UrAsia secures contracts for Kazakhstani uranium

UrAsia Energy (UUU-V, UUU-L) announced five new agreements for uranium concentrates from its Akdala uranium mine in the Republic of Kazakhstan — and then saw its shares drop.

In Toronto on Nov. 9 UrAsia shares were off 3 to $3.32 on roughly 2.4 million shares.

But Sally Eyre, vice president of corporate affairs at UrAsia, sees no correlation between the issuance of the news and the share price movement.

“We’ve had a phenomenal run over the past two to three weeks,” Eyre says. “Perhaps we’re seeing some profit taking.”

On Nov. 6 UrAsia shares had gained roughly 40% since the beginning of October when they were trading for around $2.40 a share.

In keeping with industry practices the company did not disclose full details of the new contracts but it did say they are all with North American utilities and are for roughly 5.75 million lbs of U3O8 and for delivery between 2007 and 2016.

Additionally UrAsia said the contracts range from three to nine years, and from 600,000 lbs. U3O8 to roughly 2.2 million lbs. U3O8. The company says the contracts all have market related pricing terms, and that it remains an unhedged producer.

Eyre described the current uranium market as a “sellers market” and said the flood at Cameco‘s (CCO-T, CCJ-N) Cigar Lake drove home the point that there is a squeeze on supply.

The Cigar Lake incident came on top of an acknowledged gap between mined uranium and nuclear power plant requirements that has driven uranium prices to ever new heights. On Nov. 3 the spot price for uranium was at US$60.25 a lb.

UrAsia says all of Akdala’s production for 2006 has been sold and that the mine is on track to produce 2.6 million lbs. U3O8 this year.

Founded by renowned Canadian-financier Frank Giustra, UrAsia became only the fourth publicly traded uranium producer in the world when it was listed on the TSX Venture Exchange in November of 2005.

It did so by using some of the $500 million it raised a Venture Exchange record — to acquire a 70% interest in the Betpak Dala Joint Venture back in November of 2005. Betpak Dala has a 100% interest in Akdala.

The move pushed UrAsia ahead of the multitude of other uranium juniors in that it immediately became a producer of 1.4 million lbs of U308. The company has a stated target of producing 10 million lbs. by 2015.

Akdala has a reserve of roughly 13 million tonnes, grading 0.057% uranium for 19.4 million lbs of U3O8. It has an additional indicated resource of nearly 14.5 million tonnes, grading 0.057% uranium for roughly 21.4 million lbs U3O8.

UrAsia says its focus is on developing low-cost, in-situ leach uranium projects in Central Asia. The company has three uranium projects in Kazakhstan, as well as exploration projects in Kyrgyzstan. Goldcorp (G-T, GG-N) president and chief executive, Ian Telfer, sits as the company’s non executive chairman.