Pinnacle Activity Ticker
Vol. 156 - URANERZ ENERGY, OUR NEW FEATURED COMPANY
Demand for uranium is expected to dramatically increase across the globe over the next decade, and as investors we need to be prepared for this. A global initiative is being undertaken to use clean, efficient energy resources and uranium provides the ability to go green, through the use of nuclear power. There has never been such urgency from world leaders to increase their nuclear power production. The United States and China have taken unprecedented action by committing billions of dollars to be utilized for nuclear reactor construction.
The US leads the world with 102 operating nuclear power plants, producing 19% of the country's electricity. President Obama has made it very clear that the US desperately needs to expand its nuclear power production. Obama's recent budget proposal calls for tripling government loan guarantees for new nuclear reactors, amounting to $54 billion in loan guarantees. This followed Obama's pledge in his State of the Union Address on January 27th 2010 when he proposed to heavily expand nuclear power production.
Just this week, The White House announced the planned construction of the first nuclear power plant to be built on American soil in more than 30 years. And the rest of the world isn't standing by to watch.
Mainland China has 11 nuclear power reactors in commercial operation, 21 under construction, and more about to start construction soon. There are currently 56 nuclear reactors under construction worldwide and over 200 more in the planning stages. This will all lead to a continued long term increase in demand for uranium and the companies which mine it.
Last week we told you our team had found a company with nearly $30 million in its treasury, over 300 years of management experience and a Chairman who had his past two most notable companies bought out between $10 and $20 dollars per share. Most importantly, this company has signed multi-year contracts for the sale of its uranium with two world leading nuclear operators in anticipation of its production permits being approved.
The company we are referring to is Uranerz Energy (URZ: AMEX)(URZ: TSX) and we are proud to introduce them to you as our first ever Featured Uranium Company.
Our team first went to meet Uranerz's Chairman and CEO for what was scheduled to be a brief introduction to the company and its plans for the future. Three hours later we walked out of the meeting knowing we had just discovered what would become the most established Featured Company since our inception.
What does it take to be Pinnacle's most established Featured Company to date?
- In 1996 Mr. Glenn Catchpole, Uranerz's CEO, was appointed General Manager and Managing Director of the Inkai uranium solution mining project located in the Republic of Kazakhstan (Central Asia). For those of you who aren't aware of this project, it is on its way to becoming the largest in-situ recovery ("ISR") uranium mine in the world and has helped make Kazahkstan the largest uranium producing country on earth. Mr. Catchpole spent six years taking the Inkai project from acquisition through feasibility study, joint venture formulation, government licensing, environmental permitting, design, construction and the first phase start-up.
- Uranerz is included in four of the Russell Family of Indexes, including the Russell 3000 Index, the Russell 2000 Index, the Russell Microcap Index, and the Russell Global Index.
- Uranerz began its licensing and permitting process in Wyoming over three years ago and is expected to receive these licenses during mid-2010, with anticipated production start in the second half of 2011. A key point to note is that Wyoming has never denied a permit and is considered to be the most mining friendly state in the country. This is a key reason why we are telling you about Uranerz now.
- Uranerz has long-term contracts signed for the sale of uranium with two of the United States' largest nuclear operators, including Exelon (operates the largest nuclear fleet in U.S. and third largest in the world).
- Uranerz Energy controls a large strategic land position in the Powder River Basin of Wyoming. Wyoming happens to be the largest uranium producer in the US and the Powder River Basin has some of the highest grade ISR-amenable uranium deposits in the state.
- Uranerz`s uranium properties in Wyoming neighbor Cameco`s, Areva`s, and Uranium One`s - three of the largest uranium companies in the world.
- Uranerz Energy has a large institutional following, including analyst coverage from Dundee Securities, GMP Securities, Haywood Securities and Versant Partners. All of the analysts have rated Uranerz a BUY or 'Sector Outperform 'with price targets as high as US$2.80. Uranerz currently trades at US$1.77.
Uranerz has the team, the money, the experience, the assets and the sales contracts already in place to help accomplish their goal of becoming a uranium producer in 2011.
Perhaps the most important fact, from an investor standpoint, is that Uranerz Energy's share price is trading at US$1.77, down from US$2.50 only a few months ago and an all-time high in mid 2007 of roughly US$7.50.
Now that we've got your attention, let's explain in detail why our team is set to begin accumulating shares in Uranerz Energy this week.
HOW URANERZ ENERGY FORMED
In 1998 the third largest uranium production company in the world was the "Uranerz Group" of companies - a German based group of companies that included Uranerz Exploration and Mining, Uranerz U.S.A. and Uranerz Australia. In that same year, the Uranerz Group was bought out by Cameco, the largest uranium company on earth at that time. After the buyout, many of the company's (Uranerz Group) key management were in the process of moving on or evaluating other opportunities. In early 2005, Dennis Higgs saw the uranium sector as a great opportunity and was quick to act, rounding up 9 ex-Uranerz Group management members as he knew their expertise was second to none.
Dennis Higgs knew that in order to put together an elite management team, he had to find the right CEO, and he did. Glenn Catchpole agreed to join the "new" Uranerz as its President and build a uranium ISR mining company. Considered as one of the founders, he brought George Hartman and Kurt Brown into the new company, both of whom had been with the ISR uranium mining team at the "old Uranerz".
In 2005 a new company was born and was appropriately named Uranerz Energy Corp., our new Featured Company.
Dennis Higgs is credited for helping put this team together and is the Chairman of Uranerz Energy.
Uranerz`s CEO, Glenn Catchpole, is more than familiar with the Powder River Basin and the state of Wyoming as a whole. He began his career 32 years ago in Wyoming and is back to accomplish yet another great feat in the uranium industry. His storied career stretches back decades, having been a leader at the original Uranerz. There are few in the ISR uranium industry, if any, who have the experience and resume he does. After working for several years with the old Uranerz and then with Cameco, you'd be hard pressed to find a uranium mining specialist more qualified than him. This is the man leading Uranerz Energy and its projects in the Powder River Basin of Wyoming.
The Powder River Basin in Wyoming is becoming one of the world`s hotspots for uranium. This region is building quite the reputation amongst the world's leading uranium companies. Cameco, Areva and Uranium One all have projects in the Powder River Basin of Wyoming - many of which, including Cameco's, are adjoining Uranerz's properties.
Brian Hicks (highly regarded market forecaster) recently wrote, "Uranium One sold their fully-licensed Texas property to UEC and bought the Christiansen Ranch, which lies adjacent to the URZ (Uranerz) properties in Wyoming, paying $35 million - and that's not counting liabilities..."
Of the 25 Powder River Basin properties Uranerz has ownership in (this is where Uranerz`s properties are being permitted for production), 5 of the most advanced have 43-101 reports with significant proven resources.
Nichols Ranch: Indicated: 2,949,546M lbs (0.114% U3O8)
Hank: Measured & Indicated: 2,236,050M lbs (0.123% U3O8)
- Inferred: 246,753 lbs (0.087% U3O8)
West North-Butte: Measured & Indicated: 2,837,015M lbs (0.153% U3O8)
- Inferred: 2,681,928 lbs (0.120% U3O8)
Doughstick: Measured and Indicated: 967,883 lbs (0.082% U3O8)
- Inferred: 87,981 lbs (0.055% U3O8)
South Doughstick: Measured and Indicated: 1,516,582 lbs (0.121% U3O8)
- Inferred: 131,478 lbs (0.097% U3O8)
Note that the grades are averaging at or above 0.10%, which is considered a good grade for ISR uranium mining.
In addition to the 5 properties highlighted above, Uranerz has even more depth in its uranium property portfolio. It acquired additional uranium mineral leases within the North Reno Creek project area. The North Reno Creek project has significant historic uranium resources and was at one time permitted through the Nuclear Regulatory Commission and the Wyoming Department of Environmental Quality for commercial in-situ recovery ("ISR") production, with the permits held by Power Resources Inc., a wholly-owned subsidiary of Cameco Corporation.
Key Fact: The North Reno Creek project is located in Campbell County in the central Powder River Basin of Wyoming, approximately 20 miles east of the Company's Nichols Ranch ISR Uranium Project.
Uranerz has spent roughly $46.8 million on its Powder River Basin projects to date and with roughly $28 million in its treasury, there will be much more development to come.
PERMITTING AND PRODUCTION PLANS
Uranerz Energy has submitted federal and state mining applications to build and operate the Nichols Ranch ISR Uranium Project, which, when licensed and constructed, is planned to consist of a central processing facility at the Nichols Ranch property and a satellite facility at the Hank property. The central processing facility at their Nichols Ranch ISR Uranium Project is being licensed for a capacity of 2 million pounds per year of uranium (as U3O8). It is planned that this facility will process uranium-bearing well field solutions from Nichols Ranch, as well as uranium-loaded resin transported from the Hank satellite facility, plus uranium-loaded resin from any additional satellite deposits that may be developed on their other Powder River Basin properties.
(picture: on site at Nichols Ranch)
It is important to note that the high grades achieved at Uranerz Energy projects are considered very good for ISR mining of uranium. Uranerz expects it will cost roughly $35 million to move Nichols Ranch and Hank projects into production. With roughly $28 million in the bank, the difference is minimal in comparison to large mining operations.
ISR mining is a low cost mining process, which uses a 'leaching' solution to extract uranium from underground ore bodies. It is by far a more environmentally friendly and cost effective approach to mining uranium than traditional methods.
* Nearly all uranium mining in the USA is by this method;
* Nearly all uranium mining in Central Asia is by this method;
* 29 % of all World uranium production is by this method.
Key factors of ISR mining: There is no waste rock, no tailings pond, can make low grade uranium deposits profitable and require a small work force. These factors all contribute to lower capital and operating costs for Uranerz.
It has to be remembered that production permitting takes years to accomplish and many companies never reach this stage. Uranerz began its permitting process in 2007 and it is finally coming to a conclusion (the Company expects to receive these licenses during mid-2010). Many of their current shareholders have been waiting years for this. We won't have to wait more than a few months. No company reacts or trades the same when milestones of this nature are achieved.
Uranium Energy Corp. is an example of a similar uranium company that just last April traded for $0.40 per share. During its permitting approval process, Uranium Energy's shares went on a ride from $0.30 all the way up to $4.00 - providing savvy investors with a massive return.
Brian Hicks best explains Uranerz's advantage in respect to permitting in Wyoming. He stated, "As I mentioned before, URZ (Uranerz) is in Wyoming, the most mining-friendly state in the nation. In fact, of the seven ISR (in-situ recovery) permits issued in Wyoming since 1981, URZ management members were directly responsible for the acquisition of three of these permits."
Keep in mind, Wyoming has never denied a permit...
Uranerz's Nichols Ranch ISR Uranium Project is awaiting permit approval and is expected in April of this year. Uranerz's Hank Project will serve as a satellite facility and as other resources are advanced, the company aims to add more permitted projects. Keep in mind, Uranerz has over 25 uranium projects in various stages of activity (development, exploration) in the Powder River Basin.
Mr. Dennis Higgs is the Chairman of Uranerz and the founder of the company. As mentioned above, he went out and put this talented team together in order to build a uranium producer. With a very successful track record, his role with Uranerz was a key reason we chose to put our name behind them.
Mr. Higgs was involved in the founding, financing, initial public listing, and building of several companies, including Arizona Star Resource Corp. (AMEX and TSX:"AZS"; Arizona Star was acquired by Barrick Gold Corporation at $18.00/share in December 2007) and BioSource International Inc. (NASDAQ: "BIOI"; BioSource was acquired by Invitrogen Corporation at US$12.50/share in October 2005).
Mr. Higgs' ability to position a team, manage a company and eventually lead them to success is evident by his past achievements and by how quickly Uranerz has advanced its projects.
OUR FUNDAMENTAL FIVE
Our Fundamental Five is a new addition to the regular featured reports we author. It consists of the top 5 reasons why we are buying stock in Uranerz Energy Corp. this week.
1. Uranerz is within only a few months of a production permitting decision being made at its Nichols Ranch and Hank properties - never before has a permit in Wyoming been denied. Of the ISR (in-situ recovery) permits issued in Wyoming since 1981, URZ management members were directly responsible for the acquisition of three of these permits.
2. Uranerz's CEO, Glenn Catchpole, was the General Manager and Managing Director of the Inkai uranium solution mining project - on its way to becoming the largest ISR uranium mine on earth.
3. The uranium sector is positioned to experience increased long -term demand and we believe this is the beginning of the cycle. Geordie Mark, Ph.D., FSEG and research analyst for Haywood Securities rated Uranerz as a "Sector Outperform".
4. The Powder River Basin in Wyoming is becoming one of the world`s hotspots for uranium. This region is building quite the reputation amongst the world's leading uranium companies and Uranerz has ownership in 25 projects within this region. Cameco, Areva and Uranium One all have projects in the Powder River Basin of Wyoming.
5. Uranerz has spent roughly $46.8 million on its Powder River Basin projects to date and with roughly $28 million in its treasury, significant development is on the horizon.
Our team will be buying shares in Uranerz Energy this week and in constant contact with management over the coming months. URZ will become one of our largest holdings ever at Pinnacle Digest.
All the best with your investments,
VISIT URANERZ ENERGY ONLINE
Disclaimer: PinnacleDigest.com is an online financial newsletter owned by Maximus Strategic Consulting Inc. We are focused on researching small-cap and large-cap public companies. Information in this report has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. This material is not an offer to sell or a solicitation of an offer to buy any securities or commodity. All statements in this report, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in the forward-looking statements. For more information on the Company, Investors should review the Company's registered filings what are available at www.sedar.com and www.sec.gov . PinnacleDigest.com and its affiliates, officers, directors and agents have been compensated to perform research on Uranerz Energy and therefore information should not be construed as unbiased.
Do not consider this report unbiased as we will be buying shares in Uranerz Energy Corp. and have been paid to advertise on their behalf. Maximus Strategic Consulting Inc., owner of PinnacleDigest.com, has been paid $40,000 Canadian dollars plus gst for advertisement coverage on Uranerz Energy Corp. The company (Uranerz Energy Corp.) has paid for this service. The service includes but is not limited to the creation and distribution of reports such as this one. We intend to sell every share we purchase of Uranerz Energy Corp. for our own profit. We may sell all of our shares without notice to our subscribers.
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