subject: How You Can Rate Your Favorite Uranium Organization [print this page] Numerous investors invested in the Excellent Uranium Bull Marketplace with small rationale behind their speculation. Over the robust rallies of the past two years, it was effortless to play the momentum of a newsletter writer's recommendation. Pretty a few did so, often employing the 'greater fool strategy' and hoping the last and dumbest investor would supply an exit technique for your early and nimble speculator.
We have developed a 7-point ratings system to allow you to in identifying which firms may well be greatest suited for your degree of purchase risk. It's a guideline it is possible to use, and we've not assigned a weighting to every item. Nor have we named any uranium companies. That is a do-it-yourself ratings system, which requires but two actions on your part: (a) be persistent inside your data-gathering from each and every company by asking the questions we posed beneath, and (b) be honest in your assessment whenever you review this info.
Some with the more speculative, pure exploration plays may well abandon their components by the end of the year or in 2007. Individuals would consist of under-capitalized businesses with the more speculative qualities and who also fare poorly on our ratings system. This ratings checklist would also apply to the pure specs. We began with our post, "How to Pick a Uranium Stock," featuring Sprott Asset Management Market Strategist Kevin Bambrough and Senior Portfolio Manager Jean Francois Tardif, being a starting stage to produce a a lot more advanced ratings method for you.
Uranium producers are likely to make a strong comeback as they cross more than or switch to a lot more lucrative long-term contracts. But, it could be the smaller, but more solid, uranium advancement companies which could emerge since the preferred purchase vehicles, when the bull resumes the next leg of its extended run. Now that we have had a shakeout, with possibly one more one about the horizon, it can be wise to correctly evaluate the crucial merits of the more serious uranium improvement firms.
Below are some from the key criteria we are using in our ratings system to objectively evaluate uranium businesses covered in our new book, "Investing in the Great Uranium Bull Market: A Practical Investor's Guide to Uranium Stocks." Please ascertain if your chosen exploration and/or advancement business meets these standards. That is a single way of obtaining sufficient information to help you form a snapshot of your company's prospects.
1.Cash Position. The more money a business has in its treasury, the longer it can survive. Discover out if your favorite business has a minimal of $20 million in money. More than $30 million gives a company some breathing room. Exploration and improvement are very expensive propositions. Raising funds in a down marketplace is really tough.
2.National Instrument 43-101. This independent geological assessment determines how many pounds of uranium a company's property hosts. Whilst you will find flaws with this program, it can be a workable yardstick. Find out if your favorite company has a minimum of 20 million pounds of the NI 43-101-compliant uranium resource. 1 must take into account historical resources inadequate for evaluation purposes. They may possibly also be misleading and open to hyperbole.
3.Pedigree of Recognized Deposits. Numerous of the uranium advancement companies hold qualities, which were once held through the minerals or uranium divisions of key oil companies. Some have been continuously held, throughout the 20-year bear marketplace in uranium by one business or another, and then abandoned through the nadir of the drought. Find out if your chosen uranium company's primary components were continuously held until 2000 or perhaps a bit longer, but before the spot uranium marketplace reversed. The earlier a company acquired its qualities, the greater the probability that company got the finest ones. People who came into the game late frequently got the crumbs.
4.Drill Databases. Individuals previous land tenants, the key oil businesses, who spent tens of millions of dollars drilling the uranium properties, accumulated drill databases. Some companies got the property, but not the drill databases. Some firms bought the drill database as portion of their property acquisition. Find out if the company's main properties also have the drill database accompanying it. You might be surprised at what you find.
5.Pedigree of Uranium District. There are a number of premier uranium districts, which have a history of large-scale uranium production: Athabasca, Australia's Northern Territories or South Australia, Grant's New Mexico, Wyoming, Kazakhstan, Niger, and Namibia. Locate out if your favorite business has holdings in these districts. Some firms have holdings in multiple uranium districts, which might also turn out to be recognized as a wise choice by their management.
6.Management's Technical Encounter. You can find three categories of uranium experience: exploration geologist, project geologist and mine operations. Find out how very much encounter your company's geological team has in each and every of individuals 3 categories. Individuals with less than 100 man-years of uranium knowledge behind them may be lacking. Individuals firms which have strength in all three groups could become the next uranium producers.
7.Political or Environmental Threat of Main Assets. Finally, you should assess the threat with the company's primary assets with regards to its location. Major uranium assets in North America or Australia's Northern Territories hold the lowest risk. Individuals businesses exploring or developing in Niger, Namibia or Brazil have slightly higher political threat. Firms with prospects in countries for instance the Democratic Republic of Congo, Kazakhstan or Mongolia keep a lot more danger than some investors may wish to tolerate. Areas which forbid mining for example Queensland, Western Australia or the U.S. state of Virginia carry an enormous degree of risk and a Kierkegaardian leap of faith.
Now you can rate your preferred uranium business and use this ratings method to assist you to sift through the a lot more than 300 possible stocks in which you may well have regarded as investing.
