re: prediction of prices. comments 1. PREDICTION OF URANIUM...

re: prediction of prices. comments 1. PREDICTION OF URANIUM PRICES.

COMMENT: Refer to this and previous thread:
"That is very low. Price on 11 May was already $42 and I pointed out that one can expect some additional $26 in the next 12 months to bring a total of US$68/lb".

Comment: We need to get $68 on 11 May 2007. It is now $54.00. I need another $14 to bring the price up to $68.

Sofar, 139 days have lapsed since 11 May and we gained $12. Till 11 May 2007, we could get: 365/139*$12=$31.51.

Add that to the original $42=$73.51, say US$73.50 instead of $68 predicted; so we are well on the way.

Based on $73.50, that would be an increase of 75% in one year!

However, we'll stick to $68 in the meantime.

2. REASONS FOR THE RAPID PRICE RISES.
2.1: Many countries have revised the number of required nuclear power stations upward and can't rely on low oil prices.
2.2 There are a number of sources (There is one Uranium ETF amongst them) which are buying up U and store it at approved producers.
These sources are increasing and therefore take out U from the supply-See this thread.
2.3 The shortfall in production is made up from weapons grade plutonium. The Rusions are supposed to deliver cheap weapons grade to the US till about 1212, I believe. However, prices will now rise in 2009, even if it takes a court case.
2.4. U is often bought well before it is needed by the newly to be built power stations and hoarded. In any case, U is a small part of the overall cost, so there is not that great objection to increased pricing at the moment.
2.5 There are different sized nucleat stations, varying from very large base load stations to the smaller sizes built on ships and these can supply say one city. Once due for replacement of the used uranium, a new boat can replace it without much delay.
2.6 The Chinese have done a lot of work on the safety angle and this means that these nuclear reactors are much more acceptable.
2.7: There have been delays in production-See ERA, Australia.


3. SMM INSITU VALUE OF URANIUM ON SAY 11 MAY 2007($A=0.77 US)
By then I expect them to have close to 150 mill lbs- they think it could be there. At US$68.0/lb, this value would be 150 mill*68/0.77=$A13,246,753,000 or about $A13.246 bill.

At the moment there are 197.5 mill shares. Let us assume there will be 210 mill shares on 11May 2007. In that case, the InSitu value will be about $A63.07, say $A63, a very handsome sum per share.

4. PROSPECTIVE TAKEOVER.
The current price of $A152.5 is too low. That is partly due because mining is not allowed and also because of the prospective cheap takeover of VUL by PDN (VUL shares part of some inventory with SMM). This action by PDN is subject to a court case brought by SMM who thinks they have priority on that VUL stake.

SMM had hoped that the Fed Govt would have stepped in and override the Queensland Govt and so allow mining-previous posts show that according to SMM, they can do that; but apparently, the Govt is holding back, preferring to let the Austr. Labor Party to decide this mining issue next year April at their Annual Convention.

Meanwhile, SMM's court case may delay somewhat a takeover but it is clear that with increasing U prices and proving up of additional resources, SMM will become a prime takeover target at low prices by PDN or Foreigners, IMHO. If that happens, we have the Australian Greenies to thank for the sqandering of this foremost outstanding resource.

Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks or metals/commodities.