Beattie backflip Tony Grant-Taylor April 23, 2007 12:00am Article from: Font size: + - Send this article: Print Email
IT may not have been the revelation on the road to Damascus.
But last week uranium hopeful Summit Resources, after bitterly defending its independence and control of the Skal and Valhalla deposits in north-west Queensland from takeover raider Paladin Resources, suddenly recommended Paladin's increased takeover bid. The reason? It seemed to have suddenly dawned on Summit's board that getting uranium mines up in Queensland in the short term may not be a walk in the park, whether this Friday's federal ALP conference throws out the party's no-new-mines policy – as it is expected to do– or not.
Summit chief executive John Eggers had used the coming change in ALP policy as a key plank in rejecting the scrip bid from Paladin – which is Summit's 50 per cent joint venture partner in Skal and Valhalla.
When this week's conference was over, Eggers argued, Summit's shares would probably continue the climb that had taken them from 17¢ in early 2005 to a recent high of $5.97.
Eggers has let it be known that he has discussed uranium mining with Premier Peter Beattie.
Eggers made it clear he came away with the impression the State Government would not put any hurdles in the way of his plan to develop Summit's north-west mineral province ground.
The area contains perhaps the most attractive known deposits in the state.
His impression looked spot on when Mr Beattie, while overseas, had deputy Anna Bligh reveal that a University of Queensland study found uranium mining would have little affect on Queensland's coal industry and, therefore, the Premier was no longer anti-yellowcake.
The Premier's conversion was short-lived, however.
As unions, the ALP's Left and conservationists all cried foul, federal ALP leader Kevin Rudd made it clear that though he expected the federal conference to overthrow Labor's "no more mines" policy, he was not going to impose mining on the states.
He said it would be up to the states to decide who dug up what and where – as it always had been.
Oh, said the Premier, in that case, I do oppose uranium mining. Mr Beattie's backflip seemed lost for a time on the uranium exploration industry – or at least speculative investors who had turned almost anyone with a glowing rock into a stock market high-flyer.
But by last weekend, after Paladin had raised its bid for Summit to $1.23 billion from about $1 billion – and French nuclear giant Areva had agreed to pump significant capital into Summit for an 18 per cent stake – Eggers used the Premier's renewed opposition to uranium to tell shareholders to accept Paladin's offer.
Its shares could slide, even with a change in federal ALP policy, if Beattie maintains his stance. Summit's shares finished last week 11¢ better at $5.62 while Paladin gained 29¢ to $9.49.
Paladin is offering shares in itself in its bid. And they at least are backed by its recently opened Langer Heinrich mine in Namibia, south-west Africa, and another in development in Malawi, south-east Africa.
Paladin's bullish managing director John Borshoff has said he has another deposit in his sights and sees Skal-Valhalla coming into operation in the first half of the next decade.
That latter hope may yet founder on Mr Beattie's stance, and Bligh's almost certain continuing opposition to uranium.
The boom in uranium stocks has been fed by a soaring spot price for yellowcake, which recently hit $US113 per pound – having until early 2004 spent a decade below $US15 a pound.
Chris Salisbury, managing director of the nation's largest producer, Energy Resources of Australia, recently warned that the current price could not hold medium term – though he said soaring demand and the delays inherent in bringing on new capacity meant it might be years before there was a significant correction.
Borshoff does not agree. He is confident demand will stretch supply for decades – and if he is right, Skal-Valhalla may yet have its day in the sun.
But another uranium bull, Far East Capital managing director Warwick Grigor, has warned that even with government support, getting new mines off the ground in places such as Queensland will be tough.
Grigor, who has warned that many soaring market darlings will fall by the wayside because speculators are not assessing their real potential, reckons investors should know that uranium hopefuls will face lengthy mine permit and approval processes, at least outside South Australia, where the Rann ALP government has long supported exploiting the state's uranium resources.
"The environmental and other permitting is going to be much more rigorous than with conventional mines," he told the recent Paydirt Australian Uranium Conference.
Perhaps there's a lesson in the actions of Macarthur Coal boss Ken Talbot, who may be facing his Nuttall Affair problems but continues to invest on a personal basis in various resource hopefuls, including several chasing uranium.
But not those chasing uranium in Queensland. With his big Chinese partner Citic, Talbot has gone for SA uranium explorers
SMM Price at posting:
0.0¢ Sentiment: Sell Disclosure: Held
