While the mining boom powers on, the mini “uranium boom” seems to have slowed down considerably. While leading uranium stocks Paladin and ERA have slipped considerably from all-time highs (down around 35% from their peaks), smaller uranium players have been even harder hit. One such company is a junior uranium miner, Uranium King, which caught Crikey’s eye last January. UKL piqued our attention after it jumped 41% in one day, despite not having made any announcement and its assets primarily consisting of two “inferred” resource deposits.

The lack of substance didn’t stop investors piling into the stock. In June last year, UKL’s share price touched $1.50 per share, after floating at 25 cents in late 2006. UKL lived up to the cliché “buy on rumour, sell on fact” and is trading at around 46 cents.

Things began to go awry shortly after UKL made what appeared to be a positive announcement to shareholders on 14 June 2007. In a glowing statement, UKL reported to the ASX that it would be “Australia’s next listed uranium producer” and that operating EBIT from its Apex – Lowboy deposit in Nevada (one of its two major assets) would be US$87.4 million.

The good news was short-lived though. Only two days later, the company announced the resignation of technical director, Karl Myers, from the board. Mr Myers told the company his “resignation” was due to a desire “to spend more time in the field exploring for new uranium deposits” and that “uranium is found in the field, and not in the boardroom.” Exactly how effective the 79-year-old Myers would have been “in the field” remains to be seen. Sadly, Myers time in the field didn’t last too long, with the company announcing on 2 November 2007 that it had been “forced to terminate the services of … former director Karl Myers” and that Myers had instituted legal action against UKL.

Until his sacking, Myers appeared to be a key figure at UKL. UKL’s major asset, the Rio Puerco uranium deposit in New Mexico was discovered by Myers in 1968. Until his surprise termination, Myers had personally supervised geological and geophysical studies at the area. Myers also happened to be one of the three controllers of a company called METCO. Uranium King’s assets (specifically the New Mexico and Nevada deposits) were purchased from METCO for consideration of 46 million UKL shares.

Given Myers’ apparent importance to UKL, and the fact that he owns an interest in a company which controls the majority of UKL, Myers’ departure, and the lack of information provided to shareholders, is somewhat concerning. Another cause for concern could be the fact the only “latest news” listed on UKL’s website is a research report from March 2007.

In the midst of the management upheaval (Chairman, Howard Dawson also resigned, in August), UKL announced on 11 October 2007 that it had agreed to merge with fellow minnow, Monaro Mining. Under the terms of the deal, UKL shareholders will receive 5 Monaro shares for every 7 UKL shares they own, with UKL then becoming a subsidiary of Monaro. This too seems somewhat bizarre, given that prior to the announcement, UKL was capped at around $55 million, and MRO was valued by the market at approximately $23 million.

The market either doesn’t have much confidence in the merged entity, or doesn’t think the deal will go through. Based on the deal ratio and MRO’s current share price, UKL shares should be worth around 57 cents (well above their current 46 cent level). The ASX announcement regarding the merger noted that the combined company would have a market capitalisation of $100 million – possibly a bullish claim given that combined, UKL and MRO are capitalised at around $60 million.

At this stage, the merger ostensibly remains on foot, although with promised merger documentation not forthcoming we suspect this is one marriage that may not make it.