Sharpy13 Apr 2011 17:17
The portfolio now contains 11 confirmed pipes, several of which contain significant uranium mineralization. Three have +1% drill intersects and, of these, the Wate Pipe has a reported Canadian NI 43-101 compliant resource of 696,000 lbs U3O8. This is presently being expanded by drilling and data acquisition, to prove up the historical resources which were defined by Rocky Mountain Energy(RME), who owned the project previously. RME reported reserves of:
Conservative 1,124,000
Base 1,916,863
Full 2,416,863
At the current value of U3O8 this would give us a value of:
Conservative $82,052,000
Base $139,930,999
Full $176,430,999
A recent article quoted:
Philip Williams, Pinetree Capital's VP of business development, says the spot price for uranium will likely explode above $100/lb. in 2011, much as it did in 2007 when it topped at $137. The good news, Philip says, is that even when uranium comes off its high, it will likely only fall to around $80.
A price of $100 would therefore give us:
Conservative $112,400,000
Base $191,686,300
Full $241,686,300
And a record price of $137 would yield:
Conservative $153,988,000
Base $262,610,231
Full $331,110,231
Capex costs are $20-30 million per pipe. These figures are for Wate pipe only and the VML portfolio contains 11 confirmed pipes.
It is interesting to note that the original compliant resourcing had three targets at +1% drill intersects while VML recent RNS stated average grades of between 1.46% and 2.89%.
'These resource figures were obtained from surface drilling only and the Board would expect, as historically found, that the deposit would be approximately 3 times larger once definition drilling can be completed underground from an adjacent development shaft.'
If the Wate pipe is 3 times larger than surface drilling indicates this would give us a value of (at current market price £73):
Conservative 3,372,000lbs $246,156,000
Base 5,750,589lbs $419,792,997
Full 7,250,589lbs $529,292,997
As a very quick, rough and ready comparison I've just looked at Denison mines, a US company that look to be operating in much the same way to Vane but a bit further down the path as they are in actual production.
'Denison’s 2009 production from its two mills was 1.4 million pounds U3O8 and 0.5 million pounds of vanadium. 2010 production is estimated to be 1.6 million pounds U3O8 and 2.8 million pounds of vanadium. '
Denison market cap $1,516m
Shares issued 366.2m
SP $4.14
which in pounds stirling would convert to:
Market cap £947.5m
SP £2.58
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