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China’s insatiable energy needs could send uranium prices soaring by 900% or more!
Lumwana’s uranium reserves and explorations could not have come at a better time than this for the Zambian Enterprise. Zambian investors and indigenous entrepreneurs also need to take a serious look at how they could profit from this uranium wave.
No one is in an even better position than Equinox as they exploit more possibilities to add to their bottom line. As the world demand continues to trend in positive trajectories and giant mining companies look for junior buy-outs, we don’t actually see Equinox lasting without a hostile take over …
In February 2001, the commodity price of Uranium sat at its 30-year low of around $7 per pound. Now, just over 6 years later, uranium has risen an astounding 1,700% to an all-time high of $135 per pound.
The primary force behind this incredible uptrend is simply that uranium stockpiles have declined for several years as escalating demand has far outpaced new supplies.
A key demand-driver is China with its immediate plans to bring 30 new fuel-hungry nuclear reactors online – and the country’s uranium appetite is just getting started.
China’s rapidly expanding economy demands a vast increase in the capacity of its national power grid. The Chinese government has made an irreversible commitment to nuclear power upon which $TRILLIONS in industrial revenues depend.
With 2 new nuclear power plants slated to go online each year from 2007 through 2020, China knows that its future fortunes cannot merely rely on foreign uranium suppliers – China must own the foreign uranium supplies.
We saw with our own eyes how the boom copper prices did little to create indigenous wealth and we are looking at how the next boom (the uranium boom) will for once benefit the land from which it emanates.
The challenge for the Zambian government would be how much of that stake they are going to capitalize on for the benefit of the general populace; that’s this week’s memo from us at the Zambian Chronicle … thanks a trillion.
Brainwave R Mumba, Sr.
CEO & President – Zambian Chronicle
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Zambian Chronicle 
September 13, 2007 at 12:08 am
Robert Tyerman finds the market awash with mergers and acquisitions in this month’s market view.
Bids and mergers and rumours of more to come have helped divert the markets’ attention from concerns about the potentially alarming housing market slump in the USA, with its implications for banks’ bad debts and a raft of litigation, and the prospect of another rise in UK interest rates. Trading volumes have recently been setting records and the FTSE 100 Share Index has returned to within nodding distance of its 52-week high point of 6,451.
The chances of it making significant further gains in the shorter term and ignoring the old injunction to ‘sell in May and go away’ hinge on at least some of the deals coming off and on several other factors outweighing the consequences of anti-inflationary measures and a conceivable derivatives meltdown on both sides of the Atlantic. The Bank of England and the European Central Bank may not have been as quick to raise rates as some had expected, but the upward pressure has not gone away.
But significant macroeconomic stimuli abound, including the Asian-induced commodities boom and corporate activity emanating from that continent, not to mention signs of a revival in Germany and the other eurozone countries. China has £500 billion to invest around the world, some of which has come in the UK’s direction, and Chinese companies and investors are making their mark here too – as, of course, are the Russians.
The City is convinced that funds available for good private equity or other deals dwarf most people’s imagination. How volatile these funds are and how vulnerable some of the deal structures could prove to adverse interest rate moves or other unwelcome changes remains to be tested, but there still seems to be much to play for and many keen to play.
The attention of our “nation of shopkeepers” has appropriately enough been focused not so much on buoyant first-quarter retail sales figures as on corporate moves.
A particular attention-stealer has been the saga of J Sainsbury.
Private equity group CVC finally dropped its mooted £11 billion bid, as Blackstone and Texas Pacific pulled out of its bidding consortium in the face of opposition by the Sainsbury family to any offer below 600p a share. In the subsequent slide in Sainsbury’s shares, property entrepreneur Robert Tchenguiz – focused on the reviving food retailer’s property portfolio – emerged as having upped his stake to 5.1 per cent, which suggests the last shot has not yet been fired.
The Sainsbury’s saga renewed speculation that private equity predators might switch their attention in the retail sector to Marks & Spencer, whose well-known recovery has already taken its shares from 264p to nearly 740p in three years. Elsewhere, rumours of a possible bid from banking giant HSBC boosted shares in insurer Prudential.
On the industrial front, paints and chemicals group Imperial Chemical Industries (another three-year growth story) has benefited from the attentions of US giant Dow Chemical and European chemicals combine Akzo Nobel. South African/American brewer SABMiller disappointed punters by denying ambitions to take over Scottish & Newcastle, Britain’s largest brewer, though S&N brought its own cheer to followers with a deal to brew Baltika, Russia’s best-selling beer, under licence in Britain.
Hedge funds and private equity groups at home and abroad think there is value to be had in several stockmarket areas at current levels. One US player, Apollo, was impelled to lift its offer for estate agent chain Countrywide, where another hedge fund, Polygon, has amassed 26 per cent, from 590p to 617p, partly in shares in the Rightmove group, valuing Countrywide at more than £1 billion, because of a potential rival bid in the form of a 3i-backed management buy-out.
Venerable investment trust group Foreign & Colonial (F&C), valued at £22 billion after rising 80 per cent in less than three years, stole the sector limelight when Carrousel Capital, the arbitrageur and fund management group headed by Bruno Sangle-Ferriere, announced it had built a small stake on the basis of F&C’s ‘discount and performance’. Carrousel, which recently disclosed a five per cent holding in the Witan investment trust group, lost an attempt to call the shots at Gartmore European, another large investment trust, but its action has focused attention on F&C.
Meanwhile, resources have continued to fascinate the market, with copper again hailed by pundits as being in long-term short supply, oil scoring from under-supply forecasts from the International Energy Agency, gold set to benefit from the Iran and other crises, and tin and lead also scoring. Uranium, highlighted here two months ago, has broken through the $100 per lb level as nuclear power’s rehabilitation gathers pace. This has helped shares in UraMin to breach £3 briefly before profit-taking. Soon-to-be-merged UrAsia Energy has also been in demand.
Sector giant, the Swiss-based Xstrata group, which has risen nearly fivefold in three years to almost £28, has caused a stir by selling aluminium businesses it bought only last year to a private equity group – Apollo again – for £581 million. Xstrata, whose recent buying spree has included nickel producer Lionore and Australia’s Gloucester Coal, will use the aluminium proceeds for more acquisitions.
Selling in May is no longer invariably the right course, though a market buoyed up by bid rumours could prove vulnerable to disappointments. Special situations and a selective approach are the most likely routes to profit.
Robert Tyerman is news editor of Growth Company Investor, the UK’s leading magazine for AIM and small-cap analysis.
http://www.whatinvestment.co.uk/shares/views/255323/market-view-may-2007.thtml