Michael Pascoe writes:

In the best traditions of the Wild West
from the gold rushes through to the Poseidon boom, there’s another stock market
bubble promising riches for the hint of
dirt near someone else’s dirt and never mind the distances.

Just as the iron ore specs start hitting a
little infrastructure reality, anything remotely associated with uranium is running
to highly speculative highs – with all the usual omens that it will end in
tears for the investors left holding the drilling results when the bubble
bursts.

Friday’s Toro Resources float is just the
latest example of the brewing mania. No hint of irony in the “Toro” moniker, of
course. As the gushing Smage story tells it:

Toro Energy Ltd exploded onto the
stock exchange on Friday, boosting the value of the uranium explorer’s
tradeable shares by $40 million and blowing away any doubts about investor
hunger for yellowcake stocks.

The company, which was formed by
the spin off of the South Australian uranium assets of Oxiana and Minotaur
Exploration, began trading 244% above its 25 cent initial public offer
price.

Toro opened at 86 cents, up 61
cents, and ended the day at 80.5 cents, up 55.5 cent or 222%. The first
day of trading saw the share market value of the new shares rise to $57.96
million, from $18 million, in strong turnover of 21.09 million shares.

Ah yes, money for jam. The offer was
hopelessly oversubscribed, meaning only the chosen priority few received
tickets for the rocket ride. The casual punter might think Toro actually has
some yellowcake and get enthusiastic but if you scratch the surface, no, it merely
has exploration rights to a large amount of land. Finding a uranium resource,
let alone producing yellowcake, remains a very long, very speculative way off
at this early stage. The prime marketing pitch is that the territory might hold
another Olympic Dam – which is a bit like saying that if you throw a dart at
26,000 square kilometres of NSW, you might land on Sydney Harbour
waterfront. Or not.

Toro is a South Australian float, but the
WA spirit is there. A sense of the bubble fever can be obtained from John
Phaceas’s Saturday uranium wrap for The West, which includes the float of another uranium hopeful, Encounter Resources, that
was overshadowed by Toro. Encounter closed 65% higher than its 20 cent issue price.

And what does Encounter have going for it?

Encounter holds a
key package of tenements covering possible extensions of BHP Billiton’s massive
Yeelirrie deposit, as well as tenements immediately between Nova Energy’s Lake Way and Centipede deposits near Wiluna.

Yes, dirt near someone else’s dirt – and
all on the massive scale of Western
Australia.

It’s nice to see investors willing to put
capital into exploration and it’s all good fun at the casino, as long as the
last punters into the game realise the odds they’re really playing with. I’m
thinking of pegging out the backyard and announcing I’m exploring for uranium.
The way things are heading, I’ll soon be worth millions.

Peter Fray

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