Sunday, July 24, 2005
Strathmore Minerals (STHJF) my guess of U3O8 per share
This is a low-ball guesstimate (and I mean GUESSing) of pounds of U3O8 per fully diluted share of Strathermore Minerals that can be removed from the ground at normal mining costs.
Duddridge Lake
0.5 million pounds
Dieter Lake
40 million pounds
Athabasca Basin
no idea, with the information given, I'd say 30 million pounds
Waterbury Lake
no idea, I'd say assume zero
Comstock
no idea, I'd say assume zero
Peru
5 million pounds
Roco Honda
9 million pounds
Church Rock
5 million pounds
Powder River Basin
no idea, I'd guess 0.5 million pounds
Cedar Rim
no idea, I'd guess 0.5 million pounds
Copper Mountain
12 million pounds
Northeast Wyoming
no idea, I'd say 1 million pounds
Chord
8 million pounds
That's a total of about 110 million pounds. The total share dilution is probably going to end up with around 70 million shares. So I would assume about 1.5 pounds per share of U3O8.
Given that the price of Strathmore stock is less than US$1.50, this is essentially a call option on the price of U3O8 with a strike price of maybe US$28 a pound and an option purchase price of US$1 a pound. The call option doesn't really expire, although it's probably a good idea to assume an expiration of about 8 years from now (who knows what factors might change after this time?).
UPDATE:
Here's the website of a competitor in the Athabasca basin. They do nothing but lose money, even in recent quarters. More ominously, they talk a lot about how technology is making exploration a lot faster and more effective. I'm thinking seriously about dumping this stock.
UPDATE Jan 4, 2006:
Strathmore just released an update on Church Rock. They finished an independent technical report which raises the estimate of U3O8 to 11.8 million pounds (from 6 million pounds), with an additional 3.5 million pounds inferred.
The deposit is within sandstone units which should support in-situ mining.
Duddridge Lake
0.5 million pounds
Dieter Lake
40 million pounds
Athabasca Basin
no idea, with the information given, I'd say 30 million pounds
Waterbury Lake
no idea, I'd say assume zero
Comstock
no idea, I'd say assume zero
Peru
5 million pounds
Roco Honda
9 million pounds
Church Rock
5 million pounds
Powder River Basin
no idea, I'd guess 0.5 million pounds
Cedar Rim
no idea, I'd guess 0.5 million pounds
Copper Mountain
12 million pounds
Northeast Wyoming
no idea, I'd say 1 million pounds
Chord
8 million pounds
That's a total of about 110 million pounds. The total share dilution is probably going to end up with around 70 million shares. So I would assume about 1.5 pounds per share of U3O8.
Given that the price of Strathmore stock is less than US$1.50, this is essentially a call option on the price of U3O8 with a strike price of maybe US$28 a pound and an option purchase price of US$1 a pound. The call option doesn't really expire, although it's probably a good idea to assume an expiration of about 8 years from now (who knows what factors might change after this time?).
UPDATE:
Here's the website of a competitor in the Athabasca basin. They do nothing but lose money, even in recent quarters. More ominously, they talk a lot about how technology is making exploration a lot faster and more effective. I'm thinking seriously about dumping this stock.
UPDATE Jan 4, 2006:
Strathmore just released an update on Church Rock. They finished an independent technical report which raises the estimate of U3O8 to 11.8 million pounds (from 6 million pounds), with an additional 3.5 million pounds inferred.
The report was prepared by David C. Fitch, C.P.G., who is a qualified person under National Instrument Policy 43-101. Mr. Fitch has over 17 years of uranium experience in the Grant's Mineral Belt, which was the largest producing uranium district in the world during the last uranium cycle.
The deposit is within sandstone units which should support in-situ mining.
// posted by Bruce @ 10:44 AM 
