Western lands uranium gopher for 03/21/09

Mining uranium press releases for useful news

Parts of this blog post were previously published in Fuel Cycle Week, V8N319 for March 18, 2008 by International Nuclear Associates, Washington, DC

The closing stock prices for the informal collection of uranium firms tracked here continue to fall. In the past month only one of the firms, Uranium Energy (AMEX:UEC) saw an increase in its stock price due to a joint venture announcement in the Grants Mining district in New Mexico.
Penny for your thoughts or your company?

However, at these prices no CEO is going to come to the market to sell shares to raise investment funds since they'd essentially be giving the company away. The stock chart is being discontinued due to the fact that it has gotten too hard to scrape the bottom of the barrel every two weeks to find the price data. This is a metaphor about price data and not a value judgement about the companies noted in this blog post.

Most uranium companies are grossly undervalued given their assets in the ground and the brightening future for nuclear energy. Get it? Got it? Good.

U3O8 price plunge continues

The every present threat of hostile takeovers has been mitigated by the falling spot price of uranium.

Ux Consulting reported a spot price of $43.50/lb down more than $10/lb from a six month high of $55/lb last December. As long as uranium prices continue to fall, investors will likely seek other industries for a more attractive return on their capital.

The plunging price of uranium triggered several responses to previously inked mining deals.

South Korea's state-run electricity company cancelled a deal signed in May 2008 with Yellowcake mining (OTC:YCKM) to jointly explore the Beck uranium mine in western Colorado. The Beck property has 12 known deposits which have been subject to varying amounts of drilling in the past. Beck is in the Uravan historic uranium district with a history of profitable mines.

Bluerock folds U.S. operations

Another compelling picture of what these numbers are doing to the industry is painted by the recent actions of Bluerock Resources (CVE:BRD).

Once one of the most promising of the uranium juniors doing business in western Colorado, the firm has ended its toll milling agreement with Denison's White Mesa Mill.

The settlement includes a payment of stock in lieu of cash worth approximately $500,000 which is more than half of its total market capitalization as of March 13.

In the past few months the firm shutdown the Whirlwind and J-Bird mines laying off all employees at these operations.

Clearly, it makes no sense for firms to deplete their resources in the ground when uranium prices fall below the break even point.

Denison to suspend operations at White Mesa Mill

Reuters reports that shares of Denison Mines (AMEX:DNN) plunged 20% after the firm suspended some of its operations and said it may have to sell assets to keep from violating a debt covenant.

The firm will temporarily suspend production at its Sunday and Rim mines. and will likely temporarily shut its White Mesa mill in May, once it produces the 500,000 pounds of uranium the company is under contract to produce in 2009.

The mill is be expected to restart in 2010.

It is the only operating uranium mill of its kind in the Uranvan mining district spanning Colorado and Utah. Two other projects to build new mills in the region, Mancos in Green River, UT, and Energy Fuels in Montrose, CO, are expected to be impacted due to falls prices of uranium.

Reuters reported Denison’s announcement focused on a steep loss of $56.8 million, or $0.30/share, due to non-cash write-downs of $59 million brought on by falling commodity prices.

Speaking on a conference call, Denison Chief Executive Peter Farmer said the company was in danger of violating a debt covenant tied to its profitability, and that the company was reviewing "strategic opportunities" to keep that from happening.

Options could include: "entering into contracts with utility companies... asset sales, purchases and joint ventures, investments by private equity investors and potential corporate transactions with other uranium producers," Farmer said.

In a press statement, Denison said, significant events in the fourth quarter include:
- Denison sold 400,000 pounds U3O8 during the quarter from U.S. production at an average price of $61.50/lb and 177,000 pounds U3O8 from its Canadian production under the existing long-term contract at an average price of $52.28 per pound.

- Denison and its joint venture partners, AREVA Resources Canada Inc. ("ARC") and OURD Canada Co. Ltd. announced the postponement of the development of the Midwest deposit.

- Denison announced the suspension of mining at the Tony M mine located in Ticaboo, Utah.

- Denison opened the Beaver mine on the Colorado Plateau. The Beaver mine is capable of producing ore containing over 200,000 U3O8 and 600,000 lbs. of V2O5 in 2009 and will be one of Denison's lower cost mines in the region. This may be the only new ore that reaches the White Mesa Mill.