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« South Africa to Join Nuclear Revolution | Main | Uranium To Be Auctioned Next Week »

Ur-Energy Incorporated: On the floor?

Today we are examining the possibility that Ur-Energy Incorporated could have reached the bottom of its trading range with the view to establishing a possible ‘buy’ call on this uranium explorer.

We are trying to do this against a backcloth of falling uranium prices, battered uranium stocks, a general market sell off and enough negativity to sink a ship. We have mentioned in a previous article the up-coming auction of 200 tons of uranium hexafluoride by The US Department of Energy next week. All eyes will be focused on the outcome of this sale which will be used an indicator for both the current spot price and the future trend for uranium.

A number of our readers have returned to the sidelines as the pain was becoming unbearable, a position that we understand but have not followed. Our strategy was to remain in this market throughout the summer as we were of the belief that uranium would maintain its strength. This happened for the first part of the year but the spot price has recently dropped and could continue heading south.

However, we are optimistic that the price will stabilize around its longer-term average of $95/lb. We also consider this price to be reasonably attractive to uranium miners.

So to Ur-Energy Incorporated, we will first take a look at the chart, which is not a pretty picture.

URE Chart 14 August 2007

Two months ago this stock traded at just over $5.0 and yesterday it closed at $3.0 registering a fall of 40%. Another negative sign for the stock was the crossover of the 50dma down through the 200dma which true to form pushed the stock even further down. The technical indicators have also been languishing in the oversold territory for some time. Have we lost the will to live? Well not just yet.

On the positive side we can see that the technical indicators would appear to have turned positive and are now heading north. The RSI and the stockastics have turned positive and hopefully the MACD will also follow this directional change. One swallow does not make a summer but the stock price did find some support yesterday and moved up to $3.0. The news flow is good and frequent which we appreciate especially in these times. Volume is strong and steady with the occasional trading day of over 1.0 million shares. The stock has had a 52 week High of $5.4 and a low of $2.1 so its not for the faint hearted. The Market Capitalisation is $275 million with 92 million shares outstanding.

In conclusion we appear to be close to the bottom with limited downside however we are in the middle of August with not a lot happening so it may be prudent to hold for the moment. Next weeks auction could play havoc with the price of uranium and uranium stocks. So we are going to be patient and let events unfold before adding to our portfolio.

Ur-Energy Incorporated trades on the Toronto Exchange as URE.

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