Thursday, November 01, 2007
Strathmore surges ahead
Uranium one lowered its production forecasts by 16% for this year and by 38% for next year. Equipment problems and a lack of sulphuric acid in Kazakhstan. Production at the Honeymoon mine has been delayed by nearly a year.
Cameco still has trouble with the Cigar Lake mine flood. Rumors are that industry insiders think this mine will always have troubles. It's scheduled to reopen in 2011 at the earliest instead of the original 2008 which was delayed to 2009, then 2010, then just plain 2011. They'll keep trying since there's a whole lot of highly concentrated uranium down there.
This is an interesting opinion about how delays are worse than they appear. As an [non-mining] engineer myself for a couple of decades, I've definitely seen this ridiculous behavior.
The Planner starts with the Engineers.... In my experience these Engineers are fairly accurate in providing the basis for the plan. All well and good so far. The Planner then produces a plan, which for example, will take approximately 48 months to execute.The various articles written a year ago (mostly over at StockInterview.com) made it seem that the insiders were extremely cynical about the Cigar Lake time estimates.
Enter the Project Manager, by nature a very optimistic person.... he proceeds to beat up the Engineers until the schedule is compressed in to a 36-month duration....
The Project Manager now meets with various Divisional Managers and Business Heads.... They eventually reach a compromise of 30 months to complete the project....the Chairman has given their word that it will be done in 24 months. You don’t believe me? Well if your organisation has a Project Control Department pay them a visit and ask them if this sort of thing goes on! Our bet is that you will be astonished with the anecdotal evidence that pours forth....
This Motley Fool article hits on an interesting point:
The statistic that best reveals Cameco's operational troubles is the pounds of uranium it produced. For the past nine months, Cameco mined 14.3 million pounds, down from 15.5 million pounds in the year-ago period.Uranium miners were supposed to be increasing production, not decreasing. The old timers in the industry have been saying that the lack of any significant investment in the industry for 20 odd years will have a big [negative] impact on production going forward.
I've been writing for years about Strathmore Minerals. David Miller at Strathmore explained long ago what was going to happen in the industry and his predictions have been amazingly accurate.
UPDATE Nov 4, 2007:
An anonymous commenter pointed out this excellent interview with Dev Randhawa (also found here), the Chairman of Strathmore. Strathmore is going to be listed on AMEX very soon.
There's also this presentation from Oct 30, 2007.
79 million shares fully diluted.
TradeTech is now reporting a $90 spot price.
The deposits in the ground will be a lot more valuable without artificially cheap supplies above ground.
Don't know if you saw this:
I found it worth watching to see Dev speak since I never had before. He seems low-key and straight-forward. I thought it was interesting that the interview focused on the Gas Hills project which they want to bring to production in Q4 2009 and also mentioned an AMEX listing around the corner.
I enjoy your blog and am looking forward to your new ideas.
They were de-listed from NASDAQ on May 10, 2006.