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New Investment Rules To Benefit Canadian Uranium Miners
Wednesday, March 17, 2010
Canada's federal government is changing some of the law surrounding
uranium in Canada, which should be good news for both the producing
Canadian uranium companies, and the juniors developing uranium deposits.
The Canadian uranium industry has been hamstrung by an antiquated federal
law (dating back to the cold war) that restricts foreign ownership to 49
per cent.
In its recent throne speech, Canada's Harper government announced plans
to abolish this law and open up Canada's uranium industry to
unconstrained foreign investment.
The timing of the move is critical. Canada produces 21% of the world's
uranium. Global uranium demand is expected to surge 300% in the next
decade Kazakhstan is about to eclipse Canada as the world's leader in
uranium production.
The French uranium miner, Areva, heralded the
move.
"We're pleased to see the Canadian government recognizes it is an
issue they need to address," says Areva
spokesperson Roger Alexander, "It will certainly help us."
Areva owns minority interests in several
Canadian exploration projects.
The real wild card here is China, which has about $2 trillion in foreign
exchange reserves.
China has already displayed an appetite for investing in Canadian
resource companies, having dropped $1.7 billion on Teck
Resources (NYSE:TCK) in July, 2009. Would they take a run at Cameco? Or would they buy one of the junior
developers with a growing resource?
Mainland China has 11 operating nuclear power reactors, 20 under
construction, and dozens more in the planning stage. Chinese nuclear
power production is expected to increase by 600% in the next eight years.
Currently, China generates 80% of its electricity from coal. The World
Bank estimates that air pollution costs the Chinese government about $2
billion dollars a day in health and environmental costs. So yes, the
Chinese are motivated to secure a supply of uranium for their clean
nuclear generation plants.
Uracan Resources Ltd., (TSX VENTURE:URC), is
exploring and developing bulk tonnage, near-surface uranium deposits on
the North Shore of the St. Lawrence Seaway in Quebec. Uracan
has discovered more than 40 million lbs. of compliant inferred resources
of uranium since 2006.
The 2009 Drilling Program produced positive results, which should be
incorporated into the new resource estimate due out within weeks.
But with a grade of one third of a pound, Uracan
has been trading with a much lower valuation than its peer group.
Analysts have been largely focused on Uracan's
new high grade Grandroy drill results (4 lb/t
uranium at surface), but the market is waiting on the first assays from
the current initial drill program at their Costebelle
claim block.
It has the grade and size potential to be a game changer for Uracan. Results include 12 meters grading 0.123%
(1,233 ppm or 2.47 lbs/t) U3O8 (A4 Zone) and
6.5 meters of 0.074% (735 ppm or 1.47 lbs/t)
U3O8 (H3 Zone) in saw channel samples.
The mineralized zones at Costebelle are
generally open in all directions, and have only shallow overburden.
With continued drilling success, each of these three juniors could
attract foreign interest, especially as Quebec is considered one of the
top mining jurisdictions in the world.
Getting in ahead of a foreign money flow is a good way to grow your
wealth. Global uranium stockpiles bought up in the panic buying of 2007
are depleting fast. With Chinese and Indian buyers eyeballing Canadian
companies in this new investing landscape, all signs point to a rally.
Full Article
For more information, please contact:
Vanguard Shareholder Solutions
Tel: 604.608.0824
Toll free: 1.866.898.0824
www.uracan.ca
info@uracan.ca
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