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« The Hyperion mini nuke wins an award | Main | Cameco Corporation: Still paddling! »
Friday
Sep262008

Uranium-Stocks: Portfolio Update 26 September 2008

uranium chart 26sep08
This chart is courtesy of [1] www.U308.biz.

The chart above shows the uranium spot price at $58/lb according to UXC and at $60/lb according to TradeTech with the long-term price of uranium trading at $80/lb.

It’s been a torrid time for holders of uranium stocks with many investors throwing in the towel and moving on and who can blame them when this sector has been well and truly shunned. An example of the current sentiment is reflected in the stock price of Crosshair Exploration and Mining Corporation, which is now trading at $0.265. In a recent alert Peter Grandich commented as follows:

Although Crosshair’s share price has had the tar beaten
out of it, the Company is still one of my favorites. They
have completed everything they set out to do this year.

1) They completed the acquisition of a new deposit in
the Central Mineral Belt with 6.1 million pounds of
uranium and more than 4000 claims.

2) They updated and significantly expanded their 43-
101 resource to 11 million pounds of uranium.

3) They have appointed a new president (from Barrick)
and full-time and very experienced CFO.

4) They are on the ground drilling and continuing to
improve their projects.

Crosshair seems to have the right team and the
right projects to be successful.


We do not own this stock but we have traded it in the past and were looking to re-purchase it again. When it fell to $1.00 we raised the question of whether or not it could possibly fall any further and were puzzled to see it continue on its path south. Crosshair is symptomatic of this market sector, as many of these stocks have suffered the same fait.

Although the long-term price of uranium is holding up well there is little in the way of good news that we can bring you. For now our intention is to stay put as the damage has already been done, however it may take some time before a meaningful recovery gets under way. We have updated our portfolio but only read it if you have very strong stomach.

Cameco Corporation – Watch
Cameco was trading at $37.90 when we last updated the portfolio in June and closed at $26.22 yesterday. This sectors heavy weight is still battling with water problems, which is a real drag on the stock price. (We don’t own this one)

RPT Uranium Corporation – Hold.
We bought RPT on the 19th February 2007 for $0.42 and sold it for $0.62 on the 13th June 2007 for a profit of 47.6% in 4 months. We still like this stock and so bought it back at around 50 cents, however RPT closed yesterday at $0.165.

Uranium Participation Limited – Hold
U was trading at C$9.05 in June but as of yesterday it was trading at $7.74. We bought at $11.97 on 21 November 2006 so we well and truly in the red with this trade.

Strateco Resources Incorporated – Hold
We made a small investment in RSC at $2.30 and it has traded as high as $2.87, however it closed at $1.70 yesterday, another disappointment.

Crosshair Exploration and Mining Corporation Watch
We continue to watch CXX. We had hoped that CXX had found some support at $1.00 but that soon dissipated. The news flow has been good and frequent so this rapid deterioration remains as a puzzle to us. Although we do not own this stock it remains very tempting at $0.265 but we just cant find the courage to make a purchase until we see some signs of improvement.

Laramide Resources Limited – Buy
This stock was trading for about $3.85 at the time of the last update in June, and it closed yesterday at $1.65. We bought at $5.78 on the 28 July 2006 so again we are still in the red with this one. When we were sitting on a paper profit of around 80% we sold half of our position in order to buy other uranium stocks, as we needed a bigger spread of stocks at the time. We had hoped that the bottom had been reached at the $3.00 level but it has continued to drop.

Mega Uranium Limited – Buy




We bought MEGA at around $4.0 on 27 July 2006. MGA was trading at $1.40 yesterday. In a recent news release the company had this to say about the political situation in Australia:

Mega is pleased to report the favourable outcome of the Western Australia State election, which has resulted in the incumbent Labor Party government, which opposed uranium mining, being replaced by an alliance of the Liberal Party and National Party. As the two parties forming the new State Government both have policies that favour new uranium mine development, there is no longer any political impediment to the development of Mega's 23.7 million pounds U3O8 Lake Maitland project”.

With the removal of this political ban we would expect the news to filter through and encourage investors to take a second look at Mega, but we cant count on it happening.


Khan Resources Ltd - Hold
We bought Khan on the 5th March at $3.63 and it has since dropped to lower levels due to licensing issues with the Mongolian regulators. So, in anticipation of Khans management team finding a resolution to this problem we decided to buy again. (See Khan Resources: A speculative buy) the stock rallied and we took a profit of 15% in a matter of days before the stock fell back again. Khan is still having a torrid time trading closing yesterday at $0.55.

Aurora Energy Resources - Hold
We bought Aurora on the 5th March 2007 at $14.17 and it is now trading at $1.80, a complete hammering for us. A resolution to the issues surrounding the granting of a mining license is desperately critical to their activities in the Central Mineral Belt, however it could be some time before these issues are resolved.

Strathmore Mineral Corporation - Hold
We bought STM on the 14th April 2007 at $4.96 and it is currently trading at $0.49, which is a very disappointing performance indeed.

Ur-Energy - Hold
We bought Ur-Energy on the 23rd April 2007 at $4.75 and we also bought again on the 24th August 2007 when we acquired more stock at $3.03. We had hoped to have bottomed on this one, but it was not to be and it closed yesterday at $0.76.

Denison Mines Corporation – Watch
We don’t own Denison (DML on the TSE) despite trying to buy it when times were better. However on 28 July 2008 we purchased the JAN09 Call Options of Denison Mines Corporation at a strike price of $7.50 for $1.10 per contract and they unfortunately closed yesterday at $0.20.

Other than sit through this carnage there is not a lot we can do at the moment. This situation may remain with us for the short term so we will just have to hold on until the uranium story grips the imagination of the investment community and it comes back to life. The need for uranium is not going to go away and the construction of nuclear power plants will continue but it could be some time before we see this reflected in the price uranium stocks. We had hoped to add more stocks to the ‘buy’ list but we cannot do this just yet.

If you have any comments or suggestions then please feel free to add them to this article whether you agree with us or not.

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Reader Comments (8)

you never give an opinion on Paladin Energy which is a significant and very well run company.Also any thoughts on Thorium Power?

September 26, 2008 | Unregistered Commenterrich

Namibia is a big uranium producing country and one company in particular, Forsys, has just obtained a mining license there. This stock seems to be bucking the downward trend and is actually going up! Maybe there's a bigger company looking at a buyout and some investors are seeing this potential. After all, Areva bought out Uramin and that company was also in Namibia. Maybe also South Korea might be interested in this low grade but large and easy to get at deposit deposit.
Any thoughts on this one? Thanks!

September 26, 2008 | Unregistered Commenterdaveydog

if you're going to mention Namibia, you need to add Paladin Energy to the top of the list.when this sector turns around, this will be the company bought out for sure...................PALAF or PDN.TO//PDN.AX

September 27, 2008 | Unregistered Commenterrick

Hang in there folks. I'm heavily invested in uraniums so obviously i'm getting the tar beat out of me right now. But the fundamental story for uranium improves every day. And given all the market turmoil right now i actually like where i'm positioned. Check out http://www.world-nuclear-news.org/ for some solace. It seems there is a new nuclear power plant being proposed every day.

September 27, 2008 | Unregistered CommenterRich B

if you are not continuing to nibble and purchase uranium mining stocks when they are at this low ebb, then you may not have the courage to buy when they start going up. also, how could you tell every up-stroke is not a 'head=fake'? i have bought more dnn and uec. future wyoming producer ure is my next buy. glta...!!

September 28, 2008 | Unregistered Commenterrichard mruz

Team,

We are just observers at the moment as this sector has gone far lower than we expected. We could be looking at the opportunity of a life time so don't be put off by our lack of action. If it makes sense to you then buy a few.

September 29, 2008 | Unregistered CommenterUranium Stocks

Sadly this post and comments reminded me very much of the sort of thing I read in 2000/01 regarding tech stocks that I lost a packet in...

"Just hang in there, most of the damage has been done" was the overall sentiment on stocks that where $20 (down from $200) that went on to $1...

Investing is a fashion business and no matter how good the company Uranium is currently the equivalent of pink hot-pants in winter.

Nick.

October 1, 2008 | Unregistered CommenterNick

If you sell now, you will get sqadoosh for your shares on the open market. If you held this long as I did, we might get the own the companies since we will be the last one holding any shares:). At least it will be cool to be the majority owner of land in Canada holding urnanium. Most companies can go to zero but there HAS to be something worth buying by someone. Since I own a cross sections of the sector, only one has to go ballistic to get a good portion of the money lost in value back. Anyway, I had sold out and went back in waaaay to early. So many people have gotten burned and so much technical damage has been done that it looks a long train ride cross country to get back in the game from here. That being all said and done, at least we have something to hope for potential gains when and if this thing bottoms.

October 6, 2008 | Unregistered CommenterJeff

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