Editor’s Picks: Top news of the week (February 16, 2007)

Named Uranium One, the new company will boast a market capitalization of US$5 billion at today’s prices and an excellent production-growth profile.

With uranium prices not even close to peaking, this deal’s a winner. It creates a perfect investment vehicle for larger funds, and nicely spreads out various risks by combining UrAsia’s operating and soon-to-be-operating in-situ-leach uranium mines in politically dodgy Kazakhstan with SXR’s two advanced uranium projects, the underground Dominion mine in South Africa and the Honeymoon ISL project in New South Wales.

Under the Uranium One banner, management hopes to ramp up production from its current small base to 11 million lbs. U3O8 by 2012, representing roughly half of the current output of Cameco, which is the world’s largest uranium producer.

While some callers fretted over the takeover premium and the political risk of Kazakhstan during Monday’s conference call, SXR shares started to rebound on Wednesday and closed Friday near their all-time high.

Cumberland’s chief asset is its 100% interest in the Meadowbank open-pit gold mine, now under construction 70 km north of Baker Lake, Nunavut, and host to 2.9 million oz. of reserves plus plenty of exploration upside.

This is another inspired deal that moves Meadowbank from weak to strong hands, and it’s a perfect fit for Agnico and its technical team, who have become experts at building substantial gold mines in harsh northern climes in First World countries.

In a unique twist, Agnico-Eagle managers once again showed their faith that gold prices are going much higher by having the gumption to spend US$15.9 million the day before the Cumberland bid to effectively close out Cumberland’s gold hedge position.

While it will employ local aboriginal workers as much as possible, Agnico will build and operate Meadowbank using fly-in, fly-own technical support from its flagship LaRonde mine in Quebec’s Abitibi region, modeling itself after Falconbridge’s construction and operation of its Raglan nickel mine in northernmost Quebec, which has used fly-in, fly-out support out of Rouyn-Noranda.

And with continued substantial cash flow coming from LaRonde, Agnico says it won’t require any external financing to complete construction of Meadowbank.

But stay tuned for more good news: Agnico-Eagle’s fourth-quarter results will be out on Wed., Feb. 21, followed by a conference call the next day.

Kabanga now has an indicated resource of 9.7 million tonnes grading 2.37% nickel, 0.32% copper, 0.19% cobalt, 0.04 gram gold per tonne, 0.07 gram platinum per tonne, 0.09 gram palladium per tonne and 1.04 grams silver per tonne. An additional 36.3 million tonnes grading 2.8% nickel plus similar by-product grades lie in the inferred category.

This compares with the previous, global resource estimate of 26.4 million tonnes of inferred material grading 2.6% nickel.

(For comparison, prior to mining, the reserves of the Voisey’s Bay Ovoid deposit in Labrador totalled 32 million tonnes of 2.82% nickel, 1.54% copper, and 0.14% cobalt.)

While high-grade, Kabanga had some significant drawbacks at that time: nickel prices had fallen through the floor; the infrastructure in northwestern Tanzania was minimal; and it was very close to the Democratic Republic of the Congo, which was in the mired in a vicious civil war that often spilled across its borders.

What a difference a few years make: today, nickel has more than quintupled in price, there is basic infrastructure in western Tanzania thanks to all the new gold mines, and the DRCs civil war has ended.

The partners have envisioned an underground mine that would annually handle 2 million tonnes of ore and produce up to 35,000 tonnes nickel-in-concentrate.

Flaherty and her late husband Robert ran a classic desert-dirt scam through Phoenix, which traded on the over-the-counter market in the United States back in the mid-1990s.

Phoenix’s property, they said, held volcanic cinder deposits — what they termed “vocanic refractory ore” — from which platinum-group elements, gold and silver could be extracted using proprietary methods.

In 1998, the Securities and Exchange Commission got a judgment against Robert Flaherty enjoining him and his company from making false statements to sell securities.

Nothing daunted, the Flahertys continued their con game even after scientists from the Department of the Interior got an administrative judgment that Phoenix Metals’ mill site property, near Searchlight, Nev., should be returned to the Federal government, on the grounds that the operation did not extract precious metals from the “ore.”

Robert died in 2001, but Diana kept up appearances for another year or so, assisted by another scam artist, Michael Gardiner. Federal authorities caught up with the pair in March 2004.

When it comes to technical frauds of this kind — and there are plenty more where Phoenix came from — the wheels of justice turn slowly.

Diana Flaherty is, at last, going away for a long-running fraud, and will come out to three more years of supervised release.

She has to disgorge US$5.7 million and pay the same amount again in restitution. Gardiner is awaiting sentence.

It’s 18 years since Gord Bacon, Gary Hawthorn and George Poling longed, in a paper published in the CIM Bulletin, for assay scammers to end up behind bars. Here’s a cheer to the U.S. Attorney’s Office in Las Vegas for finally doing it.

For those of you who enjoy digging a little deeper into the muck, take a look at the charges in 2004, the conviction in 2006 and the sentencing on Monday.