www.forteenergy.com.au
Forte Energy NL is an Australian-based minerals company focused on the exploration, evaluation and development of uranium and energy-related projects worldwide.
The Company changed its name from Murchison United NL on 25 November 2008.
Forte Energy has secured an extensive portfolio of uranium projects in the Republics of Guinea and Mauritania in West Africa, where it is pursuing intensive exploration programs. The Company also holds copper and cobalt interests in Queensland and Western Australia, Australia.
Forte Energy: Aiming to double uranium resources with Mauritania drilling
Concern about the impact of the Fukushima disaster in Japan on the future of nuclear power has weighed heavily on uranium miners and explorers this year.
The price of uranium has tumbled as a raft of countries led by Germany backtracked on previous commitments to nuclear power.
Africa-focused Forte Energy has seen its share price affected despite solid progress on its exploration activity over the past year.
The group’s prospects are in Mauritania, where it has a huge 8,600 square km licence property, and Guinea where its acreage is about 870 square km.
In June, Forte announced an initial JORC inferred resource for the A238 prospect in Mauritania of 14.9mlbs uranium to add to inferred resources of 11.6mlbs currently in Guinea.
A recently launched drilling campaign over the next nine months will aim to double those reserves and be the key for the next nine months.
The main focus will be the acreage in Mauritania, where, with two new licences recently acquired, the cumulative strike length for possible targets is 140km, which brokers suggest would be enough to supply a processing plant for many years if the drilling is successful.
Brokers are hopeful that by next June, the company will be able upgrade resources at A238 in Mauritania, issue a maiden resource estimate at the A284 prospect to the north of Forte’s current acreage in the country and also report a possible upgrade in Guinea.
Broker Canaccord recently suggested that having targeted a possible upgrade to resources to between 50-70mlbs, management’s target is now for 57mlbs compared to the current inferred resources of about 28mlbs.
Initial drilling results have been encouraging, the company said recently. Out of a total of 23 holes drilled, 19 identified minerals near to the surface and down to depths of over 200m.
Mark Reilly, managing director of Forte Energy, added that the recent drilling had also improved the company’s understanding of the geology of the A238 licence and that “the strategy for Forte to increase substantially its resources in the short term remains firmly on track”.
Forte is still in the early stages of its development and that means it is still spending heavily on defining the potential of its exploration acreage.
The company raised about US$15 million in February to fund the latest drilling programme. It still had about US$7 million left at the end of September, but to move the projects forward further analysts expect it to raise more funds during 2012.
Canaccord estimates that to produce a full feasibility study for Mauritania, Forte will need to raise a further US30 million, which it expects to be in stages with a tranche of US$15 million likely in the middle of next year.
Some of this could be raised through sales of stakes in the main prospects, but the funding could also involve an equity issue, the broker suggests. French nuclear specialist Areva is Forte’s largest shareholder with a 9.3 per cent stake.
What would help Forte would be an improvement in the uranium price, which has dropped from US$70/lb to about US$52/lb since the start of 2011 largely due to the uncertainty sparked by the Fukushima accident.
The incident prompted Germany to bring forward a phasing out of nuclear power, while China suspended approvals for new plants.
Even so, there are still over 60 new nuclear power stations under construction, while more than 500 more have been proposed according to trade body, the World Nuclear Association. Most of the new projects are centred on non-OECD countries.
Consolidation moves among the large uranium groups – such as the battle between Rio Tinto and Cameco for Canadian group Hathor - suggests the large producers themselves still expect the demand for uranium to be there over the long term.
Canaccord estimates that the price could recover next year to US 55/lb, before recovering to US$60/lb in 2013 and 2014. With no increase in resources and with uranium at 55/lb, the broker values Forte at 4.1p per share, but has a share price target of 6.4p, which includes some upside from the exploration work currently underway.
