We currently have a very, very robust high-grade resource of some 91mlbs @ 600ppm grade and that’s at a 250 cut-off grade. Our market cap is around about $25 million at today’s share price of around three cents, and we have $4.1 million in the bank at the moment. Our shares are pretty lightly held amongst the mums and dads in the industry and we only have really three major shareholders. And the rest are scattered as I said, over a number of mums and dads.
I am not going to attempt to give you any fancy pictures around the uranium supply, demand, where the reactors are and why we all believe that uranium is still going to head up, as we heard a little bit earlier today. As a mining engineer, I balance two figures and one of those is the 160 odd million pounds that is being consumed on an annual basis, the 140 million pounds that are being produced on an annual basis. Understanding that the balance has been taken up by stockpiles and the disarmament, and knowing at some stage, that’s going to come to an end.
The growth as you heard earlier on is predicted mainly in the non-OECD countries like China. However, the current low price of uranium predicted mine growth I believe and coming from experience in putting mines together, never works out as is planned. And most of the predicted mine growth which I hope I can demonstrate to you later, I don’t believe is actually going to materialise.
The actual entry cost into uranium is not as low as everybody would like to believe. I’ve put a list of projects that are on the board, from various companies. And according to JP Morgan, their estimates are that the average entry price to get a nice return on your money is around about $83 a pound of uranium. Companies have already talked about shelving their projects and you’ve heard about Areva and the disaster they’ve got out of the UraMin projects. And this is part of the reason I believe, we’re not going to see a lot of the planned production actually come to the market, unless we see a healthy rise in the uranium prices.
I’m here to sell our company and why I believe we’re a very, very cheap operation at the moment and very worthwhile and looked at by everyone here today. Although we ranked seventh, and all I’ve pulled here are a number of our Australian peers together – although we ranked seventh in size of the project. And we ranked fourth in grade at a healthy 600ppm with 91mlbs, our enterprise value is somewhere around 24 cents.
If you take the average of everybody on that sheet excluding the producers, you have an average of $1.26. Therefore, I believe there’s a lot of upside in this project. This project I see starting at the same place as I did with Peninsula three years ago and the fact that our enterprise value was so low. And I believe it’s that low all around whether we can monetarise the 91mlbs or not. And hopefully over the coming months, my job is not to drill anymore pounds in the ground, but to demonstrate to the investing market that we can actually monetarise those pounds.
