Over the past two years, the common myth circulated among investors has been “pounds in the ground.” How many pounds of U3O8 does a company have in the ground? The more pounds a company claims, and more importantly gets institutions and investors to believe, the higher its market capitalization has run. Bigger is always better in most cases, but recovering uranium through an ISL operation, like any other mining operation, has its quirks.
During the early stage of this uranium bull market, pounds-in-the-ground was an important yardstick. But just as one can have a million-ounce gold deposit, with a complexity of metallurgical problems that prohibit a robust economic recovery or offer a paltry grade of gold in the ore, investors may discover the same problems in properly evaluating a company’s uranium claims. Instead of asking a company’s investor relations department how many pounds of uranium they have in the ground, find out how much uranium pounds they can actually recover and produce, and how much it will cost them to mine their property. Ask instead these questions:
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