(Namibian/Nampa)-AT current uranium prices, the earnings and cash flows of Forsys Metals Corporation looks robust, according to its latest analyst report.
Forsys is a junior mining developer, which is close to completing a feasibility study on its 100 per cent-owned Valencia uranium project in Namibia.
It is situated 76 km southwest of Usakos, 35 km from the Roessing Uranium Mine and 40 km from Paladin's Langer Heinrich Uranium Mine near Swakopmund, in the Erongo Region.
The deposit is amenable to open-pit mining and processing.
Once in full production, Valencia could produce roughly 2,9 million pounds of uranium annually over a minimum 11-year mine life.
The report was compiled by Salman Partners on 12 March this year, and published on the company's website.
Capital spending would be roughly about N$2,2 billion versus the estimate in Forsys' pre-feasibility study of about N$1,6 billion to bring the project into production by mid-2010.
The company expected an average operating cash cost of approximately about N$288,82 per pound over the minimum 11-year mine-life.
"Several potential catalysts, including a potential take-over, resource growth through drilling, and a spin-off of non-core assets, could unlock shareholder value.
We believe that Forsys could be taken over by another uranium miner, a power utility or a nuclear power plant manufacturer looking to secure a long-term supply of uranium from a stable country.
We initiate coverage on the shares of Forsys with a buy recommendation," the report highlighted.
The company cited that there is good potential to find additional uranium resources within the immediate area around the Valencia project.
The company is currently carrying out exploration between the east zone, the north zone, and the main zone.
The report claimed that has a significant land package, surrounding Valencia, which could yield additional uranium deposits.
Valencia is one of the best uranium takeover targets available and Areva's acquisition of UraMin is the first volley in the impending flurry of takeovers in the uranium space indicated that Forsys is a plum target ripe for the picking, according to the report.
The Valencia project is expected to come on line in 2010.
"We expect that the commencement of production could coincide with peak uranium prices, which we estimate could average N$1 442 per pound in 2010, increasing to almost N$1 484 per pound in 2011.
We believe that Forsys could reap strong profits in the first couple of years of production," it noted.
Most of the world's supplies of mined uranium come from Canada, Australia, Kazakhstan, Niger, Namibia, Russia, Uzbekistan, South Africa, Ukraine and the United States-Namibian/Nampa.