Uranium boom coming to an end?

Never mind the title, the excerpt below shows how much potential there still may be in the stocks. All of these companies were bought with a premium over their stock price. Yet, they were valued at only a fraction of the price of uranium. I will be the first to point out that uranium in the ground will never be as valuable as mined uranium. Still, even if it were priced at $30 or $40 per pound, the gains in the stocks would be huge.

http://www.321gold.com/editorials/sobolev/sobolev070607.html

Utilities Paying $135/lb of U3O8. How Much are Uranium Miners Willing to Pay?

Let us look at the recent M&A activity in the uranium sector. The total value of the four biggest deals in 2007 is $8.1 billion.

In February, UrAsia Energy gets acquired by Uranium One (SXR.TO) for $3.1B. Based on the acquisition price, UrAsia's U3O8 resources are valued at about $11/lb or around 13% of the uranium price at the time

In April, Summit Resources receives a final takeover offer of over $1.0B from Paladin Resources (PDN.TO), effectively valuing its resources at $14/lb or 12-13% of the uranium price at the time

In June, Energy Metals (EMU) is acquired by Uranium One for $1.5B. The deal values EMU's uranium resources at $7/lb, or just 5% of the uranium price. EMU has a large number of small projects/deposits, which explains a lower takeover price per pound

Also in June, UraMin Inc. (UMN.TO) entered into a $2.5B friendly cash deal with Areva, placing a value $13/lb for its resources, or about 10% of the uranium price

The value placed by Uranium One, Paladin and Areva on the purchased projects varies based on a number of factors including: resource quality, proximity to production, size of production, geographical location, permitting and environmental issues, required capital expenditures, and other economic factors and synergies.

http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=8693122A-17A4-1130-F579E57C5FD853B7

Deutsche Bank increased their average price forecast for the next three years with an average price of $ 156 lb for 2008 and $ 175 lb for 2009.

And the same warning we've heard elsewhere appears: be more selective in what you buy!

veg.

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