Grim Reaper will make fast work of uranium promoters, leaving clearer playing field for miners

The emerging new uranium landscape will be tough going for the surviving juniors, but analyst Christopher Ecclestone divines that “the cashed up or those with production shall quite literally ‘inherit the earth.’”

RENO, NV - 

In a recent Metals Outlook report, New York-based macroeconomic and equities research firm, Hallgarten & Company, advised that "the grim reaper will carry away the lesser [uranium junior] players leaving the playing field clearer over the next 12 months. Money will gravitate to the survivors."

Noting that metals are "at the bad place already,"  Hallgarten metals analyst Christopher Ecclestone suggested that while things could get worse, "metals, including, uranium could shake off the financial blues and start marching to the true beat which is supply & demand considerations."

After the rising tide of uranium prices originally generated a plethora of uranium stock IPOs, Ecclestone asserted that "the receding tide has left many of these names floundering breathless (and cashless) on the beach."

Nevertheless, Ecclestone noted that the price of uranium is stabilizing "giving hope that some of the long-term fundamental bullish factors for the metal will come back into focus, without the frenzied hype that Promoters had previously invested in it."

Basically, Ecclestone claims that uranium has found solid ground and is now in its recovery phase. However, he warned, the new uranium landscape "is tough going for the survivors of the shakeout but ultimately the cashed up or those with production shall quite literally ‘inherit the earth.'"

Ecclestone asserts that number of traditional mining investors have been waiting for "the inevitable shakeout and are constantly testing to see if a bottom has been made after the froth has been blown office the post market."

Hallgarten has forecast that the uranium price "should fluctuate around the $60-$90 range over the next few years with a potential for upside breakout should some of the talk of more nuclear power plant building in the West actually show signs of coming to fruition."

"The uranium mining industry is one of the few areas where the U.S. is up to speed on mining," Ecclestone asserted. "While Australia and Canada also figure in the production mix these days, the U.S. can still hold its own in uranium mining despite having slipped in almost every other class of mining activity."

"The potential remains for the U.S. to recapture lost ground. ...the U.S. has mothballed mines and there is extensive past exploration data that make it that much easier to move the ball forward in this mining province. Surprisingly even the NIMBY factor is scarcely evident, as yet," he added.

Among Hallgarten's findings:

·         The spot price for uranium appears to have bottomed with a healthy rebound to the $64.50/lb level.

·         Scalebacks in the expected production, combined with ongoing timetable problems, at some mega-projects have refocused attention on smaller prospective miners that may be able to help plug the widening production shortfall.

·         The overhang of neophyte investors (including hedge funds) which invaded the spot market has been cleared away as trade buyers relieve them of their tumbling inventories.

·         Uranium spot prices may still decline again, "however it's hard for shorters to play the physical market and the supply shortfall is not becoming palpable.

·         A number of the planned nuclear expansion efforts that bulls spoke of are long term and will not add to demand over the next few years.

·         "The key takeaway is that companies who have former producing sites to one degree or another will be potentially saving proving-up costs and shortening the time frame to production."

Ecclestone noted that the revival of the interest in uranium "has created a new generation of stocks in the sub-sector some of which will prove to be additions of new resources and genuine producers broadening the number of sources of global supply away from the few mega-producing mines that dominated the scene during the low price phase. Many others will be mere cannon fodder that shall be blown away by the exigencies of Darwinian capitalism. The extinction phase for many of this species is now in full flight."

"While the recent price rebound is minor," Ecclestone predicted that, "it is unlikely to see a return to the heady days where the world ‘uranium' in the name of junior explorer meant an almost immediate stock price escalation. But the price, even at these low levels, is still several times above the price which prevailed for several years up until 2004 and there's little doubt that the stimulation in exploration activity the big price increase engendered has thrown up some potentially really profitable deposits even at current price levels."

"Should the latest price move really suggest a bottom than it is probable that there could be some good bargains to be found in some of the juniors with good deposits, a decent cash position enabling them to ride out the recent downturn in interest, and with oversold stocks," he advised.

The attention of Hallgarten & Company has been focused on Monaro Mining (MRO: AUX), Uranium Energy Corp (UEC: AMEX) and Vena Resources (VEM: TSX).

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