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« 750,000 deaths in China from Pollution: Enter Nuclear Power? | Main | Strathmore to Spin Off Non-Core Uranium Assets »
Wednesday
Jul042007

Laramide Resources: Consolidating

Most uranium stocks have been hit by a big sell off, despite the continuous rise in uranium prices.

Laramide Resources Consolidating

Laramide Resources was hit particularly hard and is down about 35% from its highs, but after this short sharp and to many shocking correction, Laramide Resources is consolidating and preparing to move much, much higher.

Corrections are to be expected in any bull market and they are healthy as after a correction, the stock, commodity or index has a period of consolidation before moving higher and continuing its bullish run. As long as none of the fundamentals that started the bull market are much changed, the bull market will continue after these periodic pullbacks.

To those fortunate enough to be riding the bull market, these pullbacks present an opportunity to add to positions and buy new positions in different stocks in the industry. It is perhaps a better idea to wait until the correction is over and the consolidation has begun before buying as there is less change of the price falling much further, once it has found a base and has consolidated for a while.

This is the exact position that Laramide Resources is in. The stock has fallen a huge amount recently and investors are now presented with a quality uranium stock at an incredible discount of 35% from its recent high, a great opportunity to buy more or acquire a position if one has not already got one.

Laramide Resources main assets are in Australia which holds more known reserves of uranium than any other country in the world and as you can see from the pie chart, they have a significant foothold and a great advantage which will be explored in a future article.

World Uranium and Australia

Laramide has a monster uranium project in Queensland, Australia, called the Westmoreland Uranium Project, which is one of the top ten largest deposits in the country. With the decision to give the power back to Australia's state premiers, to decide on uranium mining issue, will feel that it is a matter of time before Laramide Resources gets permission to develop a mine on their property.

A significant force delaying this decision from taking place is the coal mining lobby. Australia is the world's forth largest producer of coal and coal accounts for 25% of their exports, especially to fuel growing industrial demand in China. The coal lobbyists are worried that uranium mining will damage the coal industry and so they lobby against allowing the mining of uranium.

Hopefully to coal industry lobbyists will realise that it is not a case of rapidly growing economies like China and India needing coal or uranium, it is a case of them needing coal and uranium to fuel there economic advance. Once the coal lobby stops seeing uranium as a threat to there industry that should relieve some pressure on politicians and help encourage the decision to allow uranium mining to be taken.

In fact the coal mining companies would be better served by actually investing in some uranium projects of their own or entering joint ventures with some of the explorers that have already found uranium deposits, in order to capitalise on the rise in uranium prices and the shift from fossil fuels to nuclear power, accompanied by renewable energy.

However, when this decision goes through, it will be very beneficial to Laramide Resources and in particular, very beneficial to the stock price, which is what shareholders are fundamentally interested in. Until then we think Laramide will continue to expand and improve there uranium resources at their various projects by drilling programs, such as the 30,000 metre drill program they began last month on the Westmoreland Uranium Project. These results, combined with more good news on the political side of things, will power Laramide Resources ahead in the months to come, which is why we see now as a good time to load up on this top uranium stock.

Laramide Resources
trades as LAM on the Toronto Stock Exchange.

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Reader Comments (3)

The fundamental reason that I think LAM will continue to sell off is this " NO MINE,NO MONEY". Without a permit to extract product from Westmoreland LAM is virtually worthless. They could drill 50% U308 and still be dead money without drill permits. I put LAM in the same price range as any other explor-co with difficult political or enviornmental projects, like PWE or anything in the Otish Basin etc. $2 to $3 Max. These stocks are well priced vis a vis the enviornmental, native belligerance and political roadblocks they collectively face. Speculators are paying no more than 3 for these issues. LAM faces an extremly beligerant government in QLD. The coal lobby is paying the greens to protest Uranium mining in QLD , as reported in the press in AUS. The ALP will have no political pressure to change the mandate until after the next election in '08 if at all. There is no political change currently underway, in fact the anti uranium lobby has become even more vociferous in the past two months. If they are successful and are reelected, then hell could freeze over before Westmoreland is developed. Even if they're ousted (unlikely) it would be too far out in the future to bank on. Technically, if you look at LAM it has continued to break down after four false starts where white candle sticks sucked the unwary into the stock. Again, no mine, no money.LAM is going down below $3 where it belongs.Put this one down the list with the expolor-co's and not with the production visibility issues. This is one of those issues that won't work out in our lifetime.

July 5, 2007 | Unregistered CommenterWayne

With this recent shake-out you should continue to see a flight from speculation 'to quality...ie near-term producers and producers. For example, by 2008 EFR will have 3 mines in production. This is money in the bank, taking advantage of then-current uranium prices. The LAM's of the world quite probably will continue to drift downwards

July 5, 2007 | Unregistered CommenterThor1776

Whoever wrote this article needs spelling and grammar lessons. The spelling mistakes (ie. "there" instead of "their") make you seem less intelligent than you probably are.

As for LAM, I agree with Wayne. This stock is risky.

September 11, 2010 | Unregistered CommenterGeorge

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