Last week, Scotiabank economist Patricia Mohr forecast that spot uranium prices could bottom in 2012 and begin a substantial rise over the rest for the rest of this decade. Japan is back in talks to restart to restart its nuclear power initiatives with new proposals possibly coming as early as this month. Other major energy consumers across the world in high-growth markets, such as China, India and Russia are feeling the crunch of rising energy costs and may also be bolstering nuclear energy efforts in the near term to meet increasing demand. With pressures mounting, Mohr predicts that demand for uranium concentrates could grow from 173 million pounds in 2012 to 225 million pounds in 2020.
Mohr is not alone in her sentiment. Earlier this year, the World Nuclear Association recently said that over 80 of the 489 planned or proposed new reactors are expected to be commissioned by 2017.
The nuclear accident in Japan last March crumbled uranium prices and it looks like the residual effects are finally calming. This should put investors on alert for depressed uranium and multiple resource plays with substantial upsides in the coming years. A low-price play with substantial holdings that is deserving of a closer look is Forum Uranium Ltd. (TSX-Venture: FDC), a Vancouver-based junior with six uranium projects in its portfolio in addition to two Rare Earth Element projects.
The company is able to conduct drill programs across many of its projects concurrently due to several Joint Venture agreements with companies such as Rio Tinto (NYSE: RIO), Virginia Energy Resources (TSX-V: VAE) and Mega Uranium (OTCQX: MEGRF) to name a few.
Forum recently completed a successful drill program on its flagship Northwest Athabasca project totaling 3,093 metres of drilling in 22 holes at specific areas to further delineate the resources. Uranium mineralization has been discovered in a previously untested large gravity low. Forum and Mega Uranium have a 50/50 partnership to earn a 60% interest in the project, a joint venture between Cameco Corporation (NYSE: CCJ) and Areva Resources Canada. The Athabasca Basin has been proven to host substantial uranium deposits, including Cameco’s decommissioned Cluff Lake uranium mine producing 62.5 million pounds of uranium.
Assay results were disclosed last week with a new discovery of basement-hosted uranium mineralization intersected in seven holes at the Opie Zone, grading up to 0.142% Triuranium octoxide (U3O8) over 7.6 metres, including 0.458% over 0.7 metres. The Opie zone is located approximately 1.5 kilometres northwest of the Maurice Bay Deposit (historical resource of 1.5 million pounds uranium at 0.6% U3O8) and 1 kilometre south of Zone 2A (one historical drill intercept of 5.68% U3O8 over 8.5 metres). Interpretation of drill intercepts indicate that the mineralized zone strikes approximately east-west and dips 60° to the south. It remains open to the east, west and down dip and lies within a much larger white (clay) alteration zone which is spatially coincident with the gravity anomaly. Importantly, the mineralization discovered came from a drilling area covering approximately 3,700 square metres of a 120,000 square metres gravity anomaly; leaving substantially more drilling to prove-up reserves in the zone.
Investors have shied-away from explorers of all sizes as evidenced by the slide in the Toronto markets, but this could prove to be a mistake for those not shrewd enough to glean what direction the uranium markets are headed from the words of experts. At six cents per share the upside to Forum because of its robust portfolio and established partnerships is unparalleled by any of its peers.
