After a period of “brutal volatility’’ that saw prices soar to a record high in 2007 and then collapse, the uranium renaissance is back on track.
That’s the view of Nick Tintor, the Chief Executive Officer of Southern Andes Energy Inc. (TSX: V.SUR, Stock Forum). The junior is exploring for uranium in Southern Peru along with a group of Canadian companies, including the world’s leading producer Cameco Corp. (TSX: T.CCO, Stock Forum).
Toronto-based Southern Andes became a leading player in Peru’s Macusani uranium district in March 2010, when it rode to the rescue of Solex Resources Ltd., which had a portfolio of properties covering 140,000 hectares in the region, but no cash to fund its exploration programs.
Now, after a reorganization that saw Solex change its name to Southern Andes, recapitalize and install new management, the junior exploration firm is back in the field looking for drill targets and gearing up to spend about $3 million in 2011.
“We just thought the timing was right,’’ said Tintor during a recent interview with Stockhouse in Vancouver.
He is betting that concerns about greenhouse gas emissions and the search for clean energy which sent uranium prices soaring to US$136 per pound in 2007 remain intact even though prices have only recently begun to recover after sliding to a US$42 a pound in April 2010.
“A lot of this has to do with Chinese demand,’’ said Patricia Mohr, vice-president, and commodity markets specialist at Scotiabank in Toronto. (Mohr is scheduled to release a research report on uranium this week).
Published reports say China wants to increase its nuclear generated power to six per cent of all sources by 2020, up from the current level of one per cent. It’s a sign that China] has actually been a lot more aggressive than people thought in trying to make nuclear a portion of their energy spectrum along with oil, coal and the alternative green energies, Tintor said.
In keeping with that trend, China is building at least 30 of the 58 nuclear reactors which are currently being constructed around the world today, according to the UX Consulting Co. LLC., a U.S. industry consultant.
“Because of that there has been a move towards securing more uranium supply,’’ said Tintor. “You see that manifested in higher uranium stock prices,’’ he said.
At the age of 55, Tintor is well aware of the challenges that go with uranium exploration and development. During the boom years of the late 1970s, he got his start in the mining business working as a field geologist for Urangesellschaft Canada Ltd., which was looking for uranium in the Canadian Nunavut.
After four years with Urangesellschaft, he lost his job when uranium prices collapsed and the Nunavut exploration camp was shut down.
For the next 25 years, prices remained in a deep slump, choking off investment in a sector that produced the world class deposits that underpin Saskatchewan-based Cameco, the world’s largest producer.
“Nuclear has a checkered past and a lot of negativity from the environmental side,’’ Tintor said.
But the consensus view is that there will be supply deficits until at least 2013, he said.
It is why Tintor’s privately owned Toronto company Homeland Uranium Inc. was willing to talk when Solex came calling earlier this year. As a director of Macusani Yellowcake Inc. (TSX: V.YEL, Stock Forum), which has been exploring in the Macusani region since 2007, Tintor had some previous insight into the potential for discoveries in Southern Peru.
It’s an area that was explored by the Peruvian Institute of Atomic Energy (IPEN) by in the 1970s.
Southern Andes is proceeding with exploration in Peru in the belief that the Macusani region will eventually host a number of open pit uranium mines and a single processing plant that will service the region. It is expected that these near-surface deposits will be cheap to mine.
In the last two years, Tintor said roughly 40 million pounds of new uranium has been discovered in the Macusani area, which is located at an elevation of 3,800 metres to 4,800 metres above sea level.
That includes the roughly 5 million pounds located on Southern Andes properties.
The junior currently has crews in the field and plans to start drilling in 2011.
“The goal is to find and advance a uranium deposit,’’ Tintor said.
In the coming year, the junior’s other priorities include dividending out to shareholders Homeland’s 51% stake in Southern Andes.
“We have a lot of institutional shareholders and this is something that they can sell or trade,’’ said Tintor.
Having spun out Solex’s silver-lead-zinc assets into a new subsidiary Caracara Mining Inc., Tintor is planning take Caracara public in the New Year.
The Caracara assets include a NI 43-101-compliant inferred mineral resource of 28.7 million silver equivalent ounces. It is located in the Macusani District on the Princesa concessions.
Spinning out Caracara by way of an initial public offering will allow Southern Andes to stay focused on uranium, Tintor said.