There’s a fresh glow about the uranium sector, brought on by the prospect of a protracted bidding war for a Canadian firm fortunate to be sitting on a rich deposit of the fuel that has made it a potential linchpin in the Athabasca Basin of the northern prairies.

Shares of Hathor Exploration slipped in Toronto trading to about 5 Canadian dollars (US$4.81) Monday but remain above the sweetened C$4.70 bid by Rio Tinto last week, which analysts say supports the view Cameco will again raise the ante.

The interest shown in uranium could also be good news for a clutch of small-cap miners digging up the crucial atomic ingredient, including several in Australia.

The C$654 million valuation now pegged to Hathor represents a 76% premium to where the junior explorer was trading before bidding began with Cameco’s hostile approach in late August. The market is suggesting a premium closer to 90% — a healthy bet for a commodity out of favor since the Fukushima disaster and the knee-jerk response by Germany and other governments to the risks of atomic energy.

Edward Sterck, an analyst at BMO Capital Markets, estimates that Cameco would need to come back with an offer of about C$4.90 a share which, including paying the C$20 million break fee Rio and Hathor have agreed, would mean an effective C$5.05/share. That, he says, would be dilutive on most valuation metrics based on the current resource base of Hathor’s key Roughrider deposit.

Cameco is pitting itself against a much larger company with significantly more cash. And Rio has taken a friendly approach, effective when it earlier this year bought Mozambique-focused coal company Riversdale Mining.

Cameco will be penciling in synergies with its existing mine and mill nearby at Rabbit Lake. It also may be willing to pay up just to keep its rival out of the Athabasca Basin, which accounts for more than 20% of global output of uranium and where Cameco has been exploring for years.

Rio is equally keen to build its uranium operation in an area where mining costs are relatively low. Although iron ore has driven profits for the company in recent quarters, it continues to invest in its other businesses too and recently injected roughly 340 million Australian dollars (US$335 million) into majority-owned uranium miner Energy Resources Australia.

The key for both suitors, though, is an optimistic view on uranium prices longer term. The disaster in Japan continues to weigh heavily on the commodity, despite a supply deficit and vulnerable production highlighted by the flooding at Energy Resources’ Ranger mine this year.

China has 14 reactors in operation, 27 under construction and is preparing to start building more, according to the World Nuclear Association. India and Russia also have fleets of reactors underway or planned.

Given expectations nuclear will play a role in the global energy mix despite concerns, it is a fair assumption the war for Hathor and consolidation in the wider industry is far from over.