Increasing interest in the uranium market is bringing a local junior mining company to the attention of international investors.
Increasing interest in the uranium market is bringing a local junior mining company to the attention of international investors.
The share price of West Perth-based gold and base metals explorer Giralia Resources has increased from about 13 cents in mid-September to break through 20 cents last week, primarily on the back of its Lake Frome joint venture in South Australia.
Giralia pegged the little known exploration play, comprising two large exploration licences, about five years ago. Since then it has left them on the back burner while uranium prices wavered between $US7 and $US11 a pound.
However, a tightening of the supply demand equation combined with a view that there are very few new sources of uranium on the horizon has caused the spot uranium price to shoot up to almost $US20 a pound.
Already Subiaco-based junior Paladin Resources has begun reaping the reward for its dogged perusal of uranium projects during its 11-year history.
Paladin’s share price has soared from 1 cent in November last year to almost 60 cents now on the back of several uranium plays it controls – the most advanced of which is the Langer Heinrich Uranium Project in Namibia.
The increase in Giralia’s share price, which lifted significantly last week, is said to have initially been sparked by a report on the uranium market by local broker DJ Carmichael.
In the September report, which looks at the outlook for uranium as well as ASX-listed stocks with uranium exposure, the author notes Giralia’s Lake Frame joint venture.
While there are no defined resources on the tenements, the report says that any discovery may be less difficult to develop than establishing a new uranium mine in Australia.
Key to this is the tenement’s location. The Lake Frome JV abuts tenements covering Australia’s third uranium mine, Beverley.
Beverly is owned by Heathgate Resources, an affiliate of the major US nuclear utility General Atomic. Heathgate also has joint-ventured into Giralia’s Lake Frome tenements.
Under the joint venture, Giralia holds a 25 per cent free carried interest in Lake Frome, with Heathgate meeting all expenditure to decision to mine.
Importantly, Heathgate has a licence to export uranium, something that has been restricted in recent years by Federal Government policy.
Currently only three uranium mines in Australia have export licences – Olympic Dam, Ranger and Beverley.
Given the outcome of the recent election, however, with a more Coalition-friendly Senate from July 2005, there is speculation this policy may ease.
