THE BOURSE WHISPERER: Japan has hinted at reopening a couple of nuclear power reactors and we receive a couple of Broker’s notes on uranium plays; Coincident?
BLACK RANGE MINERALS
We see Black Range Minerals as a quality investment opportunity that offers exposure to the growing domestic uranium demand of the US market. We believe the company has significant upside and will re-rate on the back of positive PEA expected in 3QCY12 and commencement of permitting applications.
Black Range is currently advancing the high-grade Hansen/Taylor Ranch uranium project, located in Colorado, USA, toward production.
The project contains JORC Resource of 90.9 million pounds uranium at a very robust grade of 600 parts per million (ppm) (250ppm cut off), making it the 3rd largest uranium resource within the USA.
The Hansen deposit, which is the focus of a PEA study, is the most advanced of the deposits and hosts a JORC resource of 19.7Mlbs (750ppm cut off) at an exceptionally high grade of 1290ppm.
Historic feasibility studies were based on underground and open pit mining, however a recently completed Scoping Study identified Under Ground Bore Hole Mining (‘UBHM’) combined with ablation and off site milling as the preferred development approach.
In addition to the capital and operating cost benefits, the proposed use of UBHM and ablation is likely to streamline the permitting process given the approach does not involve onsite processing of uranium, and should lead to a significant advantage in the permitting process.
Black Range is trading at an EV/Resource of $0.29/lb, a steep discount to the ASX and TSX peer group average of $1.14/lb for both explorers and developers.
We believe such a steep discount is unwarranted given its exceptional high grade, high tonnage resource located in a uranium friendly mining jurisdiction and we expect the stock to re-rate and trade closer to the peer group average as key permitting milestones are achieved.
We initiate a SPECULATIVE BUY recommendation and a price target of $0.07/share.
Aura Energy has released the results of its 2012 drilling program at the Häggån uranium property in Sweden.
This drilling intercepted mineralisation up to 148m thick and a new area of near surface mineralisation.
This was the third phase of Häggån drilling, comprising 14 holes totalling 2,226m.
Nine holes were part of the exploration programme designed to extend the area of mineralisation outside the current resource boundary.
The second set of five drill holes were larger diameter holes that were drilled as twins of earlier holes to provide samples for metallurgical test work.
It was an excellent set of results and they are expected to support a substantial increase to the existing JORC resource when the expanded resource is released in the September quarter.
A new area of near surface mineralisation was identified with an intersection of 147m grading 170ppm uranium only 15m from the surface.
This near surface mineralisation is expected to provide additional options for the mining studies currently underway.
The results of the metallurgical test work will be reported separately when complete.
We have retained the Buy on Aura Energy, with an unchanged target price of