Late Friday afternoon, as I watched Bart Jaworsky, Associate Mining Analyst at Raymond James, discuss his top three uranium holdings on Canada’s ROB TV, it again became clear that the best publicity is reserved for those with top management. quality. Readers will recognize Jaworsky echoing the same themes, which have run through our commentary since June 2004, in everything from ISL mining to US uranium assets. Jaworsky chose Energy Metals (TSX: EMC ), UR-Energy (TSX: URE) and Strathmore Minerals (TSX: STM; Other OTC: STHJF) as its top three picks.
What attracts big-time advertising is the name behind the company. It is often not the Chief Executive. If you were to talk to Gene Ramos, the New York-based Reuters energy reporter, the first question he would answer would be, “Who is this person?” Translation: What has he achieved? Bart Jaworsky cleverly focused on “management quality.” That is a lesson investors should learn.
For example, last week Strathmore Minerals was lucky enough to have a triple play in advertising. On Tuesday, Lawrence Roulston, who writes Resource Opportunities, recommended Strathmore on ROB TV. On Wednesday, Bill Murphy’s Midas Report recommended Strathmore. On Friday, Jaworsky introduced Strathmore on ROB TV. Who is doing your public relations? In reality, the media attraction lies in the quality of management. When Spencer Jakab of Dow Jones (and Barron’s) wants a good price on uranium, he turns to David Miller, president of Strathmore. Miller was chief geologist for Cogema’s ISL operations in the United States. Again, who are you and what have you done?
In the case of Energy Metals, when it comes to ISL mining, the engineer in charge of developing its US assets is Dennis Stover. His claim to fame was designating the Smith Ranch ISL facility now owned by Cameco’s Power Resources. A review search of the ISL literature will inevitably turn up the name of Dennis Stover. Stover has proven himself, has built a respectable reputation and will inevitably attract media attention at some point.
Finding a Wyoming geological textbook that omits the name of William Boberg, CEO of UR-Energy, is easier said than done. His papers and presentations in the late 1970s and 1980s helped define the scope of Wyoming’s uranium geology. With prior experience at Conoco and Kennecott, as a uranium geologist, Boberg’s efforts to bring his company’s Lost Soldier property into full production will, at some point, attract heavy media attention.
What draws the media to a company’s door is not the whole business of a self-absorbed, self-centered, megalomaniac newsletter writer, but all the attributes we present in “How to Choose a Uranium Stock.” Quality management, excellent (and proven) properties, hidden value in the business, and plenty of cash help simplify an investor’s decision. Jaworsky warned about Kazakhstan, an area where we have avoided coverage due to the political climate (same for Mongolia). Focusing on North America reduces risk when it comes to uranium exploration and development.
In every uranium deal, there’s only one person who knows what’s going on, as Bill Sheriff of Energy Metals advised us. If you want to know what’s really going on at Smith Ranch, talk to Plant Supervisor Patrick Drummond. He has been in mining all his life, having started out in the coal mines of Scotland. The Power Resources operation draws praise from Wyoming State Representative David Edwards and State Senator Robert Peck. People who live in nearby Douglas, Wyoming speak highly of Power Resources.
At Uranerz Energy (OTC BB: URNZ), it’s Glen Catchpole, who previously ran an ISL operation in Wyoming and helped develop Cameco’s ISL assets in Kazakhstan. Forum Development (TSX: FDC) features Dr. Boen Tan, who helped discover two of the Key Lake deposits in Canada’s Athabasca Basin. ESO Uranium (TSX: ESO) relies on precious metals geologist Tony Harvey as an adviser to the company. Perhaps it is ESO’s Mikwam gold project in northern Ontario that will put this company on the map. With Forsys Metals (TSX: FSY), one turns to Graham Greenway, who previously compiled a resource estimate of FSY’s Valencia uranium property in Namibia for Rossing Uranium Ltd. Max Resources (TSX: MXR) has Clancy Wendt, who previously drilled the Utah property, and hopes to find uranium again in the same place where it was found more than 25 years ago. Mr. Anti-PR, Norman Burmeister of Kilgore Minerals (TSX: KAU), isn’t bragging about his tenure as chief geologist at Silver Standard (NASDAQ NM: SSRI) or his former Bull Run gold mine. Yes, he is mentioned on his website. But, Norm is the kind of guy who quietly lines up a drill rig for his Idaho gold property, pretty sure he’s going to find something big this summer. On the other hand, he doesn’t issue a wave of press releases to boost his stock. These are the types of people the media loves to interview. Everyone has the “hidden” story that makes the reporter function work for their readers, viewers, or listeners.
These companies epitomize the qualities we researched before writing about them in this column. Mainly, it is the quality of the management that distinguishes the possible winners from the probable losers. Everything flows from that key point. If management really knows which direction the company needs to go in, they will find the right properties. Fund managers will be eager to fund them. Investors will be less afraid to speculate on the company’s prospects. Eventually, even the most reluctant newsletter writer will be forced to introduce the company, or at least acknowledge that the company has a chance. As long as the price of the raw material continues to rise, it becomes a win-win situation for the participants. Above all, at some point, the mainstream media will come across such companies, or someone will bring the company to their attention. And then you get the kind of rallies that we’ve seen at Strathmore Minerals and a few others.
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