Strathmore Minerals: sitting comfortably in New Mexico and Wyoming

Strathmore Minerals (TSX-V:STM / OTC:STHJF) has been very quietly achieving a number of corporate milestones in a uranium market that seems almost forgotten since the heady days of 2007 when the spot uranium price continued its parabolic rise to nearly US $140  per pound, only to descend rapidly to the current US $42/lb level.

Last month, the Company closed the sale of its Pine Tree-Reno Creek Properties to Bayswater Uranium Corporation for US $30 million value, including US $20 million in cash and stock. Strathmore retains a 5% production royalty. In January, the Company closed a C $8.3 million financing that saw Swiss private equity firm, PALA Investments become the second largest shareholder to Sprott Asset Management, by acquiring an 8.3% stake in the Company.

These transactions have significantly strengthened Strathmore’s balance sheet, and will enable the Company to continue moving its core Roca Honda, New Mexico and Gas Hills, Wyoming projects forward. A major milestone was also completed last fall when the Roca Honda Mine Permit application was submitted on schedule and under budget. This application was deemed “administratively complete” by both federal and state regulatory agencies, and is now undergoing technical review. Roca Honda is one of the largest proposed uranium mines in the United States in the past thirty years.

These accomplishments should not be of any surprise. Strathmore is led by long-time uranium expert David Miller, who along with former institutional investment specialist Steven Khan make a formidable executive team. Add to that a technical team with over 200 years uranium exploration, development and mining experience and Strathmore has the talent needed to advance its business plan.

Background 

Strathmore has been a uranium company since 1997, initiating its uranium acquisition strategy when the uranium price was between US $7-15 per lb (currently $42 per lb).  The Company was successful in acquiring advanced uranium projects in the two largest historical uranium producing regions in the United States: the Gas Hills Uranium District in Wyoming and the Grants Mineral District in New Mexico. 

In 2005, Strathmore opened an operations office in Riverton, Wyoming and a government, regulatory and environmental affairs office in Santa Fe, New Mexico. In 2006, Strathmore began permitting its flagship Roca Honda uranium development project in New Mexico, followed by a second core project in the Gas Hills, Wyoming, late in 2007. 

Roca Honda is located in the Grant's Mineral District in New Mexico, and it yielded over 300 million lbs of cumulative uranium production and was the largest producing uranium district in the world. The Gas Hills Uranium District was the second largest uranium producing region in the United States with total production exceeding 100 million pounds.

Roca Honda, New Mexico

The Roca Honda uranium property is located in the Grants Mineral District in New Mexico, which produced over 300 million lbs of uranium from the 1950s through to the 1980s.  The property comprises 63 unpatented mining claims located on land owned by the Federal government and administered by the US Bureau of Land Management (BLM), and one State of New Mexico lease.  The combined land package is 745 hectares (1,840 acres) in size. In 2007 the project was Joint Ventured with Sumitomo Corp of Japan (Roca Honda Resources LLC: Strathmore 60%/Sumitomo 40%).

Source: Strathmore Minerals Website

Strathmore believes that Roca Honda is one of the best and highest grade undeveloped uranium deposits in the United States.  For 2010, the JV has commissioned Scott Wilson Roscoe Postle Associates to prepare a Bankable Feasibility Study (BFS) which will also be accompanied by a BFS of a mill processing and tailing facilities. On-going permitting activities will include baseline environmental monitoring and sampling, metallurgical studies, mine planning, reclamation planning, and mill design studies.

Gas Hills, Wyoming

Historically, the Gas Hills Uranium District was the second largest uranium producing region in the United States during the last uranium cycle, with total production exceeding 100 million pounds.  The majority of the production in this area was from conventional open-pit mining.  The Gas Hills is located 45 miles east of Riverton Wyoming, home of the Company's US exploration and development office.  John DeJoia, Sr. VP New Mexico Operations, Jim Crouch, VP Wyoming Operations, and Tom Powell, Strathmore's Senior Landman, all have extensive experience in mining management in the Gas Hills region.

Strathmore’s land holdings now total more than 33,000 acres (13,000+ Ha).  Permitting is continuing in 2010. To date, over one year of water quality and baseline environmental data has been collected, in addition to cultural (archeology), floral-faunal, meteorological and air sampling studies. Engineering designs of the planned open pits are being refined and milling options are under review.

Strathmore is reviewing exploration plans for the highly prospective, unexplored portion of the Gas Hills known as "Beaver Rim" which is located south of the designed open pit deposits.  Historical drill logs show indications of up to 5 uranium roll fronts lying beneath the Company's claims, which total ~16,000 acres.

Source: Strathmore Minerals Website

Financial Highlights

With the recent closings of both the equity financing and Pine Tree-Reno Creek property sale, Strathmore now has approximately C $29 million in working capital with no debt.  As a result the Company is well positioned for the future and will use the proceeds for the ongoing advancement of the Roca Honda and Gas Hills development projects and general working capital.

Uranium Outlook for the Future

Speaking at a meeting of miners and investors in Hong Kong in March, some industry experts claimed prices could jump to $75-100/lb due to rising demand for nuclear fuel by China, India, and South Korea.

The industry is expected to see some hyper activity because utilities will discover increasing demand for electricity amidst rapid growth globally for new nuclear power plants. There are 436 reactors operating worldwide with 56 under construction and four times that number in the planning stage.

Other analysts believe that the current uranium price is too low to stimulate future supplies necessary to cover the new reactor build-out. 

Despite the current weak uranium market, Strathmore has reached a number of corporate milestones by focusing on its long-term development strategy. While higher uranium prices are necessary to stimulate additional development, Strathmore is positioning itself to achieve its ultimate goal of becoming a future leading uranium producer in the United States.