX) originally owned the property in the Central Mineral Belt that Aurora now owns. They decided to spin off Aurora as a pure uranium play and retained 47.2% interest in the new company. I don't see any reason why they would be interested in reaquiring it. The IPO was at $3.80 in March of 2006. At current price levels of AXU (March 5th = 13.80) FRG has a return of $10 x 30,917,888 shares = $309.2 million. Of course, this is after the stock has been sold off the past 5 days. It reached a high of $17.75 on Feb. 23/07, so that adds another $3.95 per share = $120 million (approx) once AXU bounces back. Not a bad investment by FRG but I still doubt they want to buy back the outstanding shares.
Thanks
Bob

March 5, 2007 | Unregistered Commenterstoneygulch

Agreed, however should Aurora become a takeover target then it may be in FRGs interest to own a little over 50% and have the dominant say in any negotiations.

March 6, 2007 | Unregistered CommenterUranium Stocks

Since I don't know whether there are other ownership groups that have large percentages of AXU, it still seems as if FRG would have strong control(I wonder how many board members they have on AXU's board?). On the other side of the coin, I have considered whether AXU will begin to take over some of the juniors that are adjacent to their CMB holdings. Many of those juniors, such as Crosshair (CXX:TSX.V), appear to be mining similar strikes as AXU.

I hope you managed to get your allotment of AXU that you wished. FRG & AXU didn't bounce as much as some of the other intermediates today (Mar.6th) and still look like good buys.

I wonder if you have considered a position in Pinetree?

March 6, 2007 | Unregistered Commenterstoneygulch

Thanks for the comments, on the ball as usual. Yes we got a few shares in AXU which we are pleased to own. I was once told that 90% of a good decision was timing and looking at PNP it is now over $20.00. We don't know enough about it to make a purchase but will watch it as it does seem to becoming an important player. Don't let us put you off it - it is just ignorance on our part.

March 7, 2007 | Unregistered CommenterUranium Stocks

Please, don't apologise. There are lots of companies out there now and we can't own all of them. I really like Khan, but have invested in other companies and don't have funds available. Regarding PNP (www.pinetreecapital.com), you should check out their website, as they are discoverers of "baby" juniors. PNP has been getting their positions for over 6 years now and some expect some big mutual fund will acquire PNP at a hefty premium (When-who knows??). But this is not speculative investing; PNP earned $3.20 per share and trades at a P/E of 6.89 at a stock price of $22.00 (March 7 close). This is the 2nd year of returns like that. I say, "Wow!". Where do we see any company earning that kind of return, and if we find it, what are the chances of such a low P/E. It must be one of the best kept secrets on the market. I have always thought a P/E of 10 or better is relegated to good companies, and miners usually get even higher P/Es (Barrick Gold (ABX); earnings $1.61, P/E 20.64). I have owned lots of PNP in the past, but currently am very underweight in it. Bad choice, I think, but I'll try again.

March 8, 2007 | Unregistered Commenterstoneygulch

I purchased shares of Urasia Energy (UUU) between $5 and $6 per share expecting a significant price increase. I have done well so far but is the outlook still good now that they have been bought by Uranium1 (SXR)? Is it a good long term play or are there better options that can be purchased on US exchanges? Any information on Silex Systems (ASX) on the Australian exchange? It has a new Uranium enrichment process that that could be huge.

March 14, 2007 | Unregistered Commentertonyd213

This is just my opinion, but buying UUU at that price was an excellent purchase. There is a rush on to become the number two uranium company, behind Cameco. But since Cameco's future remains uncertain at the moment (re: Cigar Lake remediation) it appears that the intermediates are attracting higher volumes. SXR is currently #2 by market capitalization (for pure uranium miners), if we assume the merger with UUU passes all regulatory hurdles. It may continue on its quest to increase in size, so I think it is a safe bet to be one of the top producers. SXR is going to be only the 4th miner licenced in Australia on their Honeymoon project, so I think that is certainly worth a few dollars upside. Also consider DML, LAM, MGA, and FRG. These are all going to be good companies but anything can happen, as we have just seen with ERA and CCO.

What a great site to share information. My thanks to Uranium Stocks.

March 15, 2007 | Unregistered Commenterstoneygulch

Thanks for the comments its all good input and is to everyones benefit. We cant cover everything so there will be opportunities that we miss. Just hope that we catch a few of the good ones!

March 15, 2007 | Unregistered CommenterUranium Stocks

So this is end of May 2009 and all these stocks have been beaten down, but demand for Uranium is growing and boom times are just ahead. Which set from the alphabet soup of stock symbols will benefit more than others? Thank you.

May 28, 2009 | Unregistered Commentergarywildd

Garywildd,

We have made our decisions and updated our 'buy' list as per the portfolio with 4 buys at the moment, however our readership have a much bigger range of stocks and very good reasons for placing their hard earned cash in the stocks of their choice. The bottom line is that it is still your call.

May 31, 2009 | Unregistered CommenterUranium Stocks

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