The booming uranium market has turned red hot in the past fortnight, with the metal’s price hitting a new record, two local companies attracting increased takeover offers and a raft of explorers raising new capital.
The booming uranium market has turned red hot in the past fortnight, with the metal’s price hitting a new record, two local companies attracting increased takeover offers and a raft of explorers raising new capital.
The spot price of uranium increased by $US18 per pound to a record $US113 at an auction in the US earlier this month.
This was the largest single increase since uranium prices were first reported in 1968, and followed big increases in recent years.
The spot price was only $US72 at the start of the year and less than $US7 per pound as recently as 2001.
A big winner from the soaring uranium price has been Subiaco-based Paladin Resources Ltd, which appears to have achieved an unexpected success in its takeover bid for Summit Resources Ltd.
The sustained rise Paladin’s share price, from just a few cents in 2001 to more than $10 currently, has given the company powerful currency to make takeovers.
It acquired Valhalla Uranium last year, giving it a 50 per cent stake in the Mt Isa uranium project, and is poised to acquire Summit, which owns the remaining 50 per cent of the Mt Isa project.
Summit initially resisted Paladin’s advances and formed a defensive strategic alliance with big French nuclear group, Areva.
However, it surprised the market this week by reversing its stance and recommending that shareholders accept Paladin's improved offer, which valued Summit at $1.2 billion.
One of the factors noted by Summit’s directors is that their company has just one advanced project in Queensland; hence they are reliant on the Beattie Labor government reversing its opposition to uranium mining.
In contrast, Paladin is commissioning its Langer Heinrich mine in Namibia and is about to commence its second mine in Malawi.
"I think it was a case of the offer getting sweeter and the politics getting harder," Paladin managing director John Borshoff said.
He decribed the Summit acquisition as part of a long-term strategy, which is designed to make Paladin a major player in the globalised uranium market.
"We've been looking at M&As for two to three years before the juniors even started," Mr Borshoff said.
The other big takeover news was the emergence of a second, improved offer for Perth company OmegaCorp Ltd, which owns a uranium deposit in Zambia.
Canadian company Denison Mines Corp launched a cash offer last December, and quickly gained the backing of OmegaCorp’s directors.
Denison was able to accumulate only a 33.1 per cent stake when its offer closed last Friday.
On the same day, London company Central African Mining & Exploration Co launched a scrip takeover that valued OmegaCorp at $1.44 per share, or $222 million in total.
As well as the takeover news, the market also backed several substantial capital raisings by uranium explorers.
Berkeley Resources Ltd raised $23 million through Canadian broker RBC Capital Markets while Peninsula Minerals Ltd raised $5 million through local broker Euroz Securities.
Metex Resources Ltd had to work harder than most companies to raise new capital.
It planned to raise $5.4 million through a rights issue at 12 cents per share but did not reach the minimum acceptance level.
As a fallback it raised $2.7 million through a share placement pitched at nine cents per share.
The flood of uranium floats continued, with Strike Resources Ltd spin-off Alara Uranium Ltd lodging a prospectus to raise $6 million.
