It is no secret that the appeal to utilise nuclear energy in place of so-called “dirty fuels” which produce CO2 is becoming more and more attractive particularly in light of recent moves to lower the world’s global carbon footprint. In the U.S alone the Electric Power Research Institute reported that as many as 40 new nuclear reactors could be built over the next 20 years. These moves are being echoed elsewhere with the World Nuclear Association recently announcing that it expects the number of nuclear reactors to increase by around 30% by 2020 owing to demand from developing nations such as China and India. These figures will therefore be welcome news to Forte Energy (ASX & AIM: FTE), an Australian based exploration company with an extensive portfolio of uranium projects in West Africa.

The company is currently going through an exciting and equally busy period, having recently announced a JORC-compliant Resource of 17.7 million tonnes (Mt) at 296 parts per million (ppm) of U308 for a total of 11.6 million pounds (Mlbs) of U3O8 from their Firawa project based in the Republic of Guinea. This is the company’s first uranium resource and management firmly believe that there will be further upgrades to this figure over the next 6 months based on:

● Drilling at Firawa was mainly limited to the central 2.5km length of a 5km-long anomaly thus the current figure is based on only half of the deposit. Vertically, the drilling took place at a maximum depth of only 90m though the deposit remains open at depth and in length. Drilling has stopped for the wet season though is expected to start again anytime now thus giving much further scope for an increase to the original figure.

● The resource was calculated using an assumed density of only 2.2 t/m3 (tonnes per cubic metre) despite some samples returning measured densities in excess of 3t/m3 - again increasing the potential of the figure being increased.

As well as Firawa, Forte have two other projects in the Republic of Guinea - Bohoduo and Sesse - though both are in very preliminary stages of exploration.

The companies other areas of uranium exploration lie in the Republic of Mauritania in which it has been granted 9 exploration licenses covering a total area of nearly 12,000 sq km (square kilometres). The most advanced stage of exploration is a license in the Bir En Nar region in which drilling commenced in September 2009 and should take approximately 2 months to complete.

Drilling at this license continues on from initial radiometric work and drilling which took place in December 2007, which returned impressive results. 26 of the 38 holes tested returned intercepts exceeding 1,000ppm U3O8 and a maximum intercept at 1.55m at 18,280ppm. These results demonstrate very high grade uranium intersections and management have subsequently said they are targeting 25Mlbs U3O8 from Bir En Nar alone. This bodes very well for the forthcoming JORC-compliant resource which is expected to be released at the end of 2009.

Forte have not yet began drilling at any of their other Mauritian licenses though recently announced drilling is expected to commence at the Bir Moghrein prospect within the next few months. Forte’s other assets are located in Australia and comprise an interest in base metals including Copper and Cobalt. Managing director and CEO Mark Reilly has stated however his immediate focus is on the West African projects.

In addition to having 100% rights to potentially extremely lucrative assets in Guinea and Mauritania, Forte have also massively improved their status as a junior uranium exploration company by signing a co-operative agreement with the French nuclear conglomerate Areva. Areva have a market capitalisation in the region of €16 billion and have strong ties with the French government which therefore make them a tremendously useful ally to have on board.

The signing of the agreement in June 2008 meant Areva gained a 5% stake in Forte with an additional 10% being added in consideration of Forte gaining access to Areva’s historical database of Mauritania, technical equipment and personnel. The historical database relates to exploration work Areva carried out in the 1980’s which subsequently stopped due to the substantial decrease in Uranium prices. Consequently the knowledge and experience Areva can offer to the Mauritania projects are invaluable.

Moreover to further incentivise Forte into finding uranium the agreement holds that if Forte is successful in determining 60Mlbs JORC- compliant resource from the Mauritania deposits by June 2010 they can negotiate JV terms with Areva. If this comes to fruition it would be transformational for the company and more than likely reflect on the share price.

Analysts estimate Areva would inject a figure of around US$150m (£95m) into Forte which would not only contribute towards infrastructure/technical costs but also make it increasingly unlikely that Forte would need to further dilute the shares by way of raising equity to go into production. Incidentally Forte are under no obligation to continue into JV terms with Areva should they find the required resource though given the influence, knowledge and expertise Areva can provide this is probably unlikely.

Financially Forte are in a stable position going forward having completed a A$12m capital raising (£6.8m) through the issuing of 120m new shares in July 2009. The company has stated that this will be sufficient capital to support all the drilling and follow up work in Mauritania/Guinea well into 2010.

In summary the next 10 months will be some of the busiest and most important in the 9 years since Fortes admission to AIM. As an investor it promises to be equally exciting with news flow expected from:

● Upgrades from Firawa deposit; expected arrival between now and end of 2009.

● Announcement of JORC-compliant resource from Bir En Nar prospect; expected arrival end of 2009.

● Update on drilling at Bir Moghrein prospect; expected arrival beginning of 2010.

● Comment on JV agreement between Forte and Areva; expected June 2010.

● Further updates from Mauritania and Guinea licenses; expected throughout 2010.

The race is most certainly on for Forte to successfully delineate the required resource to enable them to trigger the JV with Areva. All indications would suggest that the Mauritania licenses hold in excess of 60Mlbs of U3O8.

It is also worth noting that Forte own the full rights to the Guinea licenses (including Firawa) and have no agreements in place with Areva regarding these deposits. Therefore if analyst estimates were to come true and 40Mlbs of U3O8 could be delineated from Firawa, Forte Energy would seriously move up the junior uranium league table.

One thing is for sure: Forte Energy has it all to play for.

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