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« Olympic Dam: More uranium! | Main | Time to buy uranium stocks: Deutsche Bank »
Wednesday
Oct032007

Uranium Stocks on the move

Uranium chart Tradetech 03oct07

Uranium stocks are on the move despite the spot price of uranium falling to $75/lb according to TradeTech. However we need to look a little deeper to get the true picture.

This price of $75/lb is based on the average price accepted by one seller in late September when TradeTech wrote the following:

‘In late September, one trader entered the market offering 100 tU as UF6 or U3O8 equivalent. The seller has accepted multiple bids and will sell about 300 tU as UF6 or equivalent U3O8 in total. The winning price in each transaction is at or very near today’s Exchange Value of $75.00 per pound U3O8.’

So when investors look at the chart they see the $75/lb.

Prior to this sale going through the results of the DOE auction were released as follows:

The winning bidders include three US utilities and one hedge fund with the average price for all bids received reported as $213.48/kgU as UF6. (213 divided by 2.2 = $97/lb approx)

Now if we check the futures price for 2008 we have a price of $84/lb. The point is that we have three pieces of data but we naturally focus on the latest figure, which in this case just happens to be the lowest figure for uranium.

However we are not invested in uranium but we are invested in uranium stocks, a different animal altogether. So take a look at the following chart, which was carried by Resource World Magazine. This is a chart of the progress of uranium stocks which is entitled ‘Resource World Uranium Stock Index’

Uranium Index 03oct07

As we can see form this chart the value of uranium stocks has been moving up since mid August. This index, if we are reading it correctly stood at around 900 in mid August and now stands at 1250. If you wish to see the uranium stocks that make up this index then click this LINK.

Granted yesterday we took a hit as many of the most popular uranium stocks were sold off. However we are not put off as the fundamentals still bode well for the future. The nuclear revolution has not stopped, we don’t see headlines on a daily basis of nuclear power plants being cancelled do we?

A recent article carried on u3o8.biz had the following to say:

Since January 2007, the global plans for new nuclear power plants have risen 37 per cent, up by 82 to 304, with China leading the charge. The Asian tiger plans to build 114 new nuclear reactors, up from projections of 63 last January, a whopping jump of 81 per cent.

The United States is now planning 32, compared to the 23 it proposed in January; a 39-per cent rise. Just last week, NRG Energy Inc, the second-largest power producer in Texas, filed the first application to build a nuclear reactor in the United States since 1979's Three Mile Island meltdown in Pennsylvania. The US Nuclear Regulatory Commission expects to receive the 32 proposed applications through 2009.


If we were to extrapolate Chinas requirements using the above rate of increase the numbers would be mind-boggling. Just imagine for a moment the present figure of 114 reactors increasing by 81% in the next twelve months and then by another 81% the following twelve months! That’s right China would require 373 new nuclear reactors. Well that old intangible ‘gut feel’ tells me that 1.3 billion people will require a lot more than that.

To conclude we intend to remain fully invested in uranium stocks and ride out the current market turbulence.

Have a good one.

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Reader Comments (1)

Great information in a time were most investors are hesitant to stay invested in Uranium stocks, like yourselves I'm riding out the uncertain times and anticipate they will turn upwards for a huge run.

October 3, 2007 | Unregistered CommenterW

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