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Spot uranium prices continued on a tear, rising to $40.50/pound this past week, as the uranium supply squeeze of 2006 takes hold. One uranium mining insider told us there were now more than 450 uranium exploration, development and producing companies. Some hold options to properties and want them explored. Others are negotiating options. Very few of those are proceeding with any serious plans. One which hopes to move forward into bankable feasibility, possibly as early as a year from now, is Forsys Metals (TSX: FSY).

On

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

March 2nd, we published a feature, entitled, “A Third Uranium Mine in Namibia.” The sub-title discussed how Forsys Metals hoped to repeat Paladin’s (TSE: PDN) success in Namibia. Four days later, Namibian, a local newspaper, ran the headline: “Third Uranium Mine on Way.” The report summarized the development, “ANOTHER uranium mine in the Namib Desert is in the pipeline. Gulf Western Trading Pty Ltd, which plans to trade as UraMin Namibia, has announced that it has applied for the renewal of its mineral licence in Namibia

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

for deposits at Trekkopje and Klein Trekkopje.”

What the heck? We thought the headline was about Forsys Metals. But it was about a competitive mining company.

There are some geographical similarities. Both the Forsys Metals’ Valencia and UraMin’s Trekkopje uranium deposits are about 35 kilometers from the Rossing uranium mine. The Valencia deposit is about 40 kilometers to the north of Paladin’s proposed Langer Heinrich uranium mine, while UraMin’s deposit if 80 kilometers to the southeast. Registered in the British Vir

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

gin Islands last year, Gulf Western Trading Pty Ltd and UraMin have offices in London and South Africa. They do not appear to yet be publicly traded. Forsys Metals has offices in Toronto and trades on the Toronto Venture Exchange.

Curious about this development, early Friday morning we phoned Johannesburg, South Africa to interview Mr. Graham Greenway, from whose technical report we quoted when writing about the Forsys Metals Valencia uranium deposit. Basically, we wanted to know if there was a race on between the two co

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

mpanies. “They are probably pretty much on a parallel,” Greenway said. “Both are fairly mature projects. They’ve been looked at in the past. They were sub-economic in the past. They are both doing confirmation work.” Greenway repeated his emphasis, “They are on a parallel track.”

So, would it be possible that Namibia will have four uranium mines before the decade ends? “It wouldn’t surprise me,” Greenway said. “When I look over at Rossing, they are also looking for alternative sources of uranium around the Rossing area.”

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

Before becoming a resource evaluator for Snowden Mining Industry Consultants in Johannesburg, Greenway evaluated resource deposits for the Rossing Mine as the mine’s chief geologist. Snowden is a highly respected international mining consultant firm with offices in Johannesburg, Perth, Brisbane, London and Vancouver. One of the uranium deposits Greenway evaluated for Rossing was the Valencia deposit. “They and Rio Tinto have a wealth of information about the exploration done up to Valencia,” Greenway told StockInterview.

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

“There is quite a bit of interest in that area.”

Well, is UraMin going to scoop Valencia, or will the Valencia deposit move along as scheduled and be the third Namibian mine? Hard to say was Greenway’s enigmatic response. But the geologist did spell out a few good points to consider about the Forsys Metals uranium deposit. “Valencia is pretty small in terms of low-grade uranium deposits,” explained Greenway. “But it is a hot area. It is within the right corridor for uranium mineralization, for that style of uranium mine

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

ralization in Namibia.”

Is the Forsys’s Valencia deposit too small on its own to become a uranium mine? No, thinks Greenway. “When I looked at a very rough financial model, it could be a stand-alone operation,” he pointed out. “I think it is a compact deposit. It can be mined by open pit. It’s not a mine that can do damage to the environment. From that point of mind, it won’t have a large environmental impact – it will have a fairly small footprint.”

Greenway added, “There is the potential for extraction to a certain po

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

int before it is handed over to someone like Rossing.” Does that mean Forsys would sell their uranium deposit to Rossing? Greenway was quick to respond, “I wouldn’t say ‘sell the deposit to Rossing.’ Speaking to the guys at Forsys, they are very keen on developing a mine.”

Let’s cut to the chase here. Is the Valencia an economic deposit or not? We ask because we would like to know if this might be Namibia’s third, or possibly fourth, uranium mine. “I would think so, yes,” Greenway responded, “Under the right conditions,

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

I think it could be economic under the current mining plan.” For the record, in his technical report, Greenway wrote, “… the Valencia Project represents an advanced staged uranium project that has potential for development as an economically viable mining operation.” He also wrote in his technical report, “Uranium mineralization has been identified over an area of 1,100 meters north-south by 500 meters east-west.”

How far is Forsys on their pre-feasibility? We asked Sean Felker, corporate communications for Forsys Metals

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

. “We have three drills on site,” he answered. “We’re drilling to the east zone to extend the mineralization.” He stressed that Forsys was fast-tracking the project, and he believed the company was about a year away from a bankable feasibility.

At least Forsys has resolved one of the drawbacks for uranium mining in Namibia. “One of the difficulties, especially within Namibia, is going to be water. The biggest one is going to be water,” stressed Greenway. Sean Felker proudly announced, “We don’t have to truck in water an

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

ymore.” The company had been trucking in water about 65 kilometers from the coast. Now they don’t. “We drilled for water, and we have water on site,” Felker told us. That’s a hurdle overcome, but it does pose a concern investors should have about better understanding various uranium companies, especially those in Africa.

The uranium bull market has opened the doors of Africa for many uranium exploration and development companies. Most are Canadian or Australia juniors; some are South African miners being financed Canadia

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

ns, through the TSX, or through London’s AIM. Greenway observed that the excited was “pretty widespread.” The countries he found in which there was the most interest were, “The Democratic Republic of the Congo (DRC), Namibia, Angola, Tanzania.”

At this point, it might be important to discuss risk factors.

Risks for Uranium Stocks in Africa

As with investing in any natural resource company, the most significant item to consider is whether there is an economic deposit to be mined. Of course, there are numerous other cons

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

iderations, which a knowledgeable registered investment advisor might clarify. From his perspective as an experienced geologist, Greenway suggested investors consider at least the following six items when studying uranium companies who are developing a property in Africa.

1. Political Risk. As with any “exotic” country or continent, such as Mongolia or Central Asia, there is the questionable political risk. Case in point, we asked Greenway if there were any African nations to avoid. “Zimbabwe has a lot of certainty as wh

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

at’s happening there at the moment,” he responded. “Niger has political and water issues.” From our analysis of news items, Namibia appears to be a politically stable.

2. Infrastructure. Unless the deposit is world-class, if there is no infrastructure in place, then the deposit will stay with Mother Nature a little while longer. Infrastructure can mean roads, a pipeline, or whatever transport system is required to move ore to a processing facility. If the project is sufficiently large, infrastructure will be built to ser

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

vice the deposit. In the case of Forsys Metals’ Valencia Deposit, it is near the Rossing mine. Not so near that some additional infrastructure might be necessary, but not hundreds of miles away from a mill, either.

3. Water. Many parts of Africa are arid. The world’s largest desert, the Sahara, is part of the African continent. Namibia’s uranium deposits are in a desert. Therefore, there must be readily available water to explore and mine the deposit. “Niger has been having a drought.” (Note: Greenway did, however, comme

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

nd Niger for having developed infrastructure.)

4. Electricity. “Namibia is very reliant upon South Africa for their electrical supply,” said Greenway. “But they are talking about expanding their KUDU gas fields in the south, to build gas-fired electricity plants.” Other countries may rely upon expensive diesel to generate electricity. Ironically, the cost of uranium mining may be dependent upon the price of crude oil, more so in Africa than a major coal-producing region, such as Wyoming.

5. Tenure of Ownership. “Previou

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

sly, Angola and Congo had issues with the tenure of ownership,” said Greenway. “You’d find two companies owning the same piece of ground depending upon who got bribed the most.” Greenway suggested this might still be found in the Democratic Republic of Congo (DRC). “Land ownership is pretty clear cut in Namibia,” Greenway noted.

6. Mining Code. Basically, this defines how much the government gets to keep from the uranium mining. That’s what a mining code is really all about: royalties. “South Africa has become a bit of p

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

roblem with that,” Greenway quietly stated. “Most of the other countries will let you get your money out of the country. Generally, the government will tax you 10 or 20 percent on your project, and then allow you to get your money out of the country.” He added in discussing South Africa, “There is a published code and there is a code that can be translated differently depending upon who you speak to.” Greenway concluded, “I don’t think you’ll find the same problem within Namibia.” He added that Burkina Faso had a pretty g

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

ood mining code (formerly known as Upper Volta).

With any project, the maturity of an area strengthens the economic possibility of a worthy uranium project. The number of years it took for Rio Tinto to help develop relationships within Namibia may help smooth the way for Paladin, Forsys Metals and UraMin. Again, having a big guardian, such as the Rossing uranium mine, in the country where you wish to develop a mine, could expedite the mine development process.

COPYRIGHT © 2007 by StockInterview, Inc. ALL RIGHTS RESERVED

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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