Rose Petroleum plc by Jack Hammer


VANE Sees Gold In Its Brecciated Uranium Portfolio

"The Canadians in particular understand uranium", says Matthew Idiens, commercial director of VANE Minerals, "and they understand our pipe portfolio". It's his contention that brecciated uranium pipes of the type that VANE has in abundance on its license in north Arizona aren't well understood in the wider mining markets outside of Canada. He may well be right, although the high margin numbers that he presents for each pipe ought to catch the eye of any quick witted investor interested in whether or not VANE is likely to turn a fast buck. As long as the company hits the grades it expects to, it will.

"We're very confident", says Mr Idiens. "We're drilling the pipes as we go along, and once we get one with a nice couple of hundred feet at 0.5 per cent plus, we'd stick four holes in and then start thinking about sinking a shaft". Assuming a US$100 uranium price each pipe should net around US$230million. So, nice numbers, given that the company has 39 targets of which five are confirmed pipes, albeit that they work on a price assumption that looks a lot less secure than it did six months ago.

And it may be that the Canadians are the only ones who really appreciate such assets geologically. But those financial projections ought to attract anyone still bullish on uranium. They'll certainly be of interest in the City, where the technical aspects of a project are often appreciated simply on the say-so of a respectable consultant or a good analyst. In London the latest investors to buy into the VANE story with a £500,000 financing package are our old friends at City Natural Resources, and they boast not a single geologist amongst their number. But VANE's got an 88 page report from SRK, available for viewing on its website, in which the Arizona assets are referred to as "an excellent suite of exploration targets". It makes for encouraging reading for the technically-minded and the non-technical alike.

So in truth what Mr Idiens is doing when he tips his hat to Canadian expertise is preparing the way for a Toronto listing. This is something that hasn't yet been decided at a board level, let alone put to shareholders, but it's definitely on the cards. All of VANE's assets are in the Americas, and Mr Idiens aside, most of its directors are there too. There's the producing Diablito gold mine in Mexico, the brecciated uranium portfolio in Arizona, a strata-bound uranium project in Utah on which a 43-101 resource is due within the next six months, a huge exploration license in Paraguay, and another Mexican gold property that's only borderline economic. So VANE is very definitely a company of the Americas, and although the North American shareholder base is on the meagre side, that's something VANE would like to change.

An additional reason for a Toronto listing is the impact of the constant sniping by Nasdaq directors against the quality of Aim as a market. Aim has served VANE reasonably well over the years, occasionally delivering decent volumes, and allowing for several fund raisings. The company's share price has only really taken off, however, since it launched its foray into the uranium market last year. VANE has also historically struggled to retain the interest of the sales staff of some of the brokers it formally employed, although the current relationship with Ambrian seems strong enough. More to the point the recent appointment of Westwind as joint broker with Ambrian is a clear pointer back to Canada.

If the company does go onto the Toronto markets, the Canadians ought to like what they see. Not only is uranium still relatively strong at US$75 per lb, but the company is generating revenue of around US$250,000 per month from the Diablito gold property. That cash flow supports the uranium drilling programme, and that in turn ought to add value. That's the theory at least - you never know in this business. But, with a bit of luck, 2007 might just turn out to be the year in which VANE Minerals marked the beginning of a virtuous and highly lucrative circle.