Tuesday, April 8, 2008 at 03:38AM
This chart is courtesy of www.U308.biz.
In scanning through a number of charts of uranium mining stocks we can see that the majority exhibit a similar pattern in that they have fallen to a position below their own 50 day moving day average. This is not exactly a knock out but the points have pilled up against these stocks.
As we said in our last update, "wrongly or rightly we decided to grin and bear it and not sell any of our stocks and subsequently register the associated loses" So we are now in situation where we believe that the damage is done and that the downside is limited. However there is no moon shot rally on the cards either, as it looks like progress will be slow and mixed from here on. We are sticking with our previous stance of ‘hold’ and recommending just a few stocks as ‘buys’ with the view to acquiring these stocks gradually, which are Laramide Resources Limited and Mega Uranium Limited.
Cameco Corporation – Watch
Cameco was trading at $36.94 when we last updated the portfolio and closed at $35.08 yesterday, no real change here, pretty much sideways movement.
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 at $0.16 yesterday, again pretty much sideways movement.
Uranium Participation Limited – Hold
U is trading at C$9.26 having been as low as $9.00 recently. We bought at $11.97 on 21 November 2006 so U is still showing a small paper loss but we will continue to hold, as it offers direct exposure to uranium without the risks inherent in mining.
Strateco Resources Incorporated – Hold
We made a small investment in RSC at $2.30 and it recently traded at $2.87, however it closed at $2.00 on yesterday showing a slight deterioration since the last update. The news flow has been good but this sector is out of favour so investors have turned their attention to other opportunities.
Crosshair Exploration and Mining Corporation – Neutral.
Having taken a small profit we continue to watch CXX. The stock was trading at about $1.46 last month but has fallen back to close yesterday at $0.86. 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 comes as a surprise to us. Although we do not own this stock it is tempting at these price levels.
Laramide Resources Limited – Buy
This stock was trading for about $5.00 last month and closed yesterday at $3.63, we bought at $5.78 on the 28 July 2006 so we are now in the red with this one. When we were sitting on a paper profit of around 80% we sold half in order to buy other uranium stocks, as we needed a bigger spread of stocks at the time. Laramide may have formed a bottom at $3.00 however we need a little more time for a confirmation.
Mega Uranium Limited – Buy
We bought MEGA at around $4.0 on 27 July 2006. MGA was trading at $3.32 last month but has since dropped back considerably to close at $2.38 yesterday. Hopefully Mega has found some support at $2.00, which appears to be very cheap buy at the moment.
Khan Resources Ltd - Hold
We bought Khan on the 5th March at $3.63 and it dropped to $1.33 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. Khan closed at $1.73 last month only to fall back again to $1.21 yesterday.
Aurora Energy Resources - Hold
We bought Aurora on the 5th March 2007 at $14.17 and it is now trading at $5.27. A resolution to the issues surrounding the granting of a mining license is desperately critical to their activities in the Central Mineral Belt. Any good news would send this uranium stock soaring, however that’s easier said then done.
Strathmore Mineral Corporation - Hold
We bought STM on the 14th April 2007 at $4.96 and it is currently trading at $1.55, which is a very disappointing performance indeed. STM along with the others is a victim of the downturn in uranium prices.
Ur-Energy - Hold
We bought Ur-Energy on the 23rd April 2007 at $4.75 and we also gave a second buy signal on the 24th August 2007 when we acquired more stock at $3.03. URE closed on Friday at $1.78, which begs the question, is this the low for Ur-Energy or are we in for more of the same?
Denison Mines Corporation – Watch
We don’t own Denison (DML on the TSE) despite trying to buy it when times were better. Recently this stock put in a run to break the $9.00 level only to fall back again and close at $6.85 yesterday. We will continue to watch for the now.
This tiny sector has been hammered and we are sorry not to be able to bring you better news. However being a small market sector and thinly traded, suggests that when the market perception improves these stocks could move up the ladder with some speed. We have already witnessed the odd uranium stock jumping up by 20% in a single day, as trigger-happy investors did not want to be left behind. The longer-term price remains strong at $95/lb but the spot price continues to put a damper on things as it shows uranium trading at $71/lb. Very little uranium changes hands at the spot price but its importance rules the roost, for now!
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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