After nearly doubling last year, the price of uranium appears poised to continue its bull run in 2007 as demand for the radioactive fuel continues to outstrip supply, analysts say.

"It is a commodity that has for years been under a lot of pressure from excess supply and now the seeds have been sown and we're beginning to see the flip side of that," said RBC Capital Markets analyst Adam Schatzker, who has forecast the price will average US$100 per pound in 2007.

"There is not a lot of mine production. The inventories that were being sold into the market are disappearing and we're actually in a supply-demand deficit."

Though hedge funds and other speculators are beginning to move into the uranium market, he said the biggest driver to the recent increase in price is a shortfall in supply and growing demand.

New nuclear power plants are being built in China and other parts of the world, while few new major deposits have been developed, leading to demand that is 40 per cent ahead of current supply.

For years the price of uranium removed the incentive to spend the money building any new production or searching for new deposits. With governments selling their inventories the markets were flooded with cheap uranium and there was no need to dig up new deposits.

But those inventories are depleting and uranium users still need the fuel for their reactors.

The price of uranium averaged US$28.15 per pound in 2005 and jumped to and average of $48.10 per pound in 2006. However the spot price for the radioactive metal was a whopping US$72 per pound at the end of the year.

Scotiabank commodity specialist Patricia Mohr has suggested that the current upswing in uranium prices is a "secular" change in global energy markets, due to the price of oil and that nuclear power generation emits virtually no greenhouse gases.

"While exploration activity has surged for uranium - across Canada, Australia, Africa and in Kazakhstan - there has been little improvement in mine production," Mohr wrote in a recent report forecasting an average price of US$80 in 2007, ending the year close to $90.

She suggested mine production gains this year will be limited as Cameco (TSX:CCO) and Areva will likely boost output in Kazakhstan, the Dominion project will start up in South Africa and Smith Ranch may be expanded in the United States.

The shortfall in supply was made worse when Saskatoon-based Cameco, the world's biggest uranium producer, reported flooding at its Cigar Lake mine in northern Saskatchewan, a project it had hoped to bring into production in 2008.

Construction at the deposit, which has proven and probable reserves of more than 232 million pounds of uranium at an average grade of 19 per cent, began in January 2005, but came to a halt last year after a flood that pushed back completion by at least a year.

Though the company has started round-the-clock work drilling holes to the source of the water inflow so it can pump in concrete, it is not known when the mine will actually be able to come into production.

Some market watchers have speculated that the Cigar Lake mine may never begin commercial production.

Schatzker said the flood at the mine that is expected to produce 18 million pounds a year when it comes does come into production, had a "fundamental impact on the market."

"The range of expectations of where that might go is all over the place because really a lack of information and a lack of clarity," he said.

But even with the trouble, Salman Partners analyst Raymond Goldie still rated Cameco a top pick for the year.

"We believe that investors have been overly concerned about the link between oil prices and uranium prices and about the flood at Cameco's Cigar Lake uranium project," said Goldie, who has a C$55.95 12-month price target on the stock.

"However, as investors realize that what Cameco loses at Cigar Lake on volume, it more than makes up on price, Cameco's share price continues to recover."

Investors have been flocking to uranium stocks, particularly those of junior companies with a lower stock price.

For example, Paladin Resources Ltd. (TSX:PDN), a small Australian miner that trades on the TSX and has uranium properties in South Africa, has been a top trading stock for several weeks on the Canadian markets.

SxR Uranium One Inc. (TSX:SXR), a Toronto-based resources company, has also been a popular investment as has been Denison Mines Corp. (TSX:DML), an intermediate uranium producer, with mining assets in the Athabasca Basin of Saskatchewan, and the southwestern U.S. as well as exploration properties in the U.S., Canada and Mongolia.

Investors have been drawn to Denison because the company owns parts of two of the four uranium mills operating in North America today, giving the company a diversified mining asset base as well as milling infrastructure.

The Toronto company recently got C$100 million in financing to back its bid to acquire OmegaCorp Ltd., an Australian-traded miner with uranium projects in southern Africa, including the advanced stage Kariba Project in Zambia.

Energy Metals Corp., an advanced uranium exploration company, is rated "buy" by Brian Mok, an analyst with Research Capital Corp.

The shares closed yesterday at $10.75, up 65 cents on the S&P/TSX. Mr. Mok initiated coverage of the company with a 12-month share price target of $13.

Energy Metals is developing uranium properties in Texas and in the Powder River Basin and Great Divide Basin in Wyoming. It also holds properties in Colorado, Utah, Nevada, Oregon and Arizona.

During the past 12 months, Energy Metals has acquired two companies and it is in the process of acquiring a third as part of its plan to "accelerate the pace towards production," Mr. Mok said. The company's uranium production could reach five million pounds a year by 2012, according to his report. Uranium recently traded at $72 (U.S.) a pound.

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.