Thursday, June 01, 2006

AGM Strathmore Minerals Corp May 29/06

AGM Strathmore Minerals Corp (STM) (Disclaimer : subject to further editing)

Met with Steve Khan, director, Bob Hemmerling, secretary of Strathmore and about 8-10 other shareholders at a large dining table at the Metropolitan Hotel. Everyone else from the company was out in the field.

An AGM at the Met conjured up visions of a nice breakfast spread. Then reality intruded. Only muffins, coffee and juice were available. This certainly wasn’t anything like a meal at Diva at the Met.

The meat was in the informal Q & A with Mr Khan. He had lots of good insight to share.

First things first – I opened up the press kit. The first article I saw was a Stock Interview.com headline that asked the question ‘uranium to head north of $500/pound?’

Sprott analyst Kevin Bambrough made a hypothetical case for $500 spot uranium, under an extraordinary emergency supply crunch, by answering the question: ‘How much would people pay before they shut it (a nuclear plant) down if there is a shortage of uranium?’ His point was that the cost of uranium in the nuclear fuel cycle is minimal and would not register any concern on the man-in-the-streets’ radar until uranium gets to such a price as $500.

The second article was a Washington Post article ’Going Nuclear’ written by former Greenpeace co-founder Patrick Moore. Leading greens are now embracing nuclear. You can already see the pro-nuclear ads on ROB-TV, trying to educate the public about nuclear energy.

Updates –

STM will spend between $6-8M in expenditures this year.

Dieter Lake, Quebec - Drill program to begin June 2006. Updated 43-101 compliant resource calculation to be completed soon. 90% done but the geologist writing it is out working in the field. Basically, they need to be in the office to finish writing it up.

Church Rock, New Mexico – continue permitting process.
Roca Honda, New Mexico – 43-101 compliant resource calculation completed. Prefeasibility studies underway. Permit application to follow.

The New Mexico projects are a production profile play – application is a 3 year process
-there are a dozen sub-contractors there already, but they have to go through studies for water, archaeology, reclamation, environmental, stream settlement. Then it’s another 3 years for the submission process to the NRC & EPA.

This process could be expedited with
1) a greater push from President Bush for alternative energy sources and
2) URX (?-nothing in google) has passed through hurdle already. It took 6 years but precedent is set and there are now public records of the submission process. Companies following URX might get a more positive reception.

Production possible in 2011.

Wyoming – lots of data with a few junior geologists going through it. (President of STM, Mr. Miller was a member of the Wyoming legislature.)

Waterbury Lake, Saskatchewan – 3000 meter drill program underway. Results expected mid-summer 2006.

Davy Lake, Saskatchewan – Summer ground geophysics program to identify drill targets.
(Dr. Franz Dahlkamp, a professor at the University of Bonn, identified this area as potential target.)

Other Athabasca properties – complete airborne geophysical programs on Western Athabasca properties; JV non-core properties.

Other insights

Mr Khan said that utilities played a big role in the late 70s. In the near future, he foresees companies (ie Japanese trading companies) that sell to the utilities might be making deals with companies like STM to secure long-term supply of U. Apparently, a Japanese trading co has such a deal with URX.

I asked if there was an equally onerous oversight process in Canada. Mr Khan answered yes and no. Saskatchewan is very pro-mining, Feds also, but what could hold back things would be environmental and maybe, aboriginal issues.

Sprott Asset Management holds 19.9% of STM. Other European and hedge funds are involved. Other institutional holders include Mavrix Fund Management, International Value Management (IVM) BV, BluMont Capital Corp, Raiffeisenbank Kleinwalsertal AG and AFIMa. (Aside – What is the Canada Alt Monthly Report? It was the source for Sprott’s Jan 05 holdings).

There seems to be a lot on the plate for STM, but they appear to have the management and geological experience to pull it off. There may now be over 200 uranium companies but the barrier to entry is high as there is a lack of qualified geologists. The bad uranium years bought its toll - there are not that many geologists graduating. The old pros are locked away with plays like STM but newbies face a large learning curve.

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