Strathmore Minerals

Strathmore Minerals (TSX:STM), (FSE:UXP) (NAS:STHJF)

Share price: CAD 4.58 (mar 23, 2007)
Number of shares: 71 million
Market cap: CAD 325 million
Resources: 166 mio. lb (Historical, NI 43-101 Indicated and Inferred)
Price per pund U3O8: USD 1.68
Estimated production start: 2010
Estimated production output in 2010: 0.5 mio. lb (rising to 8 mio. lb. in 2020)
Estimated revenue 2010 (U3O8 = $91) : USD 45.5 mio.
Estimated production costs per lb: $ 20
Estimated profit 2010: CAD 41 mio (USD 35.5 mio.)
Price target 2010 at p/e 10: CAD 4.56 (90 mio. shares)
Price target at U3O8 in ground (10 USD per pound): CAD 27.26
12 month price target: CAD 8 (upside 74 %)

My analysis

I like Strathmore, their exploration and management team and I especially like their resource estimates. What I don’t like is that their estimated production stays fairly low until at least five years out and by that time the price of uranium may have fallen. Sprott Asset Management is a major holder and one might think they would know the uranium industry. Valued on their resources in the ground this is a very good play. With all the consolidation in the uranium industry I won't be surprised to see Strathmore acquired by some larger US or Canadian uranium company.

Strathmore Minerals corporate summery:

Strathmore Minerals Corporation is a Canadian based resource company focused in the strategic acquisition and development of uranium properties on a worldwide basis. Since 1996, the Company's strategy has been to acquire uranium resources that have been previously drilled or developed by others but dropped due to uneconomic U3O8 prices in the early 1980s. The company has also acquired one of the largest exploration land packages in the prolific Athabasca Basin of Saskatchewan, Canada. As a result of the uranium price rising from a low of $7 US to over $85.00 US, Strathmore is assessing all of its properties to determine how best to develop them, including the potential for future production.

Strathmore's Board of Directors, Senior Management and Executive Advisory Board include geologists with over 200 years combined worldwide experience in uranium exploration, development, permitting and mining. This experience compliments other team members, who over the past decade have established a track record for financing and building successful companies.

Strathmore Minerals corporate presentation