BALTIMORE, MD — The old saying that everything is bigger in the land down under may be more than just marketing hype by beer companies and steakhouses. That's because when it comes to Australia's uranium resources, it's 100% true.
Australia has had a long history of uranium discovery. During his original survey for the new town of Darwin in 1869, George W. Goyder accidentally found a green-colored mineral that he knew was not copper. Goyder could not identify the mineral and it remained a historical obscurity for decades.
That was until 1949, when by a local prospector and farmer, John Michael White, rediscovered the deposit one day while out hunting kangaroos.
This discovery would later be named the Rum Jungle uranium deposit, a name derived from an accident that occurred back in 1871. According to local legend, a bullock-wagon loaded with rum destined for construction gangs got stuck in a patch of jungle on the East Finniss River. The bullockies, unable to free the wagon, untethered the oxen and set about drinking the rum, having one of histories most glorious binges. Thereafter the area was known as Rum Jungle.
Since the Rum Jungle discovery 137 years ago, massive amounts of uranium have been found throughout the country. Today, it's estimated that up tp a third of the world's known recoverable uranium is found in Australia.
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Three Down, Two on the Way
Despite having only three mines in current operation, Australia's annual uranium mining production exceeds 11,000 tons, underscoring the richness of the country's mineralization.
Last year Australia accounted for 22% of global uranium exports, making up 40% of its total energy exports. And they're only planning on increasing nationwide output.
Australia will open two additional uranium mines, the Jabiluka mine in the Northern Territory and the Honeymoon mine in southern Australia, in the next few years. This will signify a potentially vast increase in uranium production.
And it's no wonder the country wants to continue to expand operations. Uranium jumped another $0.50 this week, bringing current prices to $63.00/lb.
And the party's not over yet.
As you know, we believe that the nuclear fuel will top the $100 mark within the next few years-if not sooner-simply because of the growing gap between supply and demand. Fact is, uranium has historically sold over $100/lb on similar fundamentals.
In 1978, the overall commodity bull market pushed the energy metal to an inflation-adjusted high $145.00/lb-so it still has plenty of room to grow.
What that means to investors is simply this: Uranium and the companies that produce and explore for it are still dirt cheap. And believe me, $100 uranium will have a significant effect on those producers and explorers.
Make Power . . . Not War
When it comes to the sale of potentially catastrophic materials like uranium, the global community keeps a vigilant eye on producers. The only countries that are even allowed to purchase Australian uranium are those that use it specifically for electricity.
This responsible behavior is one reason that, for the latter part of the 21st century, Australia has been a member of the Nuclear Nonproliferation Treaty (NPT), effectively listing itself as a state with no nuclear weapons.
Believe me, this is a good thing.
Just to illustrate the enforcement of their export policies, Australia signed a deal with China in April 2006 for uranium to be used in power stations only with the express stipulation that the Chinese will not divert any nuclear fuel to their weapons programs.
Quoting Australian Foreign Minister Alexander Downer: "These agreements establish strict safeguards, arrangements and conditions to ensure Australian uranium supplied to China, and any collaborative programs in applications of nuclear technology, is used exclusively for peaceful purposes."
The exportation of 20,000 tons of uranium to China every year will commence in 2010.
The continual development of Australia's uranium industry seems to offer the hope that responsible nuclear technology will be able to ease our future energy concerns.
If Australia uses its own resources in the midst of soaring uranium prices to profit from global demand, what you really should be asking is whether you are in a position to do the same. I certainly hope so.
Even though Australia is thousands of miles away for most of us, establishing an Australian uranium position is easier than you might think. Many public companies that produce or are exploring for Australian uranium are listed on American and Canadian exchanges.
Below is a list of over 50 public companies that deal in Australian uranium to some extent:
- Acclaim Exploration
- Adelaide Resources Limited
- Arafura Resources
- Apex Minerals
- Ashburton Minerals
- Australian United Gold
- Avian Mining Pty Ltd
- Batavia Mining
- BHP Billiton
- Bullion Minerals
- Alliance Resources
- Bannerman Resources
- Cazaly Resources
- Compass Resources
- Contact Resources
- Curnamona Energy
- Deep Yellow
- Energy Metal
- Energy Resources of Australia
- Equinox Minerals
- Extract Resources
- Georgetown Mining
- Gold Search
- Golden State Resources
- Goldstream Mining
- Glengarry Resources
- Giralia Resources
- Green Rock Energy
- Havilah Resources
- Hindmarsh resources
- Image Resources
- Jindalee Resources
- Kalgoorlie Boulder Resources
- Korab Resources
- Marathon Resources
- Matrix Metals
- Minotaur Exploration
- Monaro Mining
- Monax Mining
- Nickel Australia
- Nova Energy
- Omegacorp
- Paladin Resources
- Pepinnini Minerals
- Polaris Metals
- Red Metal
- Redport
- Reefton Mining
- Rio Tinto
- Scimitar Resources
- Siberia Mining Corporation
- Southern Gold
- Southern Cross Exploration
- Stellar Resources
- Summit Resources
- Uranex
- Uranium Exploration Australia
As always, good luck and have fun investing.
- Keith Kohl
