International Uranium Profile
International Uranium has been on my watch list for about a year but I have never bought or shorted it yet. It seems to have so much potential but looking over the 1 year chart, you can see that it is at almost the same share price it was 1 year ago. In comparison, Urasia and Cameco have doubled and Paladin has tripled.
This can mean that either the stock will continue to underperform the uranium sector or it will play catch up and outperform the rest of the sector. It is still hard to say what will happen but this company has many possible catalysts for price spikes to the upside.
* Re-opening U.S. Uranium Mines Initial Production 3.4 Million Pounds Uranium
* Uranium resources in the U.S.
* Uranium resources in Mongolia
* 2,000 ton per day dual circuit uranium/vanadium mill
* Alternate feed processing/recycling
* Uranium exploration in Canada and Mongolia
International Uranium also happens to be located in one of the countries which will be pushing for more nuclear power generation: USA. President Bush, has stated many times that this is the energy of the future and new stations must be built. Although the USA seems to be pushing towards some kind of police state, it remains for the time being peaceful and fair. I don't think the government will try to nationalize any mineral properties like we've seen in many countries in South America. So the political risk is minimal. At least in their American properties which are the most important at this stage.
IUC may also have some exploration upside because they are drilling the Saskatchewan Basin with several Joint Venture partners such as Cameco and JNR Resources.
Right now the company is being a little low key in regards to their Mongolian properties but I listened to the recent conference call and the president stated firmly that they are not cutting back exploration at all. He said that the Joint Venture agreements were signed in 1994 and the new laws don't apply to this. Plus, the government in a partner with them so that always brings a little stability. The biggest advantage about Mongolia is that IUC has a huge land position and if the discoveries are good enough to go into production there is that giant called China just licking its lips for any resources it can get its hand on. Hochstein wasn't hiding anything about the political situation there though. He admitted that things are going from worse to worse and he's just hoping things can cool off for a while.
Some more information that was covered in the conference call that you can't find in their most recent presentation are the capital requirements (for the next 2.5 years, $13 million for refurbishing the mill), mining costs ($10 million to bring mines back into production and another $35 million in 2009 for the Bull Frog property), production costs ($19-25/lb (total) including vanadium credit of $4), tax pools ($10.5 million plus depreciation pools) and uranium recovery rates (93-95%).
After quickly glancing over their latest news release, I got the feeling that Uranium production would be beginning immediately. That is not the case however. Production should begin in early 2008 if everything goes well.
If the price of uranium continues its remarkable uptrend, that is nothing but good news because the higher it goes, the more money IUC makes.
With Paladin and Urasia having market caps of 1.4 and 1.2 billion respectively, International Uranium seems like it's still a baby with a market cap of under 500 million.
I see a lot of upside in this stock if/when a solid uptrend begins. The stock is trading above its 30 day moving average but I think we need the market to be more positive and a catalyst type piece of news to really get moving. When this occurs, we buy! If it doesn't occur, we don't!