Grandich's Blog

On July 30th, Crosshair Exploration and Mining announced its acquisition of a new deposit in the Central Mineral Belt with 6.1 million pounds of uranium and more than 4000 claims.  Along with this new acquisition, the company has also updated and significantly expanded their C Zone-Armstrong 43-101 resource to 11 million pounds of uranium and 27.5 million pounds of vanadium. Based on Crosshair’s in-situ resources, including the newly-acquired Two Time Zone, one could make a case of valuing the company at just over $100 million.  Considering they have less than 100 million shares out, they could be trading a bit over one dollar, not between $0.20 and $0.30.

Taking into account the company’s exploration and development improvements, as well as additions to the management team, including a new CFO, I believe Crosshair is well positioned to fulfill its future development and production goals.

Acquired, Updated and Expanded Resources.

Crosshair’s original property, making up approximately 720 square kilometers, has more than doubled in the last two months with their recent acquisition of all of Universal Uranium Ltd.’s 60% interest in the Central Mineral Belt (CMB), giving them a total of approximately 1935 square kilometers of land holdings. Not only have they increased their claims significantly, but Crosshair also controls the only two NI 43-101 uranium deposits in the western portion of the CMB.

Based on the claim ownership of the CMB properties in Labrador, it is obvious that Crosshair has a dominant land position, including both their original and newly-acquired claims.  By more than doubling their total land holdings and continuing to produce good results, Crosshair proves to be a company to watch.

Undervalued?

In August, Crosshair announced the results from their updated independent NI 43-101 resource estimate on the C Zone – Armstrong Corridor.  Not only do the results further prove the presence of a 4.5 kilometer-long uranium mineralized corridor, they provide an updated and significantly expanded 43-101 resource of 11 million pounds of uranium and 27.5 million pounds of vanadium.  Adding to this project value is the Two Time Zone, which is the most advanced prospect within the newly acquired claims in the CMB and has a current strike length of 475 meters which remains open along strike and to depth.  Its existing NI 43-101 shows a total resource of 6 million pounds of uranium, bringing the total pounds of uranium up to an impressive 17 million!

Many of my subscribers have asked me to explain the true value of a project based on their total resources.  So, here’s what I’ve done:  Using Canaccord Adam’s in-situ average uranium value of $5.00/lb, which is approximately 8-10% of the market price for uranium, I have valued the company’s 17 million pounds of uranium at approximately $85 million.  Assuming the same in-situ average % for vanadium, an additional $18 million is added.  This results in a total project value of just over $100 million!  The chart on page 3 easily explains it. Using the total project value of $102.8 M divided by the total shares issued, 94.9 million, the calculated stock value should be approximately $1.09 per share….almost four times what the current value is.  And, this is only the project value, it doesn’t include any cash they have in the bank or any other assets.  Is Crosshair undervalued? You be the judge.

A Very Worthy Team

In addition to the good results and developments taking place on the ground, Crosshair has recently announced a new addition to the management team. Having over 20 years of experience in the financial management of public companies, including several energy and resource companies based in Alberta, Crosshair welcomes Joseph Miller as the new Chief Financial Officer.

Mr. Miller was employed by TransAlta Corporation (a very large operator of over 50 power plants) in Calgary, Alberta from 1999 to 2007, first as the Manager of Financial Planning and Analysis and then as the Director of Financial Operations.  With Joseph Miller’s skills and experience, as well as the two other recent additions, Paul Hosford (from Barrick Gold) in February as President and COO, and Derrick Gill (Inco – Voisey’s Bay) in May as a new director, Crosshair has built a truly worthy team that appears ready to take the company to the next level.

Bottomline

I believe that Crosshair has established itself as the leading player in the CMB, based on its dominant land position, proven multi-deposit potential, as well as having a diverse team that can execute both on the corporate and development front.  Based on the newly acquired Two Time Zone and the recent resource update, I don’t believe that Crosshair has ever been positioned as well as it is now and Crosshair management must agree with me, since they have been buying in the recent weeks! I believe it is time to take another look and see the real potential of this company.

Tags: Crosshair+Exploration