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« Uranium-stocks: Portfolio Update 16 April 2007 | Main | Khan Resources: Up 44% in 6 weeks »
Saturday
Apr142007

Strathmore Minerals Corp: BUY

Strathmore Mineral Corp trades as STM on the Toronto Venture Exchange and we are adding this stock as a BUY on our uranium stocks list.

STM Stock Chart

Strathmore is a junior uranium stock, but it is not too small with a market cap of over $366 million and a fair number of interesting uranium properties, many with proven reserves.

Strathmore has been doing extremely well, even compared with other uranium stocks, rising from under $2 to over $5 in less than six months. Currently it has just experienced a slight fall back from its high of $5.50 and this presents us with a fairly good entry point, which we have been waiting for. If you look back to mid March, the ideal time to buy this uranium stock was at the lows of $3.31 but at that the time we were unsure whether STM was going to fall to its 200dma or if the RSI was going all the way to the 30's so we were forced to wait. As you can see, STM made a sharp recovery and is trading over a dollar above its lows in March. However we believe that this uranium stock is a good buy anywhere around or preferably under $5, and long term it is set to go much higher, possible to double figures within a year.

The uranium projects that Strathmore has are in fairly stable countries, geopolitically speaking and their uranium projects are at a variety of stages in a variety of locations throughout the Americas as the map below shows:

Strathmore Minerals Projects

One of the main projects that Strathmore is working on is their Roca Honda project in New Mexico, USA. At Roca Honda, the Strathmore team has been able to upgrade their 43-101 Measured & Indicated Resource from 12 million lbs, to a demonstrated 43-101 resource of 17.5 million lbs. In addition to this, Strathmore also has a inferred resource of 15,832,000 lbs on the same location so there could be a total of nearly 30 million lbs of U3O8 on this property alone, a very significant uranium resource.

Strathmore also has another uranium project in New Mexico, their Church Rock project. At Church Rock, Strathmore has a Measured & Indicated Resource of 11,848,007 lbs and a further 3,525,342 lbs of U3O8 in an Inferred Resource at grades of 1.90 lbs/ton and 1.81 lbs/ton respectively.

In Wyoming, Strathmore also has a number of interesting uranium properties. Gas Hills in Wyoming has a rich uranium mining history with over 100 million lbs being produced and a further 8,440,490 lbs in the historic resource. Other more advanced Strathmore uranium projects in Wyoming include the Sky project which boasts a NI 43-101 resource calculation of 948,098 lbs and is suitable for ISR mining, a much more efficient way of mining uranium as opposed to open pit mining. In Situ Recovery (ISR) the mining process reverses the natural process which originally deposited the uranium, bringing uranium to the surface via water, rather than digging an entire open pit to reach the uranium deposit. To give you some idea of how much more efficient it is, a open pit mine requires about 500 workers for every million pounds of U3O8 mined whereas ISR mining only requires 75. ISR has lower initial capital costs as less equipment is needed and has lower operating costs as there is less personnel. ISR is also a much more environmentally friendly way of mining, which makes it easier to acquire things like permits (Strathmore has already initated their application for Sky) and the support of the local community. Some of Strathmore's projects are perfectly suited to ISR and Strathmore has the expertise to carry out the operations with Ray Larson, David Miller, Dieter Krewedl and John DeJoia working on the projects, who all have extensive knowledge of the ISR process.

Strathmore Minerals Land Photo

Two more Strathmore projects in Wyoming are Pine Tree and the JEEP project both of which are ISR amenable. At the Pine Tree Claims, Strathmore has a historical resource estimate of 2,646,000 lbs and at JEEP the historic resource estimate is 329,112 lbs but they have a 6000 meter drill program planned.

If we simply take the 43-101 Measured & Indicated Resources at Roca Honda and Church Rock we have a resource of 29,360,007 lbs. If all Strathmore had was this, it would still be a good investment as with the current market cap of $336 million assuming all Strathmore has is these two resources you only only paying about $12.5 per pound in the ground, a good buy.

However Strathmore has much much more and so it not just a good buy, but a great buy, in our opinion. The total 43-101 resource for Strathmore is a grand total of 73,895,579 lbs, so you are now paying only $4.95 for every 43-101 pound of U3O8. But it gets better, because Strathmore also has and additional 84,915,245 pounds of uranium as historical resources throughout Wyoming and two in New Mexico, the Nose Rock and Dalton Pass projects. So if you include every pound of uranium that Strathmore has in 43-101 Measured and Indicated, Inferred and Historical Resources, then they have 158,810,824 lbs and so are currently trading at $2.30 per pound of U3O8

Strathmore Minerals Corp Company Logo

But of course, the key figures are the resources that are certified to 43-101 standards and it is good to see that Strathmore has ten of millions of pounds in this area.

Strathmore should continue to move higher with rising uranium prices as their substantial uranium resources become more valuable, especially the projects suitable for ISR mining. STM closed at 4.99 on the TSX Venture exchange and we bought it at $4.96 on Friday, as we view this stock to be at a good price around $5.00

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Reader Comments (1)

Hmm . . . this is interesting. I received a Strathmore brochure in a newspaper a couple months back. Due to spelling mistakes, the brochure didn't impress me much. But I keep seeing STM mentioned everywhere, so maybe they just had a poor editor.

April 15, 2007 | Unregistered CommenterJacob

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