Norfolk Metals (ASX: NFL) shares are up 49% today, over 60% on the week. The general background excitement here is about uranium. As the world realises that net zero is going to be harder than it looks so there is a revival in interest in nuclear power. That requires someone, somewhere, to go out and open some new uranium mines. So far so good, we can see that working. The excitement being right now and immediate is a little more difficult to understand, While spot prices might move that’s not really how long term production contracts work. But still, yes, more uranium mining would be a good idea.
Norfolk also has ground that’s looking pretty good for uranium content. Those vast exploration programmes of decades back did identify places where there likely is that metal. The fade off in interest in nuclear power also meant that many lightly identified were either not proven or were not exploited once they had been investigated. So, yes, this probably will do well: Orroroo Project fully approved for maiden drill program targeting known uranium occurrences. Revised aggressive and accelerated maiden drill program to commence in the next fortnight. Uranium spot prices hit 15-year highs as sellers back off”.
As we say, spot prices aren’t what the material is normally traded upon long term. Perhaps the starting point at which negotiations begin but no more than that. Still, yes, interesting market, good possibilities and the specific location is known to host uranium. The question is going to be how much rather than whether?
Norfolk Metals share price from Google Finance
What’s driving Norfolk Metals higher is the other set of announcements. One is that new shares are to be issued to fund both working capital and this drill programme: “Number of +securities proposed to be issued 5,000,000” and the proposed price was 20 cents. That’s pretty tight, given the starting share price. Then there’s: “Norfolk Metals Ltd (Norfolk or the Company) is pleased to advise that it has received firm commitments from professional and sophisticated investors for a strategic placement (Placement) to raise A$1,000,000 via the issue of 5,000,000 fully paid ordinary shares (Placement Shares) in the Company at an issue price of A$0.20 per Placement Share.” So, they’re fully funded to go drilling without too much dilution from that starting share price of only just over the 20 cent placing price.
That’s a good result. Now, whether there’s actually economic uranium at the drilling site, well, that’s the reason for doing the drilling, right?
