FTE.L Share News (FTE)

A military coup, massacre of civilians and the attempted assassination of the coup leader is not what Forte Energy had in mind when it bought the rights to dig for uranium in the West African state of Guinea.After a horrible 18 months, bullish Aussie chief operating officer Brad George reckons all bets are back on and uranium could be "next year's gold". The company was targeting a JORC-compliant resource estimate at Firawa when the president died and an opportunistic army officer took over. Within a year, Captain Moussa Dadis Camara had been shot in the head by the former chief of the presidential guard. Just three months earlier, soldiers loyal to Camara slaughtered 150 civilians protesting at his expected candidacy in elections. He hasn't returned to Guinea, leaving his old defence minister to organise the voting.Forte hopes all the trouble is over and it can get back to business. Investors deserted the company on the assumption it had lost the Firawa license, but Forte chiefs hope they may return when Guinea sorts its act out. George told ShareCast the exploration season is getting underway again and the resource should be several times bigger. "We're back to prove it up," he said. A pre-feasibility study is planned for 2011.Thankfully, the climate is altogether more peaceful - though considerably hotter - in Forte's other target area - Mauritania. It's been granted nine uranium exploration licences there and more permits are awaiting approval. Good news is the politics is less exciting than Guinea and the government is "squeaky clean".Bad news was the company struggled to get test results back in a credible timeframe. It would take months to send and receive information, which lost Forte credibility in the City. Now there's a local laboratory in Mauritania run by an Irish firm that claims it can do it in just a few weeks. Assay issue solved, says George, also a mining analyst at Mayfair-based finance house Matrix.His optimism could be justified by a number of supply and demand issues.Uranium boomed between 2003 and 2006, but has been quiet since because it's the only metal that you can predict what global demand will be in five year's time. All the nuclear reactors are still likely to be around. Investors have also lost interest, distracted by the current "gold frenzy". A series of deals during 2007 and 2008 saw Kazakhstan become the world's largest uranium producer a year later after increasing supply to China, thirsty for fuel to run its new power stations. That has also kept a lid on prices, but China is planning to increase its nuclear capacity six-fold, so will need more fuel.Countries like Korea and India are also planning to add new reactors, according to the World Nuclear Association. An extra 147 nuclear plants will come on line over the next decade, analysts at Morgan Stanley predicted in a recent research note.Russia is also due to stop supplying America with low-enriched uranium fuel for its nuclear power plants when the "Megatons to Megawatts" programme ends in 2013.Under the agreement, the Russians promised to recycle highly-enriched uranium used in nuclear warheads back into reactor grade material. This fuel currently powers 10% of American homes and half the electricity produced by US nuclear power stations.In addition, a spate of kidnappings in Niger could cause problems. The country, one of the world's largest uranium producers, is responsible for about 11% of the world's supply, but Al Qaeda terrorists are holding five French citizens hostage following an abduction from a mine last month."Reactor owners must have fuel security," says George. "If there are any supply shocks, you'll see a price spike."Morgan Stanley already thinks uranium prices will average $52.25 a pound next year, 19% more than in 2010. Supply will lag behind demand, which is expected to increase by 24% to 2015. Uranium is set to be "next year's story", maintains George.Forte is the only company involved in uranium exploration in Guinea and it's the dominant player in Mauritania. French nuclear powerhouse Areva owns an 11% stake and Lady Barbara Judge is Forte's deputy chairman. She's currently chairman of UK Atomic Energy Authority. Husband Paul is a director at Eurasian Natural Resources (ENRC).The AIM-listed company will be hoping its luck turns. If it does, it'll have the Chinese, French and Indians queuing round the block.