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Queensland to Re-think Uranium Mining Ban?

ABC logo 26 Feb 08
Following on from the decision by the Northern Territory Government to allow a uranium exploration project, Independent federal MP Bob Katter has called on the Queensland state government to overturn the ban.

Bob Katter said;

"So the alternatives really are very simply, mine uranium, and if you don't then you are doing the wrong thing by the people in north west Queensland, you're doing the wrong thing by the people of Queensland and Australia and you're most certainly doing the wrong thing by the planet as well,"

No doubt there will be a lot of opposition to this call but we think he is bang on. Not because we own some uranium stocks but because we believe it is the only answer for most countries energy needs with maybe the exception being New Zealand.

To read the rest of this news snippet just follow this link.

Have a good one.


Mega Uranium Limited: Drill Results

Mega logo 22 Feb 08

Mega Uranium Limited have issued the results of the results of its Phase three drilling program on the Mustang Lake property and the phase one drilling program on the Bruce River property, both form part of the Central Mineral Belt of Labrador.

The company said that;

“A 3,500 metre drill program on Mustang Lake is scheduled to commence in March, 2008 and will continue work on the property, which is part of a 50:50 joint venture with Santoy Resources Ltd (SAN:TSX-V) (“Santoy”), where Mega is the operator. Santoy has elected not to participate in this next phase of the program and its interest in the joint venture will be diluted on a pro-rata basis.”

At the Mustang Lake Property the best results include 1 metre of 0.197% of U3O8 and 0.6 metres of 0.167% of U3O8. At the Bruce River property the best intersection was 0.3 metres of 0.237% of U3O8. To read the article in full and see the tabulated data please click this link.

This is an exciting prospect as we look forward to more good results in the near future. The stock closed up 2.11% at $3.39, on turnover of 323,227 shares. Mega Uranium was recently upgraded to a 'Buy' in our portfolio update.

Mega Uranium Limited, trades on the Toronto Exchange under the symbol of MGA.


Fronteer Development Group: Up 7.96% today!

FRG logo 25 feb 08

Fronteer Development Group (FRG) put in a great day rising $0.69 to trade at $9.37 as we write. Fronteer is a play on both gold and uranium so this stock benefited from the rise in gold and also from a news release regarding Aurora Energy Resources Incorporated (AXU) in which it holds a 42.3% interest, to read more, please click here to read our full article.
Feb242008 Portfolio Update 24 February 2008

Uranium Chart 24 feb 08
This chart is courtesy of

It comes as a welcome relief to see the uranium stocks sector reverse the downward trend and stage a mini rally. Throughout this period of carnage which saw stocks losing 50% plus of their value it has been hard to hold on to theses stocks. Wrongly or rightly we decided to grin and bear it and not sell any of our stocks and subsequently register the associated loses. Our portfolio is battered and pales in comparison to our gold and silver portfolios. However we still believe in the nuclear future with the fundamental criteria for uranium being little changed. We could well look back on this period as the buying opportunity of a lifetime even though a victory looks improbable when you are on the ropes.

Going forward we have no doubt that there are financial skeletons in the cupboard yet to make their début with the fallout effecting most sectors, although it should not come as such a shock this time. Again we reiterate that it is difficult to see much in the way of downside for uranium stocks as the worst looks to be over. As we have reported recently, many of the uranium stocks have bottomed and some have put in spectacular spurts of 20% plus in a day. Also note the increased volume of shares traded and take a look at your favourite stocks to ascertain if they are experiencing similar increases in trading activity.

In view of the renewed interest in uranium stocks we are relaxing our previous stance of 'hold' and recommending just a few stocks as 'buys' with the view to acquiring these stocks gradually.

Cameco Corporation – Watch
Cameco was trading at $35.30 when we last updated the portfolio and closed at $36.94 on on Friday. Volume has fallen recently which is not a good sign as stocks don't usually rise on reducing volume

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 $0.17 on Friday, however it does appear to be trying to form a bottom with support at $0.16

Uranium Participation Limited – Hold
U is trading at C$10.60 having been as low as $9.00 recently, so we are pleased to some progress with this stock. 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 $2.22 on Friday so we are back to square one.

Crosshair Exploration and Mining Corporation – Neutral.
Having taken a small profit we continue to watch CXX. The stock was trading at about $1.76 last month but has fallen back to close on Friday at $1.46. Judging from our mail bag Crosshair has a fair number of admirers who may start accumulating again, wait and see.

Laramide Resources Limited – Buy
This stock was trading for about $4.22 last month and closed on Friday at $5.00, we bought at $5.78 on the 28 July 2006 so we are pleased that Laramide is heading in the right direction. 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, lets hope those days return.

Mega Uranium Limited – Buy
We bought MEGA at around $4.0 on 27 July 2006. MGA was trading at $2.25 last month but has improved considerably to close at $3.32 on Friday. Mega has the potential to move upwards very quickly.

Santoy Resources Limited – Dropped from list
However having decided to sell three of its projects to Mega for 400,000 common shares in Mega we decided to sell. We sold on 23 April 2007 at $1.39 for a profit of 70% in 4 months. Santoy now trades at $0.40. This stock is not for us at the moment as they now have limited uranium exposure so we are dropping Santoy from our list.

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 $1.28 last month but jumped recently to close at $1.73 on Friday.

Aurora Energy Resources - Hold
We bought Aurora on the 5th March 2007 at $14.17 and it is now trading at $9.46 having been as low as $8.00, but the company does have a great project in the Central Mineral Belt and when uranium prices start ticking up again, so should Aurora.

Strathmore Mineral Corporation - Hold
We bought STM on the 14th April 2007 at $4.96 and it is currently trading at $2.00, which is a very disappointing performance indeed. STM needs to join in the current resurgence in uranium stocks and prove to us that it is worth holding.

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 $2.29, having traded below $2.00. Ur-Energy is showing signs of a recovery but we would like to see the volume increase.

We will not report on the following stocks in future:
Fronteer has been transferred to our gold investment account and will not be covered here in future.
UraMin Incorporated – gone to that big AREVA in the sky!
Santoy, not enough uranium content.

We may be adding other uranium stocks to the watch list such as Denison Mines (we do not hold this stock at the moment.)
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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Mega Uranium Limited: Up 23.08 % today!

Mega logo 21 feb 08

Mega Uranium Limited gained $0.60 today on volume of 1.46 million shares traded to close up 23.08% at $3.20, along with a number of other uranium stocks that also made good gains.

Mega Uranium released a news statement which may account for some of the renewed interest which went as follows:

Mega Uranium Ltd is pleased to announce the commencement of a 3,600 metre drill campaign on the Maurice Point property in the western Athabasca Basin. The Maurice Point uranium property is under option by Mega from Forum Uranium Corp. (TSX-V:FDC) where Mega can earn a 55% interest in the project by spending $8 million over three years. Forum is operator.

If you wish to read the article in full then please click this link.

Apart the news release we are now of the opinion that market sentiment is beginning to turn in favour of this much denigrated sector as each day we are seeing uranium stock price increases across the board characterised by a star performance such as Mega Uranium today and Khan Resources yesterday.

A quick look at Mega's chart shows a terrific jump today on vastly increased volume. The technical indicators have turned up with a vengeance, it will be interesting to see if this stock can go on and and rally from this point.

Mega chart 21 Feb 08

Mega Uranium Limited trades on the TSX under the symbol MGA.

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Khan Resources Incorporated: Up 25% in a Day!

Khan logo 21 Feb 08

On turnover of 655,000 shares Khan Resources Incorporated gained $0.35 or 25% to close at $1.75, as the uranium stocks generally had a pretty good day.

Khan Chart 21 Feb 08

Well just maybe the uranium cat is not so dead after all. Yesterday we reviewed the situation posing the question of whether this sector is undergoing a Dead Cat Bounce or a Trend Reversal, it would appear that the progress north continues. For example other stocks involved in moves higher today were:

Blue Sky Uranium Corporation Up 28.21%
Bitterroot Resources Ltd. Up 19.30%
Uranium City Resources Incorporated. Up 15.0%
Waseco Resources Incorporated Up 25.71%
Mega Uranium Ltd. Up 5.26%
Laramide Resources Up 4.37%

Not too shabby to say the least, these increases must have have brought a little smile back to the faces of those who have decided to stick with it, including us.

Back to Khan, there does not appear to be any breaking news here that would affect the stocks price other then a week ago they announced an addition to the board as follows:

"The appointment of Stephen Harapiak to its Board of Directors. Steve brings a rich background in mining, project management, and engineering to the Board. Beginning with a mechanical engineering degree from the University of Manitoba in 1959, Mr. Harapiak embarked on an impressive career that led to leadership positions at companies including Noranda, Davy International (now Kvaerner) and Potash Corporation. More recently, Mr. Harapiak has been involved in international resource industry projects at a senior level including operations in Russia, ranging from a General Director position at a $230 million gold mining operation to recent work with the International Finance Corporation of the World Bank, dealing with small and medium enterprises supplying the resource industries in that region. Mr. Harapiak will bring valued industry experience and expertise to the Board. This looks to be a good appointment as Mr. Harapiak brings with him engineering disciplines and procedures.

This could be a cheap entry point for those who have Khan on their watch list and have previously been put off by higher prices.

Have a good one.

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Dead Cat Bounce or Trend Reversal?

Dead Cat Bounce 19 Feb 08

Our readers have asked is this a Dead Cat Bounce or Trend Reversal? So we took a quick look. Whilst pouring over the charts of a number of uranium stocks we were frankly amazed at some of the lows that these stocks have touched. Is it safe to buy now?

With very few exceptions the charts for most uranium stocks follow a similar pattern of racing ahead of themselves on the back of a rising uranium price and then falling back to earth as uranium was shunned during the scramble for cash. Trying to discern a trend at this micro level based on such a short period of 'levelling out' is a sure way to embarrass ourselves, but we will give it a shot. Individual stocks will of course behave according to their own criteria so the question is more general in that can we see this sector turning upwards or is this another false dawn.

The three charts below illustrate the rise and fall of this sector reasonably well as you can see. The first is CCJ, followed URE and then AXU.

CCJ Chart 19 Feb 08

URE Chart 19 Feb 08

AXU Chart 19 Feb 08

We can see that these sample uranium stocks are trading below their own 50dma lines (blue) and a long below their own 200dma line (red) unlike gold stocks for instance which are mostly trading well above their moving average lines. The technical indicators for these uranium stocks have been muddling along at the bottom of their respective ranges, in the buy zone for some time now. Recently they have come back to life and are mostly heading or pointing north. As with most declines or rises they have not been formed on a straight line go to basis, there have been minor rallies along the way. These rallies have served to offer some investors a suitable entry point and other investors the opportunity to limit their loses by selling into them. The activity of the latter has to some extent minimised previous rallies but the over-riding negative factor must be the falling spot price of uranium which is there for all to see unlike the private sales between the producers and the utilities that go on unseen. And so the spot price does to some extent take centre stage and when it drifts lifelessly it casts a long shadow over this sector spooking investors. This is a very thin market with some of these companies trading less then $1.0 million worth of shares in one day. That's a large amount of money to us but its small change to the bigger players. The point being that some of these thinly traded stocks can be moved up or down by a small amount of dollars. Since November 2007 we have seen investors steadily withdraw their cash and hence we arrive at today's stock prices.

Our view, for what its worth, is that we would like to see the price of uranium stabilise and then start to rise if this mini rally in uranium stocks is to continue. If you cant wait any longer or you think that they are great value now then by all means re-enter the market gently and start building a position. We will watch for another week or so.

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Good luck.


A Bet Against The Banks

Aside from our main investments in gold, silver and uranium, we have take a speculative position on the US financial sector.

IYF 130208

The problems of the financial sector begun with the sub-prime crisis but we believe it will spread to all areas of real estate and this will have a massive impact on a myriad of financial sectors, such as bond insurance companies, all across the world.

It is clear to us that this Bernanke led Fed committee is nothing but a one trick pony when it comes to solving economic turmoil. The base rate is already below the rate of inflation and although the Fed can continue to cut interest rates as much as they like, the question is: Will banks lend money below the rate of inflation?

Please click here to read the rest of the this article.

The Cleanliness Of Biofuels Thrown Into Doubt!

The New York Times Logo 13 Feb 08
It is a change to see that not everyone is totally convinced that Biofuels are the solution to a clean environment.

In the mail bag today we were alerted to this article in the Environmental section of The New York Times entitled: “Biofuels Deemed a Greenhouse threat”

The article is well worth a read if you can find the time to read it. Here is a short extract to wet your appetite:

Together the two studies offer sweeping conclusions: It does not matter if it is rain forest or scrub land that is cleared, the greenhouse gas contribution is significant. More important, they discovered that, taken globally, the production of almost all biofuels resulted, directly or indirectly, intentionally or not, in new lands being cleared, either for food or fuel.
“When you take this into account, most of the biofuel that people are using or planning to use would probably increase greenhouse gasses substantially,” said Timothy Searchinger, lead author of one of the studies and a researcher in environment and economics at Princeton University. “Previously there’s been an accounting error: land use change has been left out of prior analysis.

An accounting error! And we thought that accounting errors were the sole domain of the banks.

Have a good one.

Please feel free to comment on the above, the more diverse the opinions the better informed our readership will be and hopefully we will all make better investment decisions.


Denison Mines Corporation: Revisited

DML Logo 12 Feb 08

In response to our mailbag we are taking another look at Denison Mines Corporation, a favourite with many of our readers but one which we have not invested in the past.

What we said about Denison in January 2007:

“Overall we view this coming together of UIC and Denison as a very smart move. Good prospects added to good operational managers and a CEO, Peter Farmer who just oozes confidence all adds up to a ‘must have’ uranium stock.
The question is one of timing. We had UIC on our Watch List for some time and for various reasons we did not make an investment. May be we missed the boat, who knows?”

At the time we wrote this Denison was trading at around $12 and went on to trade as high as $16.00 plus. The stock price has now more than halved along with many in this sector. So has the buying opportunity that we have been waiting for now arrived? We will start with a quick look a he charts:

Chart 1: The last three years:

DML Chart three years 12 Feb 08

At $6 this stock is trading at April 2006 levels when uranium was trading at around $40.00. So at almost double the price of uranium, one would expect this uranium stock to be performing much better than it is. However the perception of which way the price of uranium is headed plays a big part in the criteria for investment.

Chart 2: Recent performance

DML Chart Recent Performance 12 Feb 08

DML looks to be forming a base. The technical indicators are just about on the floor and look to be turning higher. We could assume that they are now going to head higher or we can wait for some sign of confirmation that this is indeed the situation.

Uranium: Chart courtesy of

U3O8 Chart

Having rattled along to $138/lb on the spot market we have experienced a considerable pull back and now have uranium trading at $75/lb. However it should be remembered that the lions share of the trading takes place through privately arranged agreements between the producers and the utilities. Looking at the chart for uranium we can see the fall to $80/lb followed by a small bounce which petered out and the price now looks to be heading lower. This spot price is eagerly watched and reported on, and so has a huge influence on an investors decision making process. Many will see this as the determining factor for them, so all the uranium stocks could still go a little lower. For what it is worth we see it as the damage has already been done and that the downside from here is limited. The fundamentals have not changed although uranium appears to be out of fashion at the moment. As we said in the January article:

As Baron Rothschild once said something a long the lines that he was "only ever happy when he was sure that no one else wanted the stock that he was buying."

We think that we are at or very close to one of those opportunistic buying moments where fortune will favour brave. However for now we will keep a close eye on this stock with the view to cheekily placing a 'stink' bid below the current stock price in the hope of catching a real bargain. Should you want to pick it up now then that strategy should also work out well if you can wait for uranium to play out its downside and the rest of the investment community to recognise the value uranium stocks, such as this one. We remain positive, optimist and bullish on this sector but we have to say that it is a stance not shared by all of readers.

This company describes themselves as:

"A diversified, growth-oriented, intermediate uranium producer. With seven active uranium mines in North America (five in the U.S. and two in Canada), Denison estimates North American production at 5.0 million lbs of U3O8 by 2011." You can read more about them on their web site by clicking here.

Denison Mines Corporation trades as DML on the TSX and DNN on the AMEX, has a market capitalisation of $1.2 billion, a P/E of 37.73 and is trading at around $6.41.

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