Reminds me of the Diamond rush of the 90's.
Uranium bubble looks like trouble
By Robin Bromby
30-03-2006
From: The Australian
IT looks like a bubble, it sounds like a bubble.
The ranks of listed uranium juniors have nearly
doubled in the past year, and half that rise in
numbers took place in just three months - and there's
more to come.
Most of them don't have a drilled resource, many of
them are exploring in states where governments ban
uranium mining. Even when they do have a resource, the
gains look extraordinary.
Summit Resources, one of the more advanced explorers,
has gone from 27c 11 months ago to $1.41 yesterday. It
is now capitalised at $265 million - even though the
Labor Government in Queensland where it is based is
the nation's most obdurate in banning yellowcake
production.
The one Australian company that is developing a mine,
Paladin Resources, has still to come into production
in Namibia, but is now capitalised at an extraordinary
$2.37 billion.
Even if the much hyped Chinese investment flows into
our uranium industry, the money from Beijing will be
talking to BHP Billiton and Rio Tinto, which - unlike
most of the stocks in the eye of the speculative storm
- have substantial undeveloped uranium resources here
and exploration data to back them up.
Enthusiasts pointed to the rising uranium price and
the growing world shortage of uranium, but analysts
said any of the new explorers were four or five years
away from production - at best.
Uranium at $US40.50 a pound is no use to a company
that is still drilling its first holes.
Analysts who specialise in junior resources stocks
were yesterday unanimous in warning that investors are
heading for a fall by pumping up uranium stocks.
Fat Prophets's Gavin Wendt called the speculative wave
"ridiculous".
Far East Capital's Warwick Grigor blasted investors as
being "naive".
Stock Resource analyst Steve Bartrop called one of the
recent listings and market darling Toro Energy
"overpriced grassroots exploration".
From the US, uranium bull and publisher of the
26-year-old International Speculator newsletter, Doug
Casey, said the flood of new uranium juniors was his
main worry.
"With so many companies competing for the same number
of investment dollars, can we as speculators still
expect the same sort of gains that we've enjoyed over
the past few years?" he wrote in his latest issue.
This from a man who made 1587 per cent by riding
Australia's Paladin Resources.
According to Sydney-based Resource Capital Research,
there are now 65 uranium juniors listed on the
Australian Stock Exchange, a 96 per cent rise over the
past 12 months.
In coming weeks, two more will list: Intermet
Resources and the Giralia spin-off, U308.
Canada now counts 90 uranium juniors, up 104 per cent
over 12 months.
Mr Wendt said that, apart from Paladin, he could not
see a single Australian uranium explorer that had a
chance of getting into production in the foreseeable
future.
Western Australia might change its ban on uranium, but
the situation in Queensland was complicated by the
power of the coal lobby, which opposes uranium
development because it was an energy competitor, Mr
Wendt said.
finance.news.com.au |
