Saturday, January 27, 2007

Lose some, win some...

This past week has been a mixed bag for my uranium juniors and I was reminded of the risks endemic to that species and the merits of having companies with defined assets at the core of the portfolio. Exploration is a difficult business and it is statistically true that failure is the norm. Most exploration programs do not result in a discovery. Even if they do, most discoveries do not become mines, for one reason or another.

First up was Nova Uranium. They announced disappointing results from their Mont Laurier property in Quebec. This is the second time that the company has come up short of expectations and the market responded accordingly. I took the opportunity to incur a loss and reduce my exposure to exploration spec plays by one position.

Next up was Universal Uranium. These guys finally announced long-awaited results from their drilling program in Lisbon Valley, Utah. Apparently, the assays were not worth detailing as they were not included with the release. They simply referred to 50PPM of uranium at the bottom of the holes. Universal has a respectable property position and an active work program in the Central Mineral Belt in Labrador, property in Colorado that has been JV'ed and a property in Arizona, so I will continue to hold this position.

Luckily, Strathmore has been more than compensating for these two. Because of position-sizing with the more "conservative" (i.e. companies with defined resources) plays given heavier-weighting, the advance in Strathmore has overshadowed the drawdowns from the others. The price and volume action were very encouraging towards the end of the week, with Strathmore hitting price levels it has not seen since 1998. The stock is moving towards overbought on the daily chart but still has room to run on the weekly and monthly charts. I have targets in mind for taking profits on my trading shares.

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