April 15, 2007
That Was The Week That Was … In Australia
By Our Man In Oz
Minews. Good morning Australia, uranium again?
Oz. It really has become the only game in town, and is likely to stay that way for another two weeks as politics moves to centre stage in the Australian uranium market. Everyone here is fascinated by what is likely to emerge from the national conference of the Australian Labor Party which kicks off in Sydney on Friday, April 27, and runs over that weekend. The anti-nuclear lobby is praying that the party retain its opposition to new uranium mines. Investors are placing big bets that the ban will be lifted, clearing the way for the wholesale development of a series of new mines.
Minews. And while you play politics the uranium prices rockets up.
Oz. Fabulous, isn’t it. A couple of years ago you could hardly give the stuff away. Now its over the US$100 a pound mark, and widely expected to go much higher because the cost of uranium fuel to a nuclear power station is really in the “can of beans” category when measured against the overall capital cost and the critical need to maintain a flow of fuel.
Minews. Enough of the philosophy, time for some prices.
Oz. Right. Well last week really was a uranium glutton’s smorgasbord. A raft of stocks hit new 12-month highs, including Curnamona Energy (CUY) which jumped A87 cents (47 per cent) to A$2.73 after receiving approval to conduct trials on its Oban uranium project in South Australia. The stock eased back to A$2.69 at the close on Friday but that price is still five-times higher than a year ago. Havilah Resources (HAV), which owns 51 per cent of Curnamona chimed in with a A47 cent (22 per cent) rise to A$2.59, down A1 cent on the 12-month high of A$2.60 reached in early Friday trade. Across the uranium sector there were wholesale price rises, including Omegacorp (OMC) which jumped A23.5 cents (19.7 per cent) to A$1.43 after receiving a counter takeover bid to that proposed late last year by Canada’s Denison Mines.
Minews. Yes, interesting that fresh move on Omegacorp. We might take a closer look. Before we do that, more prices please?
Oz. Continuing with the uranium crowd, we saw a new listing in Crossland Uranium (CUX) deliver spectacular profits for the stags who were quick enough to sell the A25 cent shares taken up in the float at Friday’s listing high of A72.5 cents, a “modest” return of A47.5 cents, or 190 per cent on their original investment. The stock closed its first day at A61 cents, for a gain of A36 cents (144 per cent). Takeover target Summit Resources (SMM) stormed ahead thanks to the entry of French nuclear giant Areva on its share register. Summit closed the week at A$5.97, a gain of A82 cents (16 per cent), but did get as high as A$6.50 on Wednesday. Paladin Resources (PDN) which looks like it will struggle to complete its bid for Summit was probably the only uranium stock to lose ground on the day, slipping a fractional A17 cents (1.6 per cent) to A$10.03.
Minews. Let’s look a bit wider, how did your base metal sector perform?
Oz. Solid, but subdued when compared with uranium. The rising value of the Australian dollar weighed heavily on the sector with a number of brokers suggesting that at US83 cents to the A$1 (the highest in 17 years) we could see up to 5 per cent shaved off profits this year. The nickel favourite, Jubilee Mines (JBM) eased back A54 cents (3 per cent) to A$17.38, while other nickel stocks posted modest gains. Minara (MRE) rose A8 cents (1 per cent) to A$8.20, Western Areas (WSA) was up A18 cents (3.5 per cent) to A$5.25 and Mincor (MCR) rose A20 cents (6.2 per cent) to A$3.41, but that price was down a little on peak Friday price of A$3.50, which was a 12-month high for the stock. Zinc stocks were also weaker on Friday on dollar fears, but generally finished up marginally over the week.
Minews. Time for quick look at the gold sector, or was it too hit by the dollar?
Oz. It should have been clobbered, but some reason most of the gold stocks managed small gains. The stand-out winner of the week was Kingsgate (KCN) which report clearance of environmental hurdles to a big mine expansion in Thailand. It rose A84 cents (17.5 per cent) to A$5.64, but did get as high as A$5.90 in early Friday trade, it’s best price in almost 12-months. Most other moves were around the A1 cent mark. In fact a whole series of gold stocks posted that minimal rise, including St Barbara (SBM), up A1 cent to A56 cents, Goldstar (GDR) by the same amount to A57 cents, Allied Gold (ALD) to A38 cents, and Bendigo (BDG) which could manage only half-a-cent to A38 cents.
Minews. But, you say those rises were in the face of a tough gold market?
Oz. Absolutely. Look at the dollar effect. While the gold price in U.S. dollars rose in London last week from US$673.50 an ounce to US$681.75/oz the Australian dollar gold price actually fell from A$824/oz to A$818 thanks to our dollar rising over the week from US81.67 cents to US83.24 cents.
Minews. Thanks Oz. It seems the profit flows from the resources boom have finally caught up with your currency, but the producers will still be making a lot of money and , hopefully, paying dividends.