Terra Ventures: Uranium Could Prove Safe Haven

By James West
Dec, 4th

With commodities suffering the effects of deflation, one might be forgiven for throwing in the towel on juniors and waiting for the inevitable cycle turnaround before wading in. However, fundamentals in the Uranium space indicate demand for that energy commodity may revive before most others.

Despite the high costs associated with the commissioning of new nuclear power, China is still building out energy infrastructure, and nuclear power is a dominant feature of that country’s energy policy.

The following is excerpted from the Scotia Capital Daily Edge:

“According to the government’s Medium and Long-Term Nuclear Power Development Program, the installed capacity of nuclear power should reach 40 gigawatts by 2020. Until that time, the installed capacity of nuclear power will contribute 4 – 5% of total electric output.

China plans to start building at least nine nuclear plants over the next two years, two of which will be constructed in Guangdong, two in Zhejiang, one in Fujian, and one in Shandong, beginning at the end of this year or early next year, the China Daily reported two weeks ago, citing the China Atomic Energy Authority (CAEA). The exact locations and construction start dates for the other three, in the inland Hunan, Hubei, and Jiangxi provinces, are yet to be decided, the report said.

Separately, the State Council said the week before last that China will begin to build 10 new nuclear reactors of 1 GW each for three nuclear plants (Fuqing, Yangjiang, Fanjiashan) “very soon” as a part of the RMB 4 trillion stimulus package. Overnight, it was confirmed that the Fuqing plant already started construction last Friday.

Last month, the official Xinhua News Agency reported that China may raise its 2020 nuclear power capacity target to 70 GW from 40 GW, citing Huang Li, Head of Energy Conservation and Equipment of the National Energy Administration.”

Strengthening Chinese demand is widely perceived as driving stronger Uranium prices.

Cameco Corp. (TSX:CCO) president and CEO Jerry Grandey said he believes the recent jump in prices from $44 a pound to $55 a pound indicates uranium prices are already rebounding.

"Forced sales drove the price down almost as quickly as it had gone up, and probably to a level on the downside that is as irrational as it was on the upside," Grandey said in an interview with The Canadian Press.

"Once (projects) shut down or defer or curtail, then what you see is you´re just sowing the seeds for the next rapid rise in uranium prices, so you´re accelerating that point in time when that will happen."

According to the weekly uranium update from Toll Cross Securities Inc., much of the sector is in the black this week, for the first time in months. Toll Cross says junior explorers were up 13% compared to this time last week, advanced explorers were up 16%, production visibility companies were up by 23%, and producers were up 14%. The Toll Cross Junior Uranium Index gained 16% to 122.67 from 106.

Which is why now might be the time to look among the juniors for exceptional bargains. Many junior explorers are trading at cash value or less, though investors need to be wary that they aren’t unduly impressed with a company’s cash position if it hasn’t got the assets to spend the money on going forward.

Terra Ventures Ltd. (TSX.V:TAS) is a junior company that has both a strong cash position and very real and substantial uranium assets. Its primary asset is its 10% carried interest in Hathor Exploration’s (TSX.V:HAT) Midwest Northeast project in Saskatchewan’s prolific Athabasca Basin. Terra also holds an 8% carried interest in Hathor’s Russel Lake South project, also in the Athabasca Basin.

The recently discovered Roughrider Zone located on the Midwest Northeast project

, has seen a great deal of activity in recent months and is the most significant resource discovery of 2008. Drill Highlights on this property include: 69m of 2.33% u308, 43m of 3.25% u3o8 with select intersections such as 6m of 20% u3o8, 7m of 28.14% u3o8, and 2m of 50.51% u3o8. According to Hathor, the Roughrider Zone represents the best discovery by a Junior company in

the Athabasca Basin in nearly 20 years and has boosted Hathor and Terra’s share prices.

The Roughrider Zone lies adjacent to the high-grade Midwest and Midwest A deposits on the

Midwest Property owned by Areva, Denison Mines Corp. (TSX:DML) and OURD Canada Co. Ltd.. Drilling at Roughrider has so far has been focused on the basement rock below the Athabasca Basin unconformity. At the adjacent Midwest and Midwest A deposits (43m pounds and 19m pounds u3o8 respectively), the vast majority of mineralization is in the sandstone above the unconformity. Hathor’s extensive geophysical data shows two large gravity and resistivity anomalies directly adjacent to the currently drilled zone. Hathor believes these anomalies are alteration zones of uranium mineralization in the sandstone. Hathor has used innovative 3d seismic technology to further define the structure of the area. With three drill rigs at work early January 2009 the zone of mineralization could expand quite rapidly. It is important to note assay results from Roughrider have shown significant poly-metallic results analogous to the Midwest and Midwest A deposits.

The Midwest Northeast property is approximatly 10k from Areva’s Mclean Lake Mill and 25k from Cameco’s Rabbit Lake Mill. The Mclean Lake mill is currently running under capacity and is expecting ore from Cameco’s troubled Cigar Lake deposit. The Mclean Lake mill is considered to be the benchmark for uranium processing facilities. A recent upgrade of approximately $40m was spent to upgrade its ability to handle poly-metallic ore from the Midwest deposit.

In August 2008, the company closed a private placement of 7 million units at $0.80 per unit to

raise gross proceeds of $5.6 million. Each unit consists of one share and one warrant. Each

warrant allows the holder to buy one share for $1.20 on or before August 21, 2010. Of the 7

million units, about 4 million were purchased by private corporations owned by a Trust whose

settlor is the Estate of Adolf H. Lundin.

Terra’s other projects include their 100% owned Lac Katchiwiss property in Quebec. This property is subject of an historic resource estimate of just under 6m pounds u3o8. Terra is actively drilling on this property to expand the resource and bring it to 43-101 standards. With the recent take- over bid of Forsys metals (TSX-V:FSY), properties like Terra’s Lac Katchiwiss have regained attention. Terra’s management is expecting constant news flow in 2009 on the development of this property.

Terra also holds100% ownership of a property in Utah also subject of an historic resource estimate of around 6m pounds u3o8 and 34m pounds vanadium.

Rounding out Terra’s portfolio is a further 10% carried interest in 7 of Titan Uraniums Athabasca Basin properties.

James West is the metals editor at Resourcex Investor, a premium source of news and investment ideas for individuals seeking information about emerging companies in the resource sector. Find our more by visiting http://www.ResourcexInvestor.com.

This article is intended for information purposes only and is not intended as a recommendation to buy or sell securities in any company. The information is derived from sources believed to be reliable but no warranty thereof is expressed or implied.

Resourcex Investor received a fee for the preparation and distribution of this article, but neither Resourcex Publishing nor its employees or affiliates have received any further compensation for this article. At the time of publication, none of Resourcex Publishing’s staff or affiliates own any shares in the company herein described, though shares may be purchased in the future.

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