The opportunities and the threats of the FJE Limited Essay

The opportunities and the threats of the FJE Limited - Essay Example The objectives of this project are:- †¢ To analyze the strength of the company. †¢ To assess the weakness of the company. †¢ To identify the opportunities and the threats of the company. †¢ To identify the various sources of fund and probable funds of the company. †¢ To assess the cash requirement of the company. †¢ To analyze the various options of investment available to the company in exploration. †¢ To identify the financial viability of each of the exploration option. SWOT analysis is a strategic tool which is used to analyze, understand and decide on the various situations which can arise in the business during its course of operations. The full form of SWOT is strength, weakness, opportunities and threats . The SWOT analyses of the FGE Company have been done to assess the risks and also the competitive advantage of the company and the business in which it is operating. Strength: The main strength of FJE is the sector in which it is operating. Uranium is used to produce electricity from nuclear power. Uranium itself has a very big market globally. In 2008 Australia exported more than AUD 800 million dollars of uranium to the rest of the world. The royalties achieved from Australian uranium mines is about AUD 21 million dollars per year. From Australia only about 10707 tons of uranium has been exported to the rest of the world in 2008.... This signifies that uranium has a major demand in most of the countries of the world. Therefore companies who are operating in this sector will always have a demand in the market as the resources available are less compared to the global demand. Another advantage of the company is that it does not have any debt in its capital structure this means that company is less risky. The company has exploration site in Niger which has 5% of world’s uranium resource. Also it has a site in Australia which has the largest resource of uranium in the world. This gives FJE competitive advantage over other firms. Figure 1: Uranium Requirement of the World (Source: Trade Tech, 2011) Weakness: Exploration companies always have to bear the risk of failing in the discovery of the uranium ore or salable uranium ore. If the exploration companies cherish the high return of the extraction and export of the mineral ore then in case of not discovering the ore many times the exploration companies have to suffer huge loss. The cost of exploration and all the associated expenses are very high. The FJE limited is a very small company which has a very small capital of AUD 4 million dollars. If the company fails to discover uranium in the proposed sites then it will be very difficult for the company to maintain its operations. More over there are many trade restrictions on uranium like non proliferation treaty etc made the market for the uranium quite narrow. Another weakness is the intense competition in this sector. The uranium exploration market is already crowded by many big companies like Western Mining Corporation, BP Minerals, and BHP Billiton etc. Opportunities: The biggest of the FJE limited is the rising market of nuclear energy. Rise in the use of the nuclear