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Uranium is Both Hot and Real

Bob Moriarty
President: 321gold
Archives
February 4th, 2011

In 2001 uranium dropped to $7 a pound at the end of a 20+ year bear market. Exploration for U3O8 simply stopped. No one could make money looking for it. Then it started a relentless climb to $136 a pound by 2007. Everyone who owned a pick and a shovel got into the uranium business. The metal didn't have a single correction between $7 and $136. There's trouble waiting to happen.

Permabulls hate the word "correction" but everything goes up and everything goes down. Up and down is normal. When something goes straight up, it will one day go straight down. Uranium did.

After hitting $136 in September of 2007, uranium began a three-year correction, plunging to $40 by April of 2009. Since then prices have recovered and the latest quote shows a price of $73 a pound. Industry sources claim that there is an 80,000-pound a year short fall between mine production and reactor demand. Such demand would create a floor under the price of uranium.

There are over 75 new reactors being planned by China, India and Russia. Peak oil is both real and past. Oil would be at a record price now if the US wasn't in a depression. We need nuclear power and the rest of the world understands that and is preparing for $200 oil.

I pretty much watched the last rocket climb of the metal from the sidelines. I heard guesses of between 450 and 600 companies claiming to be "uranium" juniors but there was a lot more hot air than hot rocks. Maybe 5 or so of the juniors actually had a resource in hand. I would expect much the same in this cycle even if I expect this rally to have legs.

I went out to Arizona to meet with a small American uranium junior recently that not only has a resource in hand, they appear to have a bright future.

The company is American Energy Fields. (AEFI-OTCBB) It will be a year old in April of 2011 but they have aggressively been picking up projects with previous production or exploration history. It is their intent to prove up 50 million pounds of uranium and to go into low cost production.

The company has five projects they are working on at present. The biggest is Artillery Peak in Arizona with 2.8 million pounds of proven uranium. The project has had over 400 drill holes completed and the company released a 43-101 in 2010.

The Coso mine in California went as far as a mine design as part of a $20 million dollar program completed by Western Nuclear and others in the late 1970's. There is a 5.5 million pound U3O8 resource at a grade of .07%. The open pit project showed 3.5 million pounds recoverable but the project has great potential to expand the resource.

What AEFI refers to as their Blythe Uranium project in California actually has three mine sites with two having past production. The Safranke mine actually has about 25,000 pounds of uranium contained in 4000 tons of stockpiled ore. During the 1970's the Sanfranek mine had over 10,000 feet of drilling completed with assay results as high as 6.2%.

American Energy Fields has recently added a big project in North Dakota they call the Connors mine in Slope County. The deposit is shallow and the mineralization was delineated by over 250 historic holes. It's possible the project has both open pit and in-situ leaching potential. The historical resource was an estimated 8 million pounds of U3O8.

The company has another 29 targets in the Arizona Strip Breccia Pipe district. Similar pipes have shown grades of .60 to 1.00%. They own 16 unpatented claims totaling 123 acres.

With some 17 million pounds of U3O8 right out of the chute, AEFI is aggressively moving forward to both picking up more projects and advancing what they have toward production. They are selling for 1/3 to of what their contemporaries are selling for so have giant potential.

AEFI is an advertiser, we are biased. I do own shares and again, I want to remind potential investors that they have a responsibility to shepherd their own money. We share in neither your profits or your losses so do your own due diligence.

American Energy Fields
AEFI-OTCBB $.84 (Feb 3, 2011)
64.7 million shares
American Energy Fields website


Bob Moriarty
President: 321gold
Archives
February 4th, 2011



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