Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
We kick off with a quick look at the chart which shows todays sudden leap in the stock price which will please some the long suffering investors in Laramide Resources Limited (LAM) including ourselves. The technical indicators have jumped into the overbought zone with the RSI standing at 75.64, the MACD and the STO are also up but not as extended as the RSI.
Todays news regarding the exercise of Laramides option to acquire the La Sal property in San Juan County, Utah, will require the sum of US$500,000 to be paid to the Homestake Mining Company of California and has generated a massive increase in the volume of shares traded along with a stock price increase of 19.17%.
A follow up payment will be required of $250,000 upon successfully permitting the La Sal property, and a final payment of another $500,000, upon the La Sal property moving into commercial production.
The La Sal property had been encumbered since 2005 preventing Laramide from developing the asset even though the project had been previously permitted with a 1,200 metre access drive constructed and with access to a commercial mill.
The historical resource consisted of 440,000 tons grading 0.31% U3O8, for 2.7 million contained pounds U3O8. The resource was estimated using a minimum undiluted thickness of six feet at a cut-off grade of 0.16% U3O8.
So, this all bodes well for Laramide whose stock price has now doubled over the last couple of months. There is still a long way to go but at least this is a step in the right direction.
Laramide has acquired known uranium assets with drilled out resources. Currently Laramide has approximately 62 million pounds of U3O8 (uranium oxide) located in NI 43-101 compliant resources in Australia and the U.S.
The Company’s main focus is the advancement of its flagship asset, the Westmoreland Uranium Project in Queensland, Australia. In 2009, Mining Associates of Australia completed a technical report that showed Westmoreland has an indicated resource of 36.0 M lbs @ 0.089% U3O8 and an inferred resource of 15.9 M lbs @ 0.083% U3O8 which ranks it as one of the ten largest uranium deposits in Australia and only one of a handful not under the control of a major mining company.
The spot market price for uranium is currently $48.00/lb so its fingers crossed that the price can register $50/lb in the not too distant future.
Laramide Resources Limited trades on the Toronto Stock Exchange under the symbol of LAM and has a market Capitalization of $96.59 million, a 52 week trading range of $0.71to $1.98.
On Friday, 27th August 2010, we closed another successful trade banking a profit of 79.46% on Call Options on Silver Wheaton. We cannot see such opportunities in the uranium sector just yet but no doubt they will present themselves in time, however, with uranium showing signs of life just maybe we are closer than we think.
Stay on your toes and have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
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