Steve Hawkins

Silver Wheaton (SLW) reports earnings

Real Deal portfolio member Silver Wheaton (SLW) reports increased earnings for the first quarter. Earnings were up 165% year over year.

“Record net earnings of $13.8 million ($0.07 per share) from the sale of 2.7 million ounces of silver, compared to $5.2 million ($0.03 per share) from the sale of 2.3 million ounces of silver in 2005.”Reports

 ”Record operating cash flows of $13.9 million (2005 – $5.2 million).”

“These results are spectacular, obviously assisted by continuing strong silver prices,” said Eduardo Luna, Chairman. “We expect our second quarter to be even better, as a result of silver sales starting up under our new Yauliyacu silver contract.”

Analysis: This is really a case of you aint seen nothing yet. As prices for silver move higher over the next several years I expect cashflow and earnings will explode upward. However I would be cautious here in committing new money as I expect the price of silver to pullback.

Clive Maund theorizes that the recent silver action may be a precursor to a “superspike” like back in 1979-80. As he cautions, these events only happen once a generation. I would argue that it would not suprise me and we are positioned for a spike. I think the odds favor a pull back as we are way overbought at this point. However I am ready to let the market tell me what it wants to do.…

Cameco Corp., the world’s largest producer of uranium, said Monday it was unable to control water flowing into its Cigar Lake project following a Sunday rock slide, and it expects all underground areas to be filled with water.

The company said it evacuated everyone by 11:30 a.m., and it will investigate options to restore access to the mine. Cameco said it is committed to the project, and it will develop new timelines for construction, cost estimates and production forecasts. The mine was originally slated to start production in early 2008.

At 5 a.m. Monday, Cameco closed two bulkhead doors to try to protect the project’s main shaft and key underground infrastructure. The company later, though, found one of the doors did not seal properly, allowing significant water to flow into the processing area.

Cameco said it is adequately positioned to meets its contractual obligations, as it has supply interruption protection in contracts.

Analysis: Well this is no the best of news. This mine was scheduled to come online next year and produce 18 million pounds per year. This is one of the hazards of mining. There are two paths forward for us sell now or hold on ride through this and have confidence management will fix the mine and bring it online in 2008. I am inclined to hold as I have confidence uranium and nuclear power is the only way to go for mass power generation. It will take a few days to digest this information and get a feel for where the stock should trade. You will notice this news got the other uranium stocks to rally hard as this is just makes a bad supply situation worse. I think you can pretty much count on a supply squeeze in uranium. Buying Uranium Particpation Corp. could be a good play here if you do not own it. In summary, I am a long term bull on uranium and I want to own the largest uranium miner so I will hold and add if the stock were to drop enough.…

In recent years, the price of uranium has flown higher than that of gold, silver, platinum or palladium. From 2001 to 2006, the uranium price rose by approximately 700%.

It looks like the upside may have a lot further to go. Global demand for uranium is 160 million pounds per year, but only 90-100 million pounds is produced from mining production. The shortfall is being made up by drawing from stockpiles that had built up from the over-production during the 1970s and from decommissioned nukes from the former Soviet Union.

“For 20 years, mine supply has accounted for 60% of what is needed to supply reactors,” says Dr Tim Sugden, managing director at Nova Energy Limited at the gold and precious metals investment world conference in Hong Kong. Nova owns a major uranium deposit in Australia that it hopes to start mining in the near future. “After 2013, Russia has said it will stop supplying enriched uranium to the West.There will be a supply squeeze.”

Analysis: It is interesting and typical that people gain interest in an investment after it has gone up hundreds of percent. The fact that a supply squeeze is coming is of interest to us as we have fairly nice gains in our uraniums and will look to cash out as the public comes in at the top.…

Yahoo:

Dune Energy, Inc. (Amex: DNE – News) announced today that it has placed nine wells on production since August 30, 2006. Stabilized rates from these new wells has added gross production of 10.0 million cubic feet per day (MMcfe/d), bringing the Company’s total daily gross production to 12.3 MMcfe/d. This represents better than a four-fold increase over previous levels.

Four wells were drilled and placed on production by Dune on its existing core Barnett Shale acreage, while two were purchased as part of its recent acquisition of properties from Voyager Partners, Ltd.

Dune has also participated in the successful recompletion of three wells on its Bayou Couba property in South Louisiana. Dune owns a 91.4% WI in two of these wells and a 20.7% WI in the third.

In addition, Dune has participated in the completion of two wells on its Welder Ranch property in Victoria County, Texas. Both wells are waiting on pipeline connection. Dune was carried to casing point in the two wells as part of a previously announced farm-in agreement with Chesapeake Energy.

Amiel David, President and Chief Operating Officer said, “Dedicating the Itera #1 Rig to our Barnett Shale properties allows us to drill up to 10 wells per year. We have 24 horizontal and vertical locations in our current Barnett Shale drilling inventory. Upon successful closing of the remaining Voyager assets, our total number of drilling locations will increase to 51, excluding any additional acquisition of acreage in the Basin.”

Analysis: This could be another GMX Resources. If you remember we rode to around 400% gains on that stock under the same conditions. Huge increases in production will move the stock. This stock is a strong buy.…