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Gold/Mining/Energy : Uranium Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (4867)	12/14/2006 11:09:11 AM
From: siempre33	Read Replies (1) \| Respond to of 30213

[ResourceInvestor article re. Ditem] Could Small Uranium Explorer Be the Next Strateco? By Michael J. DesLauriers 13 Dec 2006 at 07:05 PM EST TORONTO (ResourceInvestor.com) -- Over the last couple of months the entire universe of publicly-listed uranium companies has enjoyed a considerable resurgence in positive money flow, and renewed speculative enthusiasm across the board. The question on the lips of many a keen market observer is, among the hundreds of listed names today, where will the next major discovery be made? With so many junior players commanding serious valuations merely on the back of promotion and without even a hint of promise, one must filter carefully through the endless roster of names and addresses to attempt to uncover value. In mid-April of this year RI profiled a small uranium explorer with some exciting prospects and an aggressive, experienced management team. Ditem Explorations [TSXv:DIT] was then changing hands around the 50-cent level, and it was our contention that under the stewardship of President Raymond Savoie, a connection-laden, former Minister of Mines in Quebec, the company had a better than average chance of stumbling into some projects that could add significant shareholder value. This is what has happened. Otish Mountains Most readers will probably be aware of the Otish Mountains as the area relates to one of 2006’s biggest successes in the junior uranium space, Strateco Resources [TSXv:RSC]. That company has delivered a ten-bagger for investors, with its share price having advanced from about a quarter early this year, to a close today of C$2.66, a major institutional following and a market capitalization approaching a quarter-billion dollars. Strateco has been one of the few Canadian explorers to consistently deliver high-grade results from its Matoush property in the Otish Mountains, which according to some analysts and industry pundits is shaping up to be one of the more promising geological settings for a major economic uranium discovery in Canada. What most readers do not know is that: 1) Ditem has a 2% royalty on Matoush, which some argue is already worth more than the market capitalization of the entire company; and 2) As the area-map shown above illustrates, Savoie operating in his own backyard has carefully managed to put together the second largest land position in the Otish Mountains after Cameco [NYSE:CCJ; TSX:CCO] with a contiguous land block of 340 square kilometres. Promotion/Sponsorship There are a few important things one should remember and take into account where Ditem and its valuation are concerned. The first is that unlike most or all of its peers, Ditem has done absolutely no work as far as promotion, or investor relations is concerned, and in fact, it was not until about two days ago the company had even so much as a corporate website as a means of telling its story. As a result DIT seems to be chronically under-followed, especially in the retail community – this is beginning to change. What Ditem has been doing is acquiring significant and high-impact land positions in the Athabasca Basin and Otish Mountains, leveraging the relationships that Ray Savoie built up during his tenure as Minister of Mines in the Quebec government. As announced Tuesday, the widely followed and respected Sprott Asset Management has taken note of what was being quietly accomplished here, acquiring 10% of Ditem in a private placement at 45 cents per share. Most investors in the resource sector will know Sprott as being one of the more aggressive and successful asset management players in the business, who have in fact been involved in the uranium area for a good five years. Sprott’s investment in Ditem should serve as a validation and endorsement of the property package which management has put together, elevating the company above the sea of listed juniors. Valuation/Conclusion At today’s close of 65 cents, DIT has a market capitalization of under C$20 million, with about $4 million of cash on hand to test its portfolio of projects, specifically its major land position in the Otish Mountains. Although DIT’s land package is largely untested, it would appear that some of the more informed and successful players in the resource investment business are beginning to take notice and place their bets. The idea would appear to be that Ditem is essentially a derivative of Strateco, and with a market valuation 1/10th the size of the latter, represents a quite compelling shot, in what is emerging as a geologically favourable setting for a major economic uranium discovery. Indeed, investors should look at Ditem as a cheap call option on Strateco, which never expires. The two stories are beginning to trade in lockstep, but clearly percentage gains will be superior on the cheaper play with a smaller market cap and lower share price. The company would seem to have the right ingredients with the following: 1) Two drill programs in Q1, one in the Otish Mountains and another in the Athabasca basin; 2) The second largest land position in the Otish Mountains; 3) A 2% royalty on Strateco’s Matoush; 4) A well-connected President with more rabbits in his hat. The key with junior explorers is to have the odds stacked in your favour, and Ditem certainly registers high on that criteria. DIT could quickly run higher with a little bit of success through the drill-bit, be it its own or RSC’s, and given its royalty, could soon become a takeover target of its larger brethren.