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« Uranium Stocks: Stirred but not Shaken! | Main | The Nuclear Tide is Turning: Now Israel Plans To Develop Nuclear Power »

Crosshair Exploration: Nearing a Buy Again

Crosshair has been on our watch list, ever since we signalled a SELL at $2.60 after the run to over $4.00, it failed to perform as well as our other uranium stocks.

Crosshair Exploration: Nearing a Buy Again

However, we feel that Crosshair may be approaching a point where we would consider giving a BUY signal again.

With this recent drop, Crosshair is certainly at an incredible discount, but we will wait for signs that this fall in completed before considering a purchase. Ideally we would like to see all uranium stocks start to move up, and Crosshair to move up with them. That would confirm that this stock is a viable way to ride the uranium bull market.

Crosshair does have an interesting uranium project in the Central Mineral Belt of Labrador. However, we prefer Aurora Energy Resources as the best uranium stock operating in that region. It is true that Aurora does have a much larger resource and a bigger market cap but we must look at this in relation to pounds of uranium in the ground.

Aurora has a market cap of C$956.37 million and a 43-101 resource of 98 million pounds of U3O8 so that gives us a rough value of C$9.75 per pound in the ground. Crosshair has a market cap of C$118.27 million and a 43-101 resources that was recently expanded to roughly 7.78 million pounds of uranium. Therefore the market is currently valuing Crosshair at $15.20 per pound in the ground. Using this rough rule of thumb Aurora currently represents better value for you money in terms of value per pound in the ground.

To bring Crosshair down the a more reasonable valuation, say $10/pound, the stock would have to fall another 34%, bringing its market cap to C$77.8 million and the stock price down to just above $1.20. Until we see a more significant decrease in the stock price, or an considerable increase in the uranium resource, we will keep Crosshair as a 'Watch' as uranium stocks such as Aurora offer better value in that part of the world.

Crosshair trades as CXX on the TSX Venture.

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Reader Comments (1)

Crosshair along with most of the U sector have been severely beaten up and are in "oversold territory". I agree that the fundamentals for U are excellent and improving, however given the volatility in general markets I don't intend to start repurchasing U stocks until I see a confirmed change of direction and momentum to the upside. I feel that when this does happen we will see some very significant upside moves, and given the circumstances, I am willing to forego the first 10-20% in order to be sure of the change of direction. Until then............

August 6, 2007 | Unregistered Commenterbob

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