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Now that the uranium bull market has gone to a new level, a number of exploration stocks made spectacular percentage gains after the International Investment Conference held in San Francisco in late November 2005. We turned to Kevin Bambrough, Market Strategist, and Jean-Francoise Tardif, Portfolio Manager, at Sprott Asset Management for their advice on how to navigate through the more than 250 uranium exploration, development and producing companies available across the global investment landscape. Who better to ask than a fund that has invested around $175 million in uranium stocks the past few years, about 6.7 percent of more than $2.5 billion managed by Sprott Asset Management? The Sprott team has bet heavily on a nuclear energy renaissance, and early indications confirm very strong returns in their investments.

Before our taped telephone interview, Kevin Bambrough emailed a few comments, “We would like to make the point about some incredible gains that have been had in the uranium sector. The list is growing but not the quality so investors should use extreme caution. As the uranium price rises, and money pours into exploration, we can expect to see some sizeable discoveries coming down the road. It should be exciting times.”

Prior to StockInterview.com’s interviews with Mr. Bambrough and Mr. Tardif, they compiled a list of ten tips for investors studying uranium companies. The tips are listed below, followed by an extensive interview, first with Mr. Bambrough (in this installment) and a second installment with Mr. Bambrough and Mr. Tardif.

The Ten Tips Investors Should Know

1. One of the best indicators of a project’s potential success could be past ownership. It’s best to try to buy any mining stock early in the cycle. Try to pick up properties that were worked by majors during the last bull market but which eventually dropped during the lows of the bear market. During the last uranium boom of the 1970’s, many majors decided to completely exit the uranium sector.

2. Study the value of ore body with regards to its value per tonne, or its recoverable metal. Estimate the “all in” costs and feel comfortable with what you are paying. Risks-to-reward doesn’t favor pure exploration. Typically, we avoid pure exploration plays unless management is excellent, they have a large prospective land package, and the company is well financed.

3. Look for good, proven management, which has been successful in the past.

4. Look for solid shareholders. It is always nice to see that management has a large stake in the company. Often, this makes them value their paper more, and they will be less likely to engage in reckless stock issuance. If not management, I get comfort seeing that successful fund managers have large holdings. It is even better to see that a major company in a related industry has taken an interest in the company. Read the rest of this entry »

Just as the saying goes, we live in a risky world. Almost everything we do involves some degree of risk. Generally, to invest is to risk… since one is not certain about the outcome of the investment.

According to Wikipedia, investment or investing is a term with several closely-related meanings in business management, finance and economics, related to saving or deferring consumption. An asset is usually purchased, or equivalently a deposit is made in a bank, in hopes of getting a future return or interest from it.

Today, many don’t like to hear the word investment merely because it involves risks. Apparently, to invest is to risk; but we should not because of the risk avoid investing.

It will be much better for one to learn how to manage risks associated with investment rather than avoiding investing totally. A good investor should learn how to manage the various risks associated with every investment. It will not be wise for one to avoid investing merely because of the risks associated with investment.

A potential investor should also know that the risks associated with every investment varies. For instance the risk associated with Stock Investment or Stock Trading is not the same with that associated with forex trading. Likewise, the risk associated with real estate investment also defers from the risk associated with transport business. Every business we do, no matter how small has its own risk.

What is the major fear an investor faces? The major fright investors face is the fear of losing money. Each time you give investment a second thought, the next thing that may come to your mind is that you may be losing your money.
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Cameco Corp (NYSE: CCJ) is the 800-pound gorilla of the uranium sector. Cameco is to uranium what Wal-Mart is to retailing, and what Saudi Aramco is to petroleum. On a percentage basis, Cameco dominates its sector more so than either of the two. Cameco probably has more clout in turning off the electricity now powering your computer than any other company in the world.

This week, the spot price of uranium rose to $40/pound, for the first time since Ronald Reagan was president. That should help grow the uranium business in Wyoming by leaps and bounds. In Part 5, we look at the largest U.S. uranium producer, Cameco-owned Power Resources.

Understanding ‘In Situ Leach’ Uranium Extraction

“It took $284 million Canadian to build, and it operated with 546 people,” said Patrick Drummond, Plant Superintendent for Cameco subsidiary Power Resources’ Smith Ranch facility. He was pointing to Kerr McGee’s Smith Ranch underground mine on the wall across from desk, which was later converted into an ISL operation, first run by Rio Algom. “This operation cost US$44 million to build and 80 people to start.” Drummond was referring to the In Situ Leaching (ISL) uranium extraction facility, known as Smith Ranch. “That should give you the scale of the ISL versus an underground mine,” he explained.

The aging, but sprightly, Drummond knows his uranium. He’s worked in underground mines, open pit mines, and uranium mills since 1980. From 1996 to the present day, he’s worked in Wyoming for Power Resources at the company’s ISL uranium extraction facility. “I started off in the coal mines in Scotland,” boasted Drummond, who claims he can spot a coal miner in a bar, just by looking at the veins in his hands. “I worked up in Elliot Lake and the massive underground mines up there.” Clasping his hands and looking down, he seemed to apologize, “It’s also a massive environmental problem to clean up, a major undertaking. Quirk Lake was one of the bigger mines up there. It cost a lot of money to clean it up.”

The New Face of Wyoming’s Uranium Mining is the ISL uranium extraction method, also known as solution mining. The differences between mining uranium underground and an ISL operation are both minor and vast. Both methods mine uranium beneath the surface. So both methods are underground mining. However, that is where the similarities end. “With underground, you bring up the ore, grate it, crush it, and extract the uranium from the ore,” Drummond explained the basics of underground uranium mining. “That ore becomes waste, which is known as tailings. You then have to service these big tailings and then decommission.”

ISL is the new breed of mining. “With ISL, we don’t do that,” continued Drummond in his day-long lecture to our editorial team during a VIP tour of the Smith Ranch facility. “To mine underground with ISL, you drill the holes where the uranium is and extract the uranium from the underground ore,” he said. “Then, you process that into yellowcake.”

It’s not all wine and roses for Drummond, though. He pines away for his underground mines, “From a mining perspective, it’s not mining so it is not as exciting. Drummond laughs, “ISL is like a water treatment plant. We take water out and remove some ions.” He makes it sound so simple, “We remove the water from the underground and remove the ions, being the uranium ion. Then, we put the water back under the ground.” All of the water goes back into the ground? Actually no. Drummond explained, “We take our water out and we put 99 percent back in. The one percent we call ‘bleed.’ It’s a control function.”

Drummond cites more comparables, “To start an underground mine, it would take a year to do the shaft before you could start mining. Then, there’s the development cost of the mill complex. You have all that outlay of cost before you can get any benefit. It’s expensive to do underground — $200 million plus – because of the upfront development costs.” From his perspective, the miner in Drummond has come to like solution mining. “ISL is easier. It is a lot cheaper: less expensive capital costs and less operating expenditures. It is less labor intensive.” Asked about the deadly radon emissions, often cited as a danger in underground mining, Drummond shot back, “This is a zero emission facility.”

Analyzing the two methods, he said, “You can start producing faster with an ISL operation. You start your first header house, and you can start producing and make money.” He added, “So you get a return on your investment faster.” What’s the downside? “We also recover less uranium with ISL,” Drummond admitted. “Some of Cameco’s mines in Saskatchewan are running around 5, 10, 15, and 27 percent uranium. In this area, or in an ISL, it runs less than one or two percent. It’s very low.” Plus the uranium ore body must be found below the water table. He added, “You can only do ISL in rock that’s porous and has water in it in the first place.”
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Investing in penny stocks provides traders with the opportunity to dramatically increase their profits, however, it also provides an equal opportunity to lose your trading capital quickly. These 5 tips will help you lower the risk of one of the riskiest investment vehicles.

1. Penny Stocks are a penny for a reason.
While we all dream about investing in the next Microsoft or the next Home Depot, the truth is, the odds of you finding that once in a decade success story are slim. These companies are either starting out and purchased a shell company because it was cheaper than an IPO, or they simply do not have a business plan compelling enough to justify investment banker’s money for an IPO. This doesn’t make them a bad investment, but it should make you be realistic about the kind of company that you are investing in.

2. Trading Volumes
Look for a consistent high volume of shares being traded. Looking at the average volume can be misleading. If ABC trades 1 million shares today, and doesn’t trade for the rest of the week, the daily average will appear to be 200 000 shares. In order to get in and out at an acceptable rate of return, you need consistent volume. Also look at the number of trades per day. Is it 1 insider selling or buying? Liquidity should be the first thing to look at. If there is no volume, you will end up holding “dead money”, where the only way of selling shares is to dump at the bid, which will put more selling pressure, resulting in an even lower sell price.
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Copyright 2006 Equitrend, Inc.

Many investors still don’t know about Exchange Traded Funds (or ETFs) and their advantages over traditional mutual funds. In this article, we’ll examine Exchange Traded Funds, their history, performance and advantages and why you should never buy a mutual fund again.

ETF 101

Exchange Traded Funds can most accurately be described as the happy marriage of a stock with a mutual fund.

Like mutual funds, when an investor buys an ETF, he is buying a pool of securities at one time. For instance, an ETF known as DIA, or “Diamonds.” allows the investor to take a position in the Dow Jones Industrial Average.

Like a stock, an ETF can be purchased through a brokerage account, can be traded throughout the day, can be bought on margin and offers stock-like trading features such as limit orders, stop orders and short selling

ETFs come in many different flavors. They track all the major indexes like the Dow, S&P 500, NASDAQ 100, Russell 2000 and others. They’re also available for investors who want to trade sectors like energy, technology, precious metals, financial, health care, emerging markets, interest rates and many more.
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