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First Uranium Shares Soar on Uranium Demand, Supply (Update2)

By Christopher Donville

Dec. 20 (Bloomberg) -- Shares of First Uranium Corp., a developer of uranium and gold prospects in South Africa, rose 16 percent during their first day of trading on the Toronto Stock Exchange.

First Uranium rose C$1.12 to C$8.12 at 4:16 p.m. in Toronto, after earlier reaching C$8.39, giving the company a market value of about C$952 million ($829 million). The company, a unit of Johannesburg-based Simmer & Jack Mines Ltd., sold 29 million shares at C$7 each.

``The market is hot for anything uranium right now,'' said Brian Mok, an analyst at Research Capital Corp. in Toronto.

Uranium prices have risen more than sevenfold over the last five years as demand from investors and power station operators has grown. Uranium, the raw material in fuel for nuclear reactors, has risen on concern that new supplies of the radioactive metal may not rise fast enough.

First Uranium raised C$203 million with the initial share sale, the biggest in the Canadian market by a mining company since Saskatoon, Saskatchewan-based Cameco Corp. sold C$282 million of shares in Toronto-based Centerra Gold Inc. in 2004. Simmer will continue to own about 70 percent of First Uranium.

Simmer plans to use proceeds from share sale to repay debt and to fund First Uranium's development of the Ezulwini and Buffelsfontein uranium and gold projects in South Africa.

Uranium Rally

The price of uranium has risen 99 percent in the past year to $72 a pound this week, according to market assessments published Dec. 18 by Ux Consulting Co. of Roswell, Georgia. Prices were at $36.25 at the end of December 2005.

Sxr Uranium One Inc., another developer of uranium prospects in South Africa, today completed an offering of C$155.3 million of convertible unsecured subordinated debentures, boosting the amount Uranium One has raised this year to C$499 million, said Jason Neal, an investment banker at BMO Capital Markets in Toronto.

RBC Capital Markets, a unit of Canada's biggest bank, led a group of eight banks in the sale of First Uranium's shares, including Canaccord Capital Corp., National Bank Financial and GMP Securities.

The banks may sell another C$30.5 million of First Uranium shares to meet demand through a so-called overallotment option, valuing the share sale at C$233.5 million, RBC said.