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Strathmore Minerals

Strathmore fine tunes focus to becoming a near term uranium producer

Strathmore Minerals Corp [TSX.V-STM] is a Canadian-based resource company that was one of the early players in the Uranium industry. Having acquired their first property in 1996, the company would go on to amass a wealth of assets in Canada, Peru, and the United States over the next ten years. However, by early 2007 they found that analysts did not assign their unexplored projects a value when establishing a target price for the company’s shares.

In an attempt to unlock shareholder value, CEO David Miller decided to narrow the company’s focus. Spinning off their properties in Canada and Peru, Miller created Fission Energy in June 2007.

Taking Strathmore in a new direction, Miller’s goal is to make the company a leading Uranium producer in the United States. To that end, the company has projects in Wyoming, New Mexico, and South Dakota, which are all areas well known for Uranium production. In fact, Strathmore is now the leading land owner in Wyoming’s number one Uranium district (and the second largest historical producing district in the country): the Gas Hills region.

In the interest of achieving production as quickly as possible, the assets that Miller’s team has acquired all have known Uranium deposits with historical “drill indicated” Uranium resources. Their lead project is in the Gas Hills region of Wyoming and they have ten other properties in their production pipeline. The plan is to bring their first projects into production by 2010.

Strategically and politically, targeting the US market makes sense. The push for “energy independence” has become strong in America, as a reliance on foreign oil is constantly bemoaned in the media. As alternatives to coal-burning plants are sought, nuclear power will continue to gain prominence and the demand for Uranium will only increase. In fact, the US is consuming six times the amount of Uranium that it did twenty five years ago. Combined with the collapse in the price of Uranium in the late 1980’s, the Uranium Supply and Consumption equation in the United States has inverted from net producer in 1980 to net consumer in 2005. However, with current long term price estimates ranging from US$90/lb to US$105/lb and as the push to achieve energy independence takes hold, Strathmore is strategically positioned to help reverse that trend… and to do it profitably.

Historically, the Gas Hills Uranium District yielded production of about 100 million pounds. Current estimates (Measured, Indicated, Inferred, and Demonstrated) are 14.4MM lbs of Uranium with grades varying from 0.05% to 0.21%. Currently in the permitting stage, the priority is to bring these sites into production by 2010, utilizing all three mining methods (open pit, underground, and in-situ).

The Roca Honda project is located in the Grant’s Mineral Belt in New Mexico. Historically, it yielded over 300 million lbs of Uranium and was the largest producing district in the world at the time. Today it boats a 43-101 Measured & Indicated resource of 17.5MM lbs and an Inferred resource of 15.8MM lbs. With a feasibility study under way, the plan is to bring Roca Honda into production by 2013. There were two significant developments for this property in 2007. The first was the discovery of a new mineralized zone (9 feet with a grading of 0.56%) in September 2007 and the signing of a Joint Venture with Sumitomo Corp of Japan in July 2007. Under the terms of the 60/40 Joint Venture, Sumitomo contributed US$1MM to Strathmore and will pay 40% of the costs of the feasibility study that is being undertaken. Based on the results of the study, Sumitomo will contribute up to US$50MM in development costs of the Roca Honda mine.

On the Western side of the Grants Mineral Belt is the company’s Church Rock property. With historical production of 16MM lbs, previous operators were considering the feasibility and amenability of in-situ extraction of the deposits. With a 100% ownership position in this property, the plan is to bring this site into production in early 2014. Based on the NI 43-101 the estimates are a resource of 11.8MM lbs Measured & Indicated and 3.5MM lbs inferred of Uranium.

Given the industry’s volatility, it is difficult to get a truly seasoned team of Uranium experts. Strathmore has been uniquely fortunate in this regard. In terms of exploration, permitting & Feasibility, and mining experience their team members bring over 200 years of combined experience to the company.

David Miller has over twenty-five years experience in the exploration and acquisition of Uranium properties and is an elected member of the Wyoming Legislature (with committee assignments with Minerals and the Energy council). Dieter Krewedl, a Director of the company, has twenty three years with Pathfinder Mines Corporation, a subsidiary of Cogema, and he presently serves as the President of the Geological Society of Nevada. Mr. Krewedl was instrumental in the discover of the Green Mountain Uranium deposit in Wyoming, high grade Uranium Breccia Pipe deposits in Arizona, and deposits in the Grants, New Mexico mineral belt. Ray Larsen, also a Director, was the founder, chairman, and CEO of Uranium Resources Inc for seventeen years. His company was one of the few to survive the severe downturn in the industry, no small feat.

If you need further evidence of the strength of this team, then having a marquee industry investor take a significant position in your stock has to be seen as a vote of confidence in management. In this industry, there is no name better known than Sprott Asset Management, who has maintained about a 19% share of the company.

Strathmore will continue to consider Joint Ventures for non-core properties and look to further develop their relationship with Sumitomo. As they rush their assets to production, they will also look to make an application to get on Senior Exchanges. It would appear that big things are in store for David Miller and Strathmore.

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