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Analysis on Uranium One Inc. (UUU) …Cont’d

March 26, 2013

 

Background

Reference to the previous article “Analysis on Uranium one Inc. (UUU)” published on Dated Sep 11, 2012, there is a further development regarding the stock.

Overview

Uranium One Inc., (Uranium One) along with its subsidiaries, is engaged in the acquisition, exploration and development of properties for the production of uranium in Kazakhstan, the United States, Tanzania and Australia. Uranium One’s principal projects are the Akdala Mine, the South Inkai Mine, the Karatau Mine, the Akbastau Mine, the Zarechnoye Mine and the Kharasan Mine in Kazakhstan. The Company also operates the Honeymoon Project in Australia in a joint venture with Mitsui, and apart from operating the Mkuju River Project in Tanzania, it owns a 13.9% interest in the same.

The closing price for the stock of Uranium One Inc. as on Mar 21,, 2012 is $2.77.

Stock Exchange Info

Uranium One Inc. is listed in Toronto Stock Exchange with ticker UUU. It falls under sector Basic
Material
and industry Precious Metal & Mineral.

Development

Russia’s state uranium firm JSC Atomredmetzoloto (ARMZ) offered to have Uranium One Inc. private by offering $2.86 per share to the minority shareholders. This offer is 14% higher than the price CAD 2.51 which was quoted by the article under the reference date of Sep 12, 2012. ARMZ and its affiliates are the major shareholders and already own 51.4% of common shares issued. This buyout will cost ARMZ a total of $1.3B. If approved by court, this transaction is expected to come to an end by the second quarter of 2013 .This implies that the shareholders will get a cash of $2.86 for each share by end of Jun-2013.

Analysis

The current stock price for UUU is $2.77 though the deal is for $2.86. The reason behind this difference is the 101 days remaining to receive the cash which equals the annual return of 11.7%.

In my view, ARMZ perceives great potential in investing in uranium rather than any other investment which obviously aligns with my article “Analysis on Uranium One Inc. (UUU). An exceptionally low spot price of Uranium is the primary reason for it’s expected future growth. At present, the demand is expected to grow because there is no substitute available for Uranium.

Conclusion

This was a good investment with a locked gain of 13.9% (annualized 17.5%). I still believe that Uranium is a good investment and I will keep an eye for some good entry point for any other uranium investment.

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