With the uranium sector on the cusp of major growth in WA, junior exploration firms have been told to join forces or risk missing the boat.
URANIUM industry veteran Alan Eggers says consolidation is inevitable in the uranium exploration sector, as there are too many junior stocks chasing the dream.
The Manhattan Resources director says the lure of large profits in a rapidly developing industry has attracted many junior explorers looking to advance projects to satisfy the world's growing demand for uranium.
According to the World Nuclear Association, uranium production needs to expand significantly as current world production satisfies only 55 per cent of demand.
Up to 40 per cent of the world's known uranium deposits are in Australia, which has been restricted to just three operating mines under government policies.
Mr Eggers said not all junior exploration companies would advance projects to production, with consolidation necessary to attract investment.
"All of those junior explorers aren't going to be able to keep raising money on maybe projects," Mr Eggers told WA Business News.
"It's going to be the quality projects that come through with quality management.
"It gets too confusing for investors, no-one is quite sure where to put their money, and I think there are always a few rogue players out there that don't do the industry any good, but that's for all metals, its not peculiar to the uranium sector."
Mr Eggers has already started implementing his strategy of consolidation, with Manhattan signing a merger agreement with South Australian uranium explorer, Uranio, earlier this month.
While the deal is subject to conditions, the combined entity would have about $9 million in cash and 11 million pounds of uranium resource in Western Australia and South Australia.
"We've got one or two projects in there that have real value, and I believe that marrying their projects and team with Manhattan's team and our funds in these times is good," he said.
Mr Eggers also said Manhattan planned to expand through further merger and acquisition activity.
"In this market it's been very difficult over the last 18 months," he said.
"We believe there's a number of undervalued assets and corporations out there in the uranium sector so we will be looking at merger and acquisition activity to grow the company."
Already a significant shareholder of Uranio, Mr Eggers will become executive chairman of the company, to be renamed Manhattan Corporation.
Manhattan plans to advance its Ponton uranium project 200 kilometres north-east of Kalgoorlie through drilling programs and scoping studies with funds from the merger.
"It's a substantive deposit, and has a lot of upside," Mr Eggers said.
"It has a quite low capital cost so we could bring the project on-stream reasonably quickly, subject of course to obtaining all the state and federal approvals that would be required."
Mr Eggers said he thought it would only be a matter of two or three years before uranium was mined in WA, after Premier Colin Barnett lifted the blanket ban on uranium mining in August last year.
Mr Eggers sees BHP Billiton's Yeelirrie uranium project, 500km north of Kalgoorlie, and Cameco/Mitsubishi's joint venture Kintyre project in the Pilbara as "big brother" operations that will pave the way for junior explorers.
"With the major companies of Cameco/Mitsubishi and BHP Billiton leading the way here I think it's just a matter of fairly short time before the first approvals will be made," he said.
"Uranium mining is already big business in Australia; it's an existing business so we can move very quickly to develop new mines."
A uranium sector veteran, Mr Eggers spent 20 years running Summit Resources, which in 2007 succumbed to a hostile takeover by another Perth uranium company, Paladin Energy.
Mr Eggers built Summit from a $250 company in 1987 to an ASX top 200 company. Its core asset was its uranium deposit in Mount Isa - currently under evaluation by Paladin for possible development.
"There's no way I wanted to let go of the company because I built it and I wanted to see it through to mining," he said.
"The commercial reality was that was the best value for shareholders, and in hindsight it's proved to be a good decision because we sold right at the top of the market."
