First Uranium Faces a Glowing Future
By Charlotte Mathews
30 Mar 2007 at 10:22 AM
JOHANNESBURG (Business Day) -- The dual listing of a second uranium company, First Uranium [TSX:FIU], on the JSE today is opportunely timed as prospects for uranium producers look increasingly rosy.
First Uranium’s major shareholder is junior gold miner Simmer & Jack, which holds 67.2% of the shares. The company was first listed on the Toronto Stock Exchange on December 20 in an initial public offering that raised C$219.4 million (US$190.2 million). It is not issuing any new shares for its South African listing.
First Uranium and dual-listed SXR Uranium One [TSX:SXR.TO] will be the only two avenues for South African investors hoping to gain access to the turnaround in the uranium sector.
The reason for listing First Uranium was to enhance awareness of the company in South Africa and encourage South Africans to invest in its shares, it said.
First Uranium’s main projects are to develop gold and uranium assets from its Ezulwini and Buffelsfontein tailings operations and make further acquisitions in uranium.
The first gold is expected from Ezulwini in October this year and the first uranium in June next year. The first uranium and gold production from the Buffelsfontein tailings project is expected next year.
First Uranium’s shares were trading at C$10.60 (US$9.19) yesterday, more than 50% higher than their initial offering price.
Uranium prices have soared almost tenfold in the past five years and have almost doubled in the past six months from about $50 per pound to $95 per pound this week.
The main reason for the strength is the expected global growth in energy consumption, which is likely to be met increasingly by nuclear power stations.
According to a recent World Nuclear Association report, quoted on First Uranium’s website, there were 442 nuclear power stations around the world in September last year, with another 28 under construction and 62 proposed.
The move towards more nuclear power stations signals a change in attitude towards nuclear energy. Even Australia, which houses 40% of the world’s uranium reserves but has a freeze on building new uranium mines, is expected to change its stance after a ruling party conference mid-year.
But global supply of uranium is expected to fall short of demand because of a lack of investment in exploration and production in the past 20 years, the time taken to bring new mines into production, and severe flooding at one of the world’s biggest developing uranium mines, Cameco’s [NYSE:CCJ; TSX:CCO] Cigar Lake. Cameco said last week Cigar Lake would come into production in 2010 - two years later than originally planned.
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