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Tuesday, July 29, 2008

Strathmore Minerals pummelled

Since Friday, Strathmore Minerals (STM.V, STHJF) has dropped from around C$1.30 to C$0.92. There's no news. Other uranium juniors have done far better. The Strathmore spinoff company, Fission Energy (FIS.V, FSSIF) jumped from around C$0.65 to around C$0.80 on heavy volume on Friday and then fell down to C$0.61 today. Friday afternoon, Tuesday morning, and Tuesday afternoon a lot of shares were dumped. I have no idea why. These things happen.

The spot price of uranium has been slowly climbing these past weeks. Things are looking good for Strathmore, Fission Energy, and the uranium mining industry in general. It's tempting to think this is a reaction to the sale of the Chord property at a low price, but that was 3 weeks ago. And it's worth pointing out that, not being an operations company, Strathmore will always end up giving up about half its interests in each property in joint ventures, so the price was better than it appeared.

I also looked back over the July 21 press release and nothing in it is surprising. Maybe it's the troubles of Yellowcake Mining, one of the joint venture companies. Cash is evaporating all over the financial world nowadays. I'm glad that the Roca Honda joint venture is with the large company Sumitomo (住友).

If you own the stock and you'd like to hear some details, the Strathmore website still has the May 2008 presentation. It's definitely worth listening to (about 20 minutes).

I continue to hold the stock (and Fission Energy as well).

Also, it seems likely that NICK will announce their results on Thursday.

Comments:
Bruce, thanks for posting your take on the drop. When these things happen I'm always concerned that "somebody knows something" but it's certainly possible that someone just needed to sell. We'll see

-Jay
 
Jay,

Yeah, I'm always wondering what's out that that I don't know. In this case, I don't see anything, at least not yet. The carnage was totally limited to Strathmore, so it's not an industry thing. Strathmore has multiple independent projects going on, so I don't see any rational reason for the stock price to be this low, so fast. The sort-of-bad news happened weeks ago.
 
...but here's a totally wild-assed guess that's probably wrong but interesting. I'm not suggesting that I know something secret here. It's just an idea. If I turn out to be right, it's just dumb luck.

Let's say someone found out some inside information about the current results of Fission Energy's drilling near the Hathor "roughrider" site, perhaps the brother-in-law of a lab worker analyzing cores. If someone had chosen to dump all their shares of Strathmore and put it all into Fission Energy, it would explain why about a quarter million dollars was pulled out of Strathmore on Friday and a very similar amount seems to have been poured into Fission on Monday.

If that happened, it's possible by that Tuesday morning someone else had gotten the jitters when the price of Strathmore didn't bounce back up and then sold an even larger pile of stock in the morning. There's a lot of fear in the market right now and it's always contagious.

Well, it's possible yet another person panicked after seeing the price drop Tuesday morning and then sold an even larger amount on Tuesday afternoon.

That's merely one possible guess among many viable guesses.
 
I hope you're right, or that it's some other market driven rather than fundamental reason.

Jay
 
^^Thanks!!

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