First Uranium IPO Soars In Debut

Shares of First Uranium Corp., a developer of uranium and gold prospects in South Africa, rose 16 percent during their first day of trading on the Toronto Stock Exchange.

First Uranium rose C$1.12 to C$8.12 at 4:16 p.m. in Toronto, after earlier reaching C$8.39, giving the company a market value of about C$952 million ($829 million). The company, a unit of Johannesburg-based Simmer & Jack Mines Ltd., sold 29 million shares at C$7 each.

``The market is hot for anything uranium right now,'' said Brian Mok, an analyst at Research Capital Corp. in Toronto.

Uranium prices have risen more than sevenfold over the last five years as demand from investors and power station operators has grown. Uranium, the raw material in fuel for nuclear reactors, has risen on concern that new supplies of the radioactive metal may not rise fast enough.

First Uranium raised C$203 million with the initial share sale, the biggest in the Canadian market by a mining company since Saskatoon, Saskatchewan-based Cameco Corp. sold C$282 million of shares in Toronto-based Centerra Gold Inc. in 2004. Simmer will continue to own about 70 percent of First Uranium.

Simmer plans to use proceeds from share sale to repay debt and to fund First Uranium's development of the Ezulwini and Buffelsfontein uranium and gold projects in South Africa.

Uranium Rally

The price of uranium has risen 99 percent in the past year to $72 a pound this week, according to market assessments published Dec. 18 by Ux Consulting Co. of Roswell, Georgia. Prices were at $36.25 at the end of December 2005.

Sxr Uranium One Inc., another developer of uranium prospects in South Africa, today completed an offering of C$155.3 million of convertible unsecured subordinated debentures, boosting the amount Uranium One has raised this year to C$499 million, said Jason Neal, an investment banker at BMO Capital Markets in Toronto.

RBC Capital Markets, a unit of Canada's biggest bank, led a group of eight banks in the sale of First Uranium's shares, including Canaccord Capital Corp., National Bank Financial and GMP Securities.

The banks may sell another C$30.5 million of First Uranium shares to meet demand through a so-called overallotment option, valuing the share sale at C$233.5 million, RBC said.

Uranium Hits Record Levels

The price of uranium surged to a record $72 (U.S.) a pound, capping an extraordinary year for the radioactive metal which has now doubled over the past 12 months.

The spot price for the material used to fuel nuclear reactors jumped 9.9 per cent from a week earlier, according to Roswell, Georgia-based Ux Consulting Co.

The gains came after an auction last week of 260,000 pounds of uranium by Mestena Uranium LLC, a privately held producer based in Corpus Christi Texas.

Spot uranium prices have climbed from $36.25 a pound last January, to current levels as hedge funds and other financial investors have snapped up the commodity in anticipation of supply shortages amid increasing demand from energy producers.

In October, the world's largest uranium producer Cameco Inc. of Saskatoon, said it would delay production at its Cigar Lake Mine by at least a year, following a flood.

The mine was supposed to begin production in 2008 and eventually supply up to 10 per cent of the world's uranium needs.

Uranium related equities have soared this year in tandem with the rising spot prices. A Sprott Securities index of 37 uranium companies, consisting mostly of exploration firms or near-term producers, has gained an average of 182 per cent year to date.

First Uranium Corp. has filed a final prospectus for its $203-million initial public offering of shares with Canadian securities regulators.

A syndicate of underwriters, led by RBC Capital Markets, has agreed to buy 29 million shares at $7 each, the company said Thursday.

The underwriters have also been granted an over-allotment option to buy up to 4.35 million additional shares within 30 days after closing of the offering, which is expected Dec. 20.

The Toronto Stock Exchange has conditionally approved listing the stock under the symbol FIU.

The company also said Thursday it will acquire certain assets, including shares of First Uranium and Ezulwini Mining Co., from South Africa's Simmer & Jack Mines Ltd., concurrent with the IPO closing.

The assets pertain to the proposed Ezulwini and Buffelsfontein uranium and gold projects in South Africa.

The Ezulwini project will involve recommissioning an underground uranium and gold mining operation while the Buffelsfontein project will involve the construction of a tailings reprocessing facility.

After the reorganization and IPO, Simmer & Jack will hold a 69.8 per cent interest in First Uranium if the over-allotment option is not exercised.

Net proceeds of the offering are to be used primarily to fund development of the Ezulwini and Buffelsfontein projects. It will also allow First Uranium to repay debt incurred by Simmer & Jack on Ezulwini Mining's behalf.

A fourfold increase in the price of uranium in the past three years has led to a rush of new claims by uranium companies in the Western United States, according to a new survey by an environmental group that wants to inform the public of the potentially harmful consequences.

Mining claim data compiled by the Environmental Working Group, a research organization based in Washington, shows that in Colorado, Utah, Wyoming and New Mexico, the total claims rose from just over 2,000 in 2001 to about 18,000 in 2005.

In Arizona, a project manager for the Canadian mining concern Quaterra Resources, has filed 616 claims, many within a few miles of the Grand Canyon's north rim.

"There's a renaissance of people's attitudes toward nuclear energy as a viable, green, clean, clean-air type of energy source," said Paul Matysek, president of Energy Metals, based in Vancouver.

Matysek added that the increase in oil and natural gas prices, even though they have eased in recent months, had spurred a miniboom in the price of uranium.

"Three years ago it was $12 or $14" a pound, he said. "Today it's $65.50."

Matysek's company has signed a letter of intent to merge with High Plains Uranium, a company formed in New Brunswick, Canada, less than two years ago. High Plains, with headquarters in Cheyenne, Wyoming, has filed more than 2,250 claims.

All impediments to mining Australia's uranium resources should be removed, a parliamentary committee said Monday in the latest attack on national policies restricting sales of the radioactive fuel.

"All members are agreed that the present restrictions on uranium exploration and mining are illogical, inconsistent and anticompetitive," said Geoff Prosser, a lawmaker from the ruling Liberal Party and chairman of the committee that examined uranium issues.

"State policies preventing development of new uranium mines should be lifted and legislative restrictions on uranium mining should be repealed," he said in a statement.

The committee's report came two weeks after an expert task force set up by Prime Minister John Howard to examine a range of uranium issues recommended lifting restrictions on export and enrichment of the fuel to boost the multimillion-dollar nuclear industry and help reduce greenhouse gas emissions from fossil fuels.

Prosser's 10-member cross-party committee was asked to report on the strategic importance of Australia's uranium resources, which account for almost 40 percent of the world's known reserves.

Prosser said that when the inquiry was established in March last year, there was little discussion in Australia about uranium mining and even less about nuclear power.

"There is now a growing recognition that nuclear power makes a significant contribution to the mitigation of greenhouse gas emissions," he said.

"As a matter of energy justice, Australia shouldn't deny countries that wish to use our nuclear power in a responsible manner the benefits from doing so," he added.

Australian uranium production has been limited since 1983 by a "no new mines policy" established by the federal opposition Labor Party when it was in government. The Labor-governed states of Western Australia and Queensland also have bans on uranium mining and processing, and there is a national ban on building nuclear power stations.

Labor governments of four of Australia's six states -- Western Australia, New South Wales, Victoria and Queensland -- have indicated they do not intend to review their policies.

Australia, which supplies about 23 percent of the current world uranium market, imposes strict conditions on its sales to ensure that the fuel is not put to military use.

But sales are expected to soar with a recent agreement to supply China. Australia is also considering selling uranium to India despite New Delhi's refusal to sign the Nuclear Nonproliferation Treaty.

Zambia will not issue licences for mining uranium until it gets guidelines from the International Atomic Energy Agency (IAEA) despite the discovery of huge uranium deposits, the mining minister said on Wednesday.

"Nobody has been given a licence to mine uranium because we are looking at issues of storage and marketing. We are also waiting for guidelines from the International Atomic Energy (Agency)," Mines and Minerals Development Minister Kalombo Mwansa told journalists.

Officials and exploration firms have reported the discovery of major uranium deposits in in the mineral-rich southern African country in recent months.

Mwansa said firms had been given licences to explore uranium and that mining licences would only be awarded once guidelines were provided from the IAEA, the U.N. nuclear watchdog.

"The government is cautious because it does not want to raise controversy with the world's big nations on the mining of uranium and its subsequent sale," a senior official in the mines ministry said.

Mwansa said significant uranium deposits have been found around Lake Kariba in the southern province and at the Lumwana copper mine in northwestern province.

He told a mining conference in Lusaka that the state Geological Survey Department had preliminary data showing more uranium deposits in eastern Zambia and that exploration would be undertaken to determine the amount of the minerals.

The minister also said Zambian authorities had extended incentives awarded to copper and cobalt mines to other mining firms to explore and mine different base metals.

"The government has decided to extend all the tax incentives that apply to mining of copper and cobalt ...to all other base metals," Mwansa said.

Mwansa said firms mining base metals in Zambia would no longer be required to pay duty on imported mining equipment which is normally charged at 25 percent, and that they would not be compelled to pay 17.5 percent value added tax for a period of five years for pre-production expenditure.

The firms also will be exempted from paying tax on dividends to shareholders and tax on interest payments to financial lending institutions which provide financing to the mining firms.