Friday started off as a quiet, pre-holiday trading day for most uranium miners on StockInterview.com’s Uranium HQ. After all, this was the beginning of a long weekend before Canada celebrated Victoria Day on Monday. But just before Noon, investors knew something was happening with Energy Metals Corporation.

By 2pm, shares had jumped to a daily high of C$16.72 – up by C$1.72/share for the day. The stock was halted by the Toronto Stock Exchange’s Market Regulation Services, after trading volume surpassed the three-month average trading volume by 300 percent.

Around the noon hour, a few other stocks jumped a bit higher. By day’s end, several other companies we closely follow had posted strong percentage increases: Ur-Energy (7.46%), Uranium One (7.66%), Strathmore Minerals (15.11%) and Uranerz Energy (19.49%).

At the end of the trading day, Energy Metals issued a news release announcing it ‘is in exclusive negotiations with respect to a potential sale of the company.’

In a February 16th article entitled “Junior Uranium Miners Reluctant To Be Acquired," we posted remarks by Energy Metals vice president for strategic initiatives Farhad Abasov, who told us, “We are open to opportunities on the other side of the M and A that will enhance our shareholders’ value.”

Quite a few speculations have been made as to the possible suitor. In early May, Raymond James mining analyst Bart Jaworski speculated Uranium One could intensify its U.S. push in the coming months. He considered Strathmore Minerals, Ur-Energy and Energy Metals ‘attractive takeout candidates.’ These were the same names we discussed with Uranium One chief executive Neal Froneman in July 2006.

We also talked with Froneman about continued U.S. acquisitions in late January 2007, after his disappointing setback with Rio Tinto (U.S.) in Wyoming regarding the Sweetwater Mill and Wyoming uranium assets. He told us then, “We’re not sitting on our hands.”  Several weeks later, Froneman announced the merger with UrAsia.

Within hours after the announcement was made, he emailed us indicating the U.S. remained a priority. Recently, Uranium One’s acquisition of USEG’s uranium assets and Shootaring Canyon uranium mill was concluded. The company’s technical team has been aggressively moving these projects forward, according to a previous email.

We do not believe Uranium One will acquire Energy Metals Corporation. This is our speculation based upon several assumptions.

This past week, we exchanged emails again with Mr. Froneman. After we discussed the uranium price, he wrote, “We should talk sometime, maybe next week?”

It would be unrealistic for us to interview him if he were in the middle of acquisition negotiations. Further, we believe Uranium One shares would have been halted, and Froneman would have also issued a news release in conjunction with Energy Metals.

For the past few weeks, rumors have emerged that Denison and Energy Metals would merge. TheInvestar.com’s Matthew Smith speculated Denison was the likely suitor. He also suggested AREVA as a potential candidate. Neither company makes sense.

Mr. Smith has completed preliminary research that AREVA, with the newly elected French president, could spin out as a fully public company. On this speculation, we believe Smith is headed in the right direction. Further, if Denison does merge with another, the marriage would likely include a more publicly spun-out version of AREVA.

Another acquisitor offered by others was Cameco Corp. This is highly unlikely as the world’s largest uranium producer is likely to move forward with the company’s own Wyoming projects in the Gas Hills district, through its wholly owned Power Resources U.S. subsidiary. Exploration and future development efforts appear focused outside the United States in exotic regions such as Peru (Macusani, Munani and Lagunillas in conjunction with Vena Resources) and Gabon (with Pitchstone Exploration). Cameco is looking for an elephant to replace the loss of imminent Cigar Lake production. Uranium grades in excess of 30 and 40 percent in Peru are more in the order of what this producer is hunting, not the low-grade uranium projects offered by Energy Metals.

We have developed some familiarity with Energy Metals since late 2005, and featured this company in our publication, “Investing in the Great Uranium Bull Market.”

Reviewing the Energy Metals news release, the wording was reminiscent of the Strathmore Minerals ‘Exclusivity’ joint venture announcement with a major international firm. What was left out of the Energy Metals news release? The company was deliberately secretive. This could possibly rule out any publicly traded company.

This is the type of secrecy found in negotiations with private equity firms and hedge funds. We are aware of several uranium mining juniors – those with assets in various stages of the permitting process – having been approached by hedge funds and private equity firms. There have been quite a number of these discussions since last summer when Wall Street began noticing the price spike in uranium.

A week ago, we reported on the impact of the recent Raymond James conference in New York City. At another ‘investor conference’ held this past week, we received feedback that most of the interest was institutional. From our own record-keeping, through the sales of our recently released Uranium Outlook 2007-2008,  we determined an overwhelming percentage of CD-ROM sales came from financial institutions, banks, hedge funds and others which were not retail investors. We were also surprised to have sold out the entire first printing of this publication in less than 30 days.

In an article published last year, we observed a quiet but curious Connecticut hedge fund studiously taking notes at the Platts Nuclear Fuel conference in Washington, D.C. this past September. They subsequently met with a number of contenders in the uranium mining space.

From what we understand, this hedge fund was interested in imminent cash flow. One of the fund’s requirements was getting a grasp of a company’s likely cash flow so they could run it through their Discounted Cash Flow (DCF) model. On May 1st, Energy Metals announced the sale of 1.4 million pounds U3O8, over a six-year period commencing in 2010. With that announcement, Energy Metals could qualify for a hedge fund's DCF modelling.

It is also our contention that a U.S. utility could possibly be involved. In a recent phone conversation, we were told by a utility spokesman that his company had interest in helping uranium mining companies develop their U.S. uranium projects in order to provide a reliable fuel supply for his company’s reactors. Because he went off the record with those comments, we can not reveal the utility’s name.

One U.S. utility, which could later become an acquisitor, is a utility currently eager to acquire uranium for its nuclear reactors. FPL (Florida Power and Light) may be in a bind to acquire sufficient uranium in 2007 and 2008. We have multiple-confirmed FPL’s plight for near-term uranium delivery through four separate nuclear fuel industry sources. All four well-known company spokesmen provided us with pieces of a puzzle that FPL is keen to quickly get its hands on U3O8 as soon as possible.

FPL is also eager to sign contracts for their long-term uranium requirements well into the next decade. As the uranium prices continue to rise into 2008, it could be less expensive for FPL to simply buy one or two uranium mining companies. Especially if this Floridian utility plans on constructing up to three new nuclear reactors before 2020.

In any case, it really doesn’t matter which company hopes to successfully negotiate the buyout of Energy Metals. More importantly, for investors, is our conclusion that this potential acquisition is highly likely to result in more aggressive interest and speculation in other uranium mining companies with U.S. projects – especially those companies moving toward production before the Russian-U.S. HEU agreement expires in 2013.