Goldsearch Finds Mary Kathleen, the Uranium Queen

–Who is Mary Kathleen and why are so many middle-aged men chasing after her? Mary Kathleen is actually a mine, discovered in northwestern Queensland in 1954, and by now she is probably pretty shabby an unkempt. But it’s what’s strewn about her that’s attracting so many hot-blooded suitors. The original Mary Kathleen mine, according to Robin Bromby in today’s Australian, is about halfway between Mt. Isa and Cloncurry in Queensland. It  “operated in two bursts, 1958-63 and 1975-82, producing a total of 8,882 tonnes of uranium,” for Britain’s Atomic Energy Authority.

–Atomic power is experiencing a resurgence, as Justice Litle explains in the essay below. For this reason, mining for atomic fuel (uranium) is experiencing its own resurgence. Justice edits the U.S.-based edition of Outstanding Investments. He takes a look at the blooming nuclear power industry’s chances of meeting the world’s growing demand for energy. None of it will happen without nuclear fuel, though. That means more uranium. And that brings us back to Ms. Mary Kathleen.

–The mere chance the more uranium might be lurking near the old mine has been a boon this week to shareholders of Goldsearch (ASX:GSE). The company saw its shares explode to the sky like a beautiful mushroom cloud earlier this week. It even took the unusual step yesterday of telling ASIC it knew of no reason why its shares were going bananas. Perhaps it’s because the company owns three properties south of the Mary Kathleen mine and east of Mt. Isa. Today, we see a frenzy in shares for Deep Yellow (ASX:DYL), another company with prospects in region.

–This may also explain why “Uranium and gold escape general rout,” according to Stephen Wyatt in today’s Financial Review. Gold has given back some of its gains in early trading today. But the strength of the bullish sentiment for both gold and uranium lies on the strength of bullish fundamental demand. In uranium’s case, it’s a question of growing demand and real constraints on supply. But just who is actually going to do the supplying here in Australia?

–“There are now more than 160 uranium juniors worldwide, with new and used projects in Australia, the Americas, Africa, and Asia,” Wyatt reports. “A number of analysts and especially uranium players, such as Paladin (TSE:PDN) founder John Borshoff, are tipping uranium to head towards US$100 a pound. In 1976, nominal prices broke over US$40 a pound. In real (today’s) price terms, adjusting for inflation, this translates into a price of US$120.”

–The little-known fact about the uranium bonanza ahead is that no one can open up a uranium mine anywhere else in Australia…yet. Unless and until state governments in Queensland, South Australia, and Western Australia decide to lift their bans on new mines, there are only three operating uranium mines in all Australia, Olympic Dam and Beverley in South Australia, and the Ranger Mine in the Northern Territories. BHP Billion (ASX:BHP) operates the massive Olympic Dam, which produces about 4,500 tonnes of uranium a year. Olympic, with 374,000 tonnes in uranium oxide reserves, has about 80 years of production at current production rates. Ranger is operated primarily by Rio Tinto (ASX: RIO).

–So why, you may be wondering, is there a land rush on in Queensland when no one can open a new mine in that state until the state government gives the green light? Queensland, after all, is home to 30 million tones of high quality black coal. That’s nearly half of all of Australia’s black coal reserves. Black coal, by the way, is typically higher in energy and lower in sulphur than brown coal (lignite, which China happens to have in abundance.)

–That explains why Australia is the largest exporter of sea-borne coal in the world. That rich black coal from Queensland, backed with millions of years of energy concentrated from the rays of the sun, makes its way by ship to Japan, Korea, and China, where it’s used to produce electricity (thermal coal) or help smelt iron ore (also from Australia) to make steel (coking coal.) With a lucrative domestic resource base in coal and iron ore, you have to wonder why Queensland’s government would be interested in opening up new uranium mines. And the answer is, it isn’t! At least not yet. Read below to see why that may change…

Dan Denning

Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

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Bill Higgins

Hi,Dan I like your work.Keep me posted.

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