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Europe needs nuclear power and is searching for
domestic uranium assets. Nuclear remains a vital component of Europe’s
energy mix. Europe currently has approximately 160 working nuclear reactors.
Most of Europe realizes that nuclear power is vital for
its future. Poland, Finland, Slovakia, Spain are all going full speed ahead
to develop new next generation nuclear reactors.
Currently, Europe as a continent,
is the largest per capita consumer of nuclear power generation. Despite being
such a large consumer, it only has one uranium mine in production.
Europe is a major importer of uranium as there are
major supply issues and Europe must develop domestic assets. Slovakia
recently elected a new pro nuclear Prime Minister who is a major supporter of
nuclear energy. The party believes domestic assets such as European
Uranium’s (EUU.V) Kuriskova Project
should be developed.
Slovakia is a member of the European Union and it is
highly unlikely that the project will be threatened by resource nationalism
like we are seeing in South America and Africa.
Recently, nuclear giant Areva
became a major shareholder and sits on European
Uranium’s board as they are interested in the low cost of
production and extremely high grade at the Kuriskova
Project. Areva paid $.35 for the deal so new
investors could purchase shares significantly discounted to that placement.
This is a major stamp of credibility and prestige as European
Uranium (EUU.V) emerges from a junior explorer into a developer of
Europe’s next uranium mine with the backing of a major nuclear
institution.
This relationship with Areva
may accelerate development of the project as Areva
has access to some of the best engineers, metallurgists and mine developers
assisting on the project.
Once Kuriskova is in
production it could provide Slovakia with all the uranium it needs with just
25% of production. The 75% can be sent to hungry neighbors such as Poland,
Romania, Great Britain and France who are all building additional nuclear
reactors.
Areva may be focused on European
Uranium’s Kuriskova Deposit.
Areva provides metallurgical expertise and engineering
assistance which is very unique for a small cap company.
European
Uranium is trading at a market cap of below $15 million with over $7
million in cash and no debt.
The company has a strategic shareholder Areva that at anytime could
acquire Kuriskova for pennies on the dollar. The
market is valuing Kuriskova at $8 million.
The recent NI 43-101 Pre-feasibility came out with an
NPV at 5% at $374 million. This means the project is currently valued at
pennies on the dollar.
We expect significant developments in the second half
of 2012 as the trend appears to be moving higher. Support has held at $.20
and momentum has been increasing. We believe that we could test May lows or
possibly go a little below it to form a double bottom. Look for a breakout
above the 200 day moving average and the August high at $.325.
Disclosure: Author is long European
Uranium and the company is featured on his free website.
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