Laramide Well Positioned in Uranium Boom

Drill results from Laramide Resources’ (LAM-T, LMRXF-O) La Jara Mesa uranium property, in New Mexico, provided another shot in the arm to the share price of the Toronto-based company at the end of March.

After beginning the year with a private placement that raised $23 million at a share price of $7.50, Laramide has seen its shares more than double; they recently traded at $15.38 apiece.

Even in an environment where surging uranium prices are lifting uranium companies with little in their asset portfolio, Laramide’s growth has been impressive.

While much of the company’s identity on the Street continues to be tied to its Westmoreland project in Queensland, Australia, it has managed to further distinguish itself with strong results from New Mexico and the announcement of a gold property acquisition that it plans to spin off with other assets into a gold pure-play.

On April 3, the company announced it was acquiring the Thunder Lake gold properties in northwestern Ontario from a joint venture of Corona Gold (CRG-T, CRGAF-O) and Teck Cominco (TCK.B-T, TCK-N). It plans to create the spinoff company, which will be called NewGoldCo., later this year.

By jettisoning its gold projects, Laramide will solidify itself as a uranium company, and one with a flagship property — Westmoreland — that has an indicated resource of 15.6 million lbs. uranium contained in 8 million tonnes grading 0.088% U3O8, and an inferred resource of 32.9 million lbs. uranium in 16 million tonnes grading 0.093% U3O8.

The project, however, has been held up by a moratorium on uranium mining in Australia. But that might soon change. Recent news that the premier of Queensland had reversed his anti-uranium position had companies with assets in the state beaming. And while the premier has since backslid on his comments, the prospect for mining uranium in Queensland is still believed to be improving.

As for its La Jara Mesa property, the company says it believes New Mexico is due for a “major revival” in uranium production.

It cites a June 2004 report from the U.S. Energy Information Administration (EIA) that estimated reserves in the state at 341 million lbs. U3O8, assuming forward costs of up to $50 per lb. U3O8.

In mid-February, Laramide finished a 2,000-metre, 9-hole drill program at La Jara Mesa. Results from seven of the holes have been reported with highlights including 4 metres of 0.719% U3O8 from one hole and 4.4 metres of 0.513% U3O8 from another. A 0.05% U3O8 cutoff was used.

Drilling was focused on what is known as the Dena deposit — the largest of five deposits delineated by drilling in the 1980s.

Laramide acquired the property in 2005 from Homestake Mining — since acquired by Barrick Gold (ABX-T, ABX-N) — along with its entire uranium portfolio for US$3.75 million. Laramide must pay a royalty of US25 per lb. of uranium to Barrick.

As part of the purchase, Laramide also acquired the Los Ochos, Melrich and La Sal properties — all of which are in either New Mexico or Utah.

La Jara Mesa is described as roughly 763 metres long and 460 metres wide and is confined primarily to the lower two sands of the Poison Canyon member of the Jurassic-age Morison formation.

The deposit dips to the south-southeast with the base of the Poison Canyon sand lying 200 metres below surface at the north end of the resource area and at 210 metres depth at the south end.

Laramide says drill hole locations were not chosen to twin previously drilled holes but rather to confirm the general trend of previously identified resource zones.

La Jara Mesa has a measured and indicated resource of 7.2 million lbs. uranium contained in 1.5 million tonnes grading 0.23% U3O8, and an additional inferred resource of 3.2 million lbs. uranium contained in nearly 800,000 tonnes grading 0.2% U3O8.

Laramide’s vice-president of exploration, Peter Mullens, has said the company is exploring the possibility of a new, regional mill facility in the Grant’s District.

“We believe the potential of New Mexico may be underappreciated by the market given that from 1959 through 1981, conventional production in New Mexico ranged from nine to nineteen million pounds of uranium per year, averaging nearly thirteen million pounds per year,” Mullens said in a prepared statement.

Laramide has roughly 54 million shares outstanding.