Editorial: New uranium, moly projects flood PDAC

The mineral exploration boom went into overdrive during the week ended March 9, the tenth trading week of 2007, with things hitting a fevered pitch at the Prospectors and Developers Association of Canada convention held in Toronto March 4-7.

* While all mineral commodities are in a broadly bullish trend, this was uranium’s year at the PDAC, with junior explorers touting hundreds of new uranium exploration and development projects located around the world.

But there is getting to be quite a bit of froth in the uranium sub-sector, and we expect some kind of shakeout of the lesser-quality projects as time passes. Our non-specialist readers should be aware that uranium is a lot like coal: there’s actually a lot of it lying around the planet; the tricky part is jumping through the regulatory hurdles, mining it and selling it at a profit.

* With a recent spot price of US$85 per lb. U3O8, the short-term market for uranium still looks very strong.

This is particularly true in light of news on Feb. 7 that Rio Tinto’s Australian uranium subsidiary Energy Resources of Australia had declared force majeure at its Ranger open-pit uranium mine in Australia’s Northern Territory, owing to cyclone George’s heavy rains.

The mine — the world’s second largest and provider of 11% of global uranium supply — was shut down on Feb. 27, and will restart in mid-March. First-quarter production will likely be 20-30% lower than expected, shaving about 1% off global uranium production for 2007.

* A minor theme of the PDAC was the emergence of molybdenum as a significant sub-sector for mining investors and mineral explorers.

Ian McDonald and Kerry Knoll’s Blue Pearl Mining is suddenly a dominant new force on the production side, and Eric Sprott’s Sprott Asset Management has unveiled its new molybdenum fund, in which Blue Pearl will participate.

If you have any interest in moly, a must-listen is the presentation by Blue Pearl’s vice-president of sales and marketing, Mark Wilson, on molybdenum’s future, which looks very rosy. It’s available at www.bluepearl.ca.

* We were saddened to learn of another fatal small-plane crash in our industry: On March 8, Garnet Halliday, Paladin Resources’ executive general manager for operations and development, was killed in an aircraft accident near Lilongwe in Malawi, along with pilot Frank van-Veuren, principal of Executive Air Charter. They were the only people aboard.

Halliday, aged 50, was pivotal in developing Paladin’s new Langer Heinrich uranium mine in Namibia, and was leading the team preparing for the construction of the Kayelekera uranium mine in Malawi.

* It was another furious week of M&A activity, with deals among the small caps dominating: Latin America-focused gold juniors Aurogin Resources and Morgain Minerals are merging as equals; Denver, Colo.-based cheque-casher Royal Gold is adding to its royalty portfolio with an all-share, friendly bid for Battle Mountain Gold Exploration; Mega Uranium is offering shares and warrants for Labrador uranium-focused Monster Copper; and Australia’s Zinifex actually lowered its friendly offer for Canadian Arctic explorer Wolfden Resources by 9 to C$3.81 per share.

* In Toronto’s financial district, the Ontario Club at Commerce Court is the main hub of public activity for the mining community. However, the club’s move at the end of this month to comparably swanky new digs at 1 King West has been derailed owing to condo developer Harry Stinson’s filing for bankruptcy protection as part of a larger, sour battle with partner David Mirvish. The Ontario Club will likely have to improvise as to the location of its upcoming events for a few months.

* If you haven’t already, it’s well worth catching up with the goings-on of the world’s biggest gold miner, Barrick Gold, through its excellent, 3-hour-long “Investor’s Day” presentation available at www.barrick.com. We see Barrick retaking the leadership role in the gold mining industry that it had lost for a few years to Newmont Mining and Goldcorp.

Send your Letters-to-the-Editor and other op-ed submissions to the Editor at: tnm@northernminer.com, fax: (416) 510-5137, or 12 Concorde Pl., Suite 800, Toronto, ON M3C 4J2.