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Wednesday, February 08, 2006

Strathmore Minerals (STHJF) more news

Strathmore Minerals issued a press release which announces
...that the Company has completed the staking of 249 lode mining claims in the Powder River Basin, of northeastern Wyoming. The Powder River Basin is home to two "in-situ leach" uranium extraction facilities and other known occurrences that may be amenable to recovery by ISL.... The Company now controls over 12,000 acres (450 mining claims and 5 State Mineral Leases) of lands in this area of the Powder River Basin. The properties are underlain with known and potential uranium mineralization consisting of tens of miles of uranium roll-front deposits which may be amenable to the "in-situ" leach (ISL) uranium recovery method.
They previously had 3,200 acres in the Powder River basin. The claims they already had were next to both Cameco and Cogema's properties. These new properties are contiguous or nearby the existing properties.

This announcement does not have any measurable impact on my estimate of extractable pounds per share of U3O8. I had guessed half a million pounds at Powder River. I suppose I might increase that to 1 or even 1.5 million pounds. With my estimate of 70 million totally diluted shares (I should revisit that estimate again), an extra million pounds is down in the noise.

Some organization trying to hype the stock issued this press release.
Strathmore Minerals (TSX: STM; Other OTC: STHJF) President David Miller told StockInterview's Market Outlook, "The President's timing for expanding the U.S. nuclear energy program could spurn spot world uranium prices to record highs." Miller was referring to U.S. President George W. Bush's State of the Union Address on Tuesday evening in which it has been widely reported Bush will focus on expanding his country's nuclear energy program to reduce dependence upon foreign oil. Miller added, "World inventories are at a 20-year low with a possible deficit in 2006 of 70 million pounds of uranium oxide. Demand is outstripping supply nearly two to one."
Apparently, there's a lot of talk about a takeover of Strathmore. I'm totally against it as it would force shareholders to exit the stock at a price that I'd consider too low.
Journal editor, James Finch, reported, "Mr. Randhawa told the Mergers & Acquisitions Report he would consider a sale of the company's U.S. assets if the price was right. Strathmore's CEO, who is also chairman of the board and founder of the uranium company, confirmed there was outside interest in his company, which led to hiring National Bank Financial." In the report, Randhawa said, "I thought we needed to have the best advisors in the industry help us evaluate the alternatives available to us."
We'd better be talking about a lot of money for the US properties. The newsletter thing they link to has some interesting stuff in it. The Feb 6, 2006 entry talks about how the 2005 spot price jump was largely due to speculators and that the price could level off [fine with me]. I'd have to agree that speculators have a lot to do with the fast jump.

The Feb 2, 2006 entry has some stuff from David Miller, Strathmore's president who
...told a Dow Jones reporter that the possible reprocessing of spent nuclear fuel won’t tame the spot uranium market. Miller said the market was “going nuts” and forecast in the published wire service report that he expected the spot uranium price to double again over the next 18 months.
Later the newsletter mentions talk about studies that show that uranium could go as high as $500 per pound before the cost becomes prohibitive and kills the cost of nuclear power. In other words, the demand is pretty much inelastic up to that point. This tells us nothing about whether the price would actually go that high. It just looks at what might be a very high upper bound.

Yet people are talking about a buyout price of only CANADIAN$4.29 for Strathmore. That seems too low.

If uranium oxide doubled in price to $75, Strathmore stock would be worth a great deal of money, perhaps $50/share. Would it sell for that much? I have no idea.

This week, however, uranium oxide spot prices remained at $37.50, the same as last week. The news is more of the same stuff about expanding demand.

The U. S. Dept of Energy had a release this past week. It covers 7 important points.
  1. Building of a new generation of nuclear power plants in the United States. [possibly pebblebed, but there are apparently other new and much safer methods as well]
  2. Developing and deploying new nuclear recycling technologies.
  3. Working to effectively manage and eventually store spent nuclear fuel in the United States.
  4. Designing Advance Burner Reactors that would produce energy from recycled nuclear fuel.
  5. Establishing a fuel services program that would allow developing nations to acquire and use nuclear energy economically while minimizing the risk of nuclear proliferation.
  6. Developing and constructing small scale reactors designed for the needs of developing countries.
  7. Improving nuclear safeguards to enhance the proliferation-resistance and safety of expanded nuclear power.
The Moscow Times reports that Sergei Kiriyenko, head of the Federal Atomic Energy Agency, claims that Russia needs 40 new nuclear reactors. Starting in 2012, they need to build 2 reactors per year in order to meet Russia's goals.

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