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Opinions Charles Oliver, HBSc CFA
First Uranium CorporationFIU.TOHOLDOct 16, 2009
Anywhere from $3 to $3.50 is quite cheap. Trading at about 5X PE. Missed their production guidance and lowered their Q3. Also the strengthening Rand has been an issue.
$3.08
Stock price when the opinion was issued
non-base metal mining
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DON'T BUY
Struggled with management and production issues and has been a poor executed story. He owns the convertible debentures, which pays a yield while you wait and possibly get some of the money back when uranium rebounds.
Robert LauzonOwned
non-base metal mining
DON'T BUY
Came out with a fair amount of fan fair. The price of Uranium is doing nothing. It’s a long-term hold. You are not going to get a huge amount of action in the short term. We have decommissioning of more nuclear weapons that that adds another uncertainty. Mexico [gulf oil problem] has not lifted Uranium.
non-base metal mining
SELL
Have a deal with Gold Wheaton (GLW-T) where they have an up-front payment to sell their gold production from their uranium mining. A possible penalty of about $42 million US if they are not in production by June from one of their mines. There are conflicting stories. Still a shortfall problem in the 2nd quarter and a bigger one by the 4th.
non-base metal mining
DON'T BUY
Management forecast low-cost uranium production of 225,000 pounds per quarter by the 3rd quarter. Also forecast a doubling of gold production with a production cost of approximately $330 per ounce. His confidence level in management has deteriorated. A wait-and-see stock. (See Top Picks.)
Robert LauzonOwned
non-base metal mining
WATCH
Has been in a downward trend since May, which may be because of their South African location. 50 day has turned below the 200 day moving average but the MACD is showing a higher low, which is indicating that the down is over. The sector starts moving up you will probably get a rally in this giving you a chance to get out.
non-base metal mining
TOP PICK
South Africa. Expected to produce both uranium and gold. A near-term producer that has done a good job in developing their properties. Trading below NAV of $12-$14.
Robert LauzonOwned
non-base metal mining
