Uranium still a risk; Black Stone expands its resources

15 Jan
  1. Dramatic news from Uranium Resources, which has announced a reverse stock split with a one-for-five ratio. The move, which will increase the price of each share by five times by reducing the total shares issued by the same factor, was necessary to enable it to meet the minimum bid request required to keep its NASDAQ listing. The decision was approved by 73.9% of its stockholders in a vote on Jan 14.

Uranium stocks have been earmarked by SeekingAlpha.com as generally undervalued in view of the expanding market for nuclear energy in 2013. However, the companies it suggests taking a strategic position in are Cameo, which it describes as a “profitable and well-known uranium producer”; and Denison Mines Corp for its large stake in the Athabasca Basin in Canada, which contains some of the world’s richest high-grade uranium deposits. Cameo is predicted by analysts to earn $1.38 in 2013. Denison, whose shares are trading at just over $1, might yield larger pay-offs in the long-term but have a less established record.

minerals

2. Colossal $1.4bn equity raised by Blackstone Minerals LP, one of the biggest privately held royalty and fee mineral owners in the US and headquartered in Houston, Texas.

As a result of a multi-stage exchange process, investors in institutional funds and co-investment vehicles exchanged diverse interests in Blackstone Mineral’s assets for $1.1bn in partnership units.

President and Chief Operating Officer Hallie A. Vanderhider stated: “Whether it was through an exchange or the purchase of new equity, our investors now own units in a large, diversified collection of oil and gas assets with attractive current yield and upside potential.”

In addition, Blackstone forked out $295m in cash for its own interests, a move Vanderhider lauded as representing the best deal for all sides: “those who wished either to sell their interests or remain in their existing investment vehicles have been able to do so.”

CEO Thomas Carter is quoted as saying the deal has given Black Stone “the critical mass to move quickly on significant mineral acquisitions without putting undue pressure on our balance sheet,” but the company has not issued any further details as to its future plans.

From its humble roots as a local family-owned business, Blackstone Minerals has grown to encompass 50,000 wells across 41 states.

Advising the deal was a Specified Investor Group (SIG), formed of Vinson and Elkins LLP who counselled on legal matters, and Tudor Pickering Holt and Co. as financial advisers.

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