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Now that the spot uranium price has sustained above $40/pound, after a 20-year drought and a bottom of $6.40/pound at the end of December 2000, hundreds of junior exploration companies have thrown their hat into the ring. Both Canadian and Australian junior uranium companies hope to raise the big money required to bring a uranium property into production. A perceived uranium supply crunch has added to this frenzy. As occurred with previous uranium cycles, only the strong will survive.

While numerous Canadian junior exploration companies hope to find a new discovery in various uranium-prospective regions through Canada, a safer investment strategy is to speculate on companies, whose properties were previously drilled during the uranium bull market of 1974-1980). Some of those properties had uranium deposits delineated by major oil and uranium companies, who did not blush at spending tens of millions of dollars in exploration.

Some of the newly arrived uranium companies acquired those drilling databases and their properties, which were abandoned by the previous owners. Some companies have been actively moving their projects forward to production, using a more environmentally friendly mining method than an open pit or underground mine. It is called In Situ Leach (ISL) uranium mining, and the operation is much like a water treatment plan. Oxidized, or carbonated, water is pumped into an orebody, and uranium is flushed into a processing plant. These are relatively inexpensive to install, possibly for as little as $10 million.

There are pitfalls when investing in those companies which plan to establish ISL operations. During the initial phase of this bull market, a common myth, circulated among investors, had been "pounds in the ground." How many pounds of uranium oxide, or U3O8 for short, does a company have in the ground? The more pounds a company claimed, the higher its market capitalization ran. Once you sift through the companies with very real prospects from those who are cheerleading their "pounds in the ground," you should have a realistic short list.

These are the four key questions which must be answered if you wish to minimize your risk when investing in uranium stocks:

How permeable are the ore bodies you plan to mine?

What is your average grade?

Over what area does your rollfront extend?

What is the depth of your ore body? One of the most important factors to consider is the permeability of the sandstone, from which the uranium will be mined. Permeability is the flow rate of the liquids through the porous sandstone. Knowing what the permeability of the orebody will let you know how much water you can get through the sandstone formation. Harry Anthony, an internationally recognized ISL expert, noted, "You need higher grade ore for tight formations. With high permeability, you can space your wells further apart."

The make-break point for a formation's permeability is its Darcy rating. How high is the Darcy? A typical Darcy can range from minus 1000 to plus 3. The higher the Darcy, the more permeable the formation. This helps determine how economic the orebody is. An acceptable range would be one-half to one Darcy. What is a Darcy? Uranerz Energy CEO Glenn Catchpole, who is also a hydrologist, said, "It is gallons per day over feet squared." He added a pure hydrologist would calculate the feet per day or centimeters per second to get a more accurate permeability assessment.

With low permeability in a tight formation, you may need to space more wells in a typical well field pattern. While explaining that costs are fixed and variable, Anthony computed the cost of a production well for a 500 foot deposit at $15,000. An injection well could cost $11,000 to install. By comparison, in New Mexico, where the deposits are wider and of higher grade, a 2000-foot production well might cost $27,000 and the injection well could cost $18,000, and it would still be economic. Obviously, the deeper the deposit, the more it will cost to extract the uranium. Not only will the capital costs increase, but operating costs will be greater.

Uranium grades can be a contentious point. "Grade is the driving force," Harry Anthony shot back. We asked him about companies which said they could run an economic ISL operation with grades as low, or lower than 0.02. Anthony laughed, "They'd be out of business before they started." Strathmore Minerals' president David Miller offered a more technical analysis, "That will not likely have enough recoverable pounds. The operating grade feeding the plant will be too low." What is the best grade? Miller wanted to see properties with deposits that average on the order 0.5, 0.10, or 0.15.

Uranium grades can impact the cost of operating an ISL plant. An ISL plant may operate at 5000 gallons per minute. Running 24 hours daily, the plant would process 7.2 million gallons of water. Operating costs are based upon cost per thousand gallons of water. "This includes electricity, reagents and labor," said Anthony. On a daily basis, it would cost more than $21,000 to run an ISL plant, based upon Anthony's calculations of $3.03 per thousand gallons of water. Under this scenario, a plant might produce 2360 pounds of U3O8 every day or 80,000 pounds monthly. The cost to produce each pound would be $8.18. Using that math, the uranium grades would be about 44 parts per million (ppm) or 0.08. Anthony said, "I like to see 70ppm or higher." That comes to a uranium grade of 0.13.

Another way to evaluate a company's uranium property is looking at each part of its development costs. In a well field pattern, David Miller can determine the economic viability of the ground. "The keys to what is recoverable include how many pounds are recoverable per pattern and what it costs to install a pattern," Miller explained. "If you have 10,000 pounds in place and can recover 8000 pounds, your well field development cost can be $8/pound, if it costs you $80,000 to install that pattern.

The cost to install a pattern also depends over how much territory your uranium deposits run. "Ten million pounds over an area of one-half mile will cost less than those same pounds over an area of two to four miles," explained Terrence Osier, Strathmore Minerals senior geologist. "That means more injection wells and more production wells." Depth of the wells influences installation cost and impacts its daily operating cost. "When uranium costs were very low, a company needed 70,000 pounds per pattern," Anthony commented. "Now a company might only need 20,000 pounds per pattern to make it economic."

There are many variables within the above advices provided by these experts. However, the important point to realize is the time of hyperbole and hoopla over "pounds in the ground" has passed. As more uranium development companies move closer to establishing an ISL operation, the go/no-go consideration, as UR-Energy CEO William Boberg aptly described it, will come down to permeability. After that, the economics of a project will either make it viable or not. Using these criteria, you can avoid the hysteria by speculating with the odds stacked more in your favor.

COPYRIGHT 2007 by StockInterview, Inc. ALL RIGHTS RESERVED.

James Finch contributes to StockInterview.com and other publications. StockInterviews Investing in the Great Uranium Bull Market has become the most popular book ever published for uranium mining stock investors. Visit http://www.stockinterview.com

When it comes to a subject like plumbing, occasionally it is interesting to get an overview of the subject. With that in mind, we give you the role of plumbing through the evolution of society.

The word plumbing derives from the Latin word for lead, plumbum. Plumbing is a skilled trade that works with pipes, tubing, and plumbing fixtures that are designed to provide potable water and to drain waste. Plumbing dates back to the earliest civilizations. The Romans, Persians, Indians, and Chinese all had rudimentary plumbing systems. They were often involved with the supply of water and waste removal was haphazard at best. It was in the palaces of the rulers that some of the earliest examples of indoor plumbing were found. The common people were pretty much on their own.

It was not that people did not desire comfort and privacy when performing basic functions. Archaeologists in China recently unearthed a 2,000 year old toilet in a tomb built for an Emperor. It was complete with running water, a stone seat, and a comfortable armrest. Of course, since it was in a tomb, it was intended for use after his death. There were really very little improvements in plumbing methods and materials for centuries. A relative of Queen Elizabeth made an attempt to manufacture a privy that would provide the Queen Mother with a little dignity and privacy, but he became a laughing stock as a result of his efforts. Another two hundred years would pass before more serious attempts would be made.

The invention of the flush toilet is widely assumed to be the work of one Thomas Crapper who was a London plumber in the 19th century. While it was true that he did patent several plumbing inventions, and headed a shop that produced, among other things, toilets, other men had actually done the real inventing before he came along. In World War I, American doughboys in England saw the name of Crappers shop on toilets around London. They coined the term crapper, and it has stuck especially in the military.

It was not until the mid 19th century that public sanitation, the need for potable water, the proper elimination of waste, and even the regular habit of bathing became common. It may have been because of the realization of the connection between unsanitary conditions and disease. The discovery of bacteria and the understanding of their role in diseases that had been killing people since the dawn of time may have been the catalyst that spurred the growth of plumbing. It may have just been that its time had arrived along with the other technological advances that have led us into a new edge.

Plumbing was certainly a growth industry during that Golden age when the civilized world was converting from no plumbing to full plumbing. Between the years of 1928 and 1954, the sales of plumbing products and water heating equipment went from 498 million dollars a year to a staggering 2.33 billion dollars a year. Now, potable or safe water is required by law in most developed nations. Proper sanitation and the safe removal of waste is the accepted norm. Plumbing has become a symbol of civilization, and retains its place among the ranks of the skilled professions of the world.

Fred Linson is with PlumbingStop.com - a directory of plumbing companies.