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Monday
Mar172008

Uranium Conference in Adelaide

Adelaide now logo 18 March 2008
A snippet that may be of interest to you, yesterday at the Paydirt 2008 Uranium Conference in Adelaide, Warwick Grigor managing director of Far East Capital said;

“the fall in the uranium price from last year's peak of $US135 per pound to $US74 currently was neither something the industry, nor investors, should worry about. The froth has been blown off the top. The price could reasonably trade within the $US60-$US90 pound range for the balance of this year. It would be most surprising to see it fall any lower."

Mr Grigor tabled his analysis of Australia's leading uranium companies which over the last year showed a fall of 65% on average. However he went on to say that;

"I still hold the view the next decade will be a great source of opportunity for anyone involved in the uranium and nuclear power sectors," he said. "We should stick to our guns and back this nuclear bull market to the hilt."

This is pretty much the way we think so we were pleased to hear someone show a little enthusiasm for the uranium sector and for uranium stocks. The article was carried by the www.com.au just click this link to read it in full.

If you have just taken an interest in the uranium sector and would like to receive our free newsletter regarding uranium and in particular investing in uranium stocks please click this link.


Sunday
Mar162008

The Australian’s view of China.

In the past few months, The Australian has travelled around China to find out what changes have been made and, in an article by Rowan Callick, we get an insight into China's progress in their quest for energy.

With the economy in overdrive and no end in sight China is turning its attention to the reduction of greenhouse gases as the eyes of the world are starting to focus on the Beijing Olympic Games, China's economy, pollution levels, its strategy for the future. With around 80% of China's energy being fuelled by coal, one of the dirtiest forms of energy production, China is increasingly turning to nuclear power to form a larger part of its energy needs going forward.

The State Electricity Regulatory Commissions Gu Jun-yuan, the commission's chief engineer, said
“that from 2001-2007, China had increased its power capacity by 1.5 times Japan's total, growing annually by 18.5 per cent. Some problems have been exposed in the course of this rapid development, for instance in pricing. We must rely on market based reform to solve these problems.”

We draw your attention to growing annually at 18.5% and already bigger then Japan! This article goes on to talk about the various power plants in operation from Hong Kong to the biomass project in Shandong province. But what you want to know about is uranium where this report says:

“Overall, China's plants source 70 per cent of their uranium domestically and import the rest from Russia, Europe and elsewhere.”

We have touched on construction time frames in the past as they have a direct impact on just when the the supply of uranium is required, this article says that:

The first two units at Daya Bay (nuclear power station close to Homg Kong) took six years and nine months to build, by US giant Bechtel, the second two, five years. China National Nuclear Corporation is building the two new units, half of whose components are also being made in China. A five year construction period and getting shorter by the day as the Chinese improve their construction techniques. The US, Britain and France ought to take note, as it looks to us that the days of spending ten years or so in construction, are rapidly coming to an end. Good news for uranium bugs!

Daya Bay 17 Mar 08
Daya Bay power plant

Also worth noting is that China Light and Power, which operates the three power facilities that The Australian visited, also operates in Australia as TRUenergy and has around 1.2 million electricity and gas customers. It owns Victoria's Yallourn power station along with the electricity retail business of Yallourn Energy. Throw in the trillion dollars or so that China has in reserve and it looks like acquisitions could soon be the order of the day, which at the current the price levels for uranium stocks, would be a steal.

Many thanks to Wayne for alerting us to this article.

Have a good one.

If you have just taken an interest in the uranium sector and would like to receive our free newsletter regarding uranium and in particular investing in uranium stocks please click this link.
Thursday
Mar132008

Uranium Update 13 March 2008

U308 Chart 13 March 2008


Chart courtesy of www.u3o8.biz

As we can see from the chart the spot price has moved up a whole dollar to $74/lb which appears to be lacklustre when compared to the gold and silver markets which are currently basking in the limelight.

A quick look at the authoritative web sites and we find the following quote from TradeTech.com:

“The spot uranium market exhibited signs of strengthening last week. One transaction involving 100 thousand pounds U3O8 is reported and new demand emerged. Several sellers raised their offer prices over the course of the week. Nevertheless, a gap still exists between most willing sellers and willing buyers. Buyers, however, showed a willingness to pay somewhat higher prices than has been witnessed in recent weeks. As a result, TradeTech’s Spot Price Indicator increased $1.00 to $74.00 per pound U3O8”

So there we have it.



Turning to a lighter note regarding seasonal statistical behaviour we take a look at The Motley Fool who had this to say in an article entitled 'The March Mayhem Effect' where we see Uranium Resources Incorporated (URRE on NASDAQ) hitting their charts:

“What drove the stellar March performance of uranium miner Uranium Resources? The surge is most likely an anomaly, just like January's status as the worst month to own the stock; Uranium Resources falls an average of more than 35% during that month -- so get ready to sell. Not!
It happens that May is the best-performing month for rival Cameco (NYSE: CCJ); it returns about 11% in that month.
You can see why we don't recommend using this as a list of stocks to buy or sell -- just a platform for further research. Whatever the reason, Uranium Resources' three-star rating suggests that CAPS investors have a middle-of-the-road opinion about its future performance.”

To read the article in full just click this link.

And finally, after our post about Aurora Energy Resources taking a bath yesterday, she fought back with a 7.17% gain to close at $6.58, an opportunistic purchase for somebody.

If you have just taken an interest in the uranium sector and would like to receive our free newsletter regarding uranium and in particular investing in uranium stocks please click this link.










Wednesday
Mar122008

Aurora Energy Resources Incorporated Takes A Bath!

The news that The Nunatsiavut Government is considering a proposed three-year moratorium on uranium mining and milling on Labrador Inuit Lands in coastal Labrador hit the stock price of both Aurora Energy Resources Incorporated and Fronteer Development Group Incorporated hard.

Aurora chart 13 March 08

According to CNN the above mentioned motion has passed a first reading and must now pass a second reading before it can included in the law.
Aurora President and CEO Dr. Mark O'Dea had this to say:

"Aurora recognizes that uranium mining can only proceed on Labrador Inuit Lands with the agreement and trust of the Labrador Inuit, Aurora is committed to making sure that the Nunatsiavut Government and the coastal communities are comfortable with any proposed mining project."


Aurora is optimistic that the process will move ahead. Well as investors in this stock we certainly hope that these issues are resolved to benefit of both parties. It also raises the question of whether to stay or whether to go? If we go now we register a financial loss and if we stay the loss could be much worse or looking the bright side, the stock would jump on news of a reconciliation. The successful outcome in part depends on the ability of the management team to convince the objectors to the scheme that their concerns have been considered and satisfied. This focusses our attention on the company President himself, Dr. Mark O'Dea and just how much confidence we have in him. The answer to that question is that we are very confident that he can resolve this issue and push ahead. So what do we do next? Well, first of all we will hold onto our stock as the bad news is out and the damage is done. Secondly we will monitor the situation with the view to buying more of this stock at these low levels in anticipation of a bounce back.

As you can see looking at Aurora's chart it is not a pretty sight, from a high of $16.00, to yesterdays close at $6.14.
The same situation has also affected FRG which we will also watch carefully.


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Aurora Energy Resources Incorporated trades on the TSX under the symbol of AXU. Fronteer Development Group Incorporated trades on the TSX under the symbol of FRG and on the AMEX under the symbol of FRG.


Tuesday
Mar112008

China: High Speed Construction of Nuclear Power Plants!

China Flag 12 March 08

China power plant 12 March 08

We have all witnessed the speed at which China completed a brand new airport in preparation for the Olympic games. They did it in just four years in contrast to Heathrow Airport, which took six years just to get planning approval. So they have now applied that same speed of construction to the nuclear sector and the result is astounding.

“China is expanding nuclear power construction plans faster than earlier planned, a senior energy official told state media on Saturday, saying installed power capacity by 2020 could be 50 percent above the initial goal” according to Reuters

China's nuclear energy development plan had hoped to achieve an operating power capacity of 40 gigawatts by 2020. To put it into perspective that is the same amount of power that Spain requires and represents approximately 4% of China's energy needs. However, the vice Minister of the National Development and Reform Commission has announced that that this figure will be exceeded by 50% to 60 gigawatts in the very same time frame. This news ties in with what we have been saying on this web site for some time, that in the rush to secure a supply of uranium for the future energy needs. it is better to understate your real needs until you have those supply contracts in place. (27th September 2007 we wrote: we tend to think that China will announce more and more new proposals once it has tied up the supply of uranium) We believe that this is the first of many such announcements that will come out of China on a timely basis. News flow needs to be managed in order to avoid causing a panic in the market and driving up the price, well at least until you have made certain that you can actually feed these new power plants.

It may take a while for this sort of news to sink in, but it does bring forward the delivery dates for uranium and will keep on doing so as China charges ahead with record breaking construction schedules. It is also well known that China is sitting on a mountain of US Dollars and other foreign currencies. The UD Dollar, in particular is falling out of bed, so what better way to unload this fast depreciating paper asset but to swap it for your future power requirements?

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Saturday
Mar082008

A Get Together with Doug Casey and Rick Rule

Casey Research organised a get together at the Barbebra Café in Auckland on Wednesday night for International Speculators. Around thirty people attended and a very good night it was too!

Doug Casey, Sam Kirtley and Bob Kirtley
Pictured Above: Bob Kirtley, Doug Casey, Sam Kirtley


The subjects covered were wide ranging as each attendee had their own unique area of interest around which debate was built. Doug is a mind of information about everything from property development opportunities in Argentina to the possibility of a sovereign state tying its currency to the gold standard. This is an interesting idea as the global distrust of paper currencies grows, it could happen sooner then we imagine.


To read the full article and see more photos of the get together just click here.
Saturday
Mar082008

Crosshair Mining and Exploration Corporation: Revisited 09 March 2008

Crosshair Mining and Exploration Corporation


Judging from our mail bag Crosshair has many fans who frequently tell us to buy this uranium stock right now, as it won't go any lower etc. So we will take another look at one of this sectors favourite stocks.

Initially we bought Crosshair for $1.86 with the view to holding it for the long term when on 25th September 2006 we wrote:

“The company is currently exploring for uranium in the Central Mineral Belt of Labrador, where it has amassed a land position amounting to some 2740 claims, covering an area of 685 square kilometres. This area is regarded by a lot of commentators as the next big uranium discovery in Canada. The management team is also highly thought of and Canada is geographically and geopolitically as good as it gets.”

Since then we have sold Crosshair for $2.60, locking in a profit of around 40% as the stock ran to over $4.00, peaked and has struggled ever since.

If you are holding and tracking a portfolio of uranium stocks you will have noticed the recent upswing which lifted many uranium's off their recent bottoms and into a rally. We recently posted article on Denison when it was close to $6.00 and its subsequent rally to almost $10.00, notice that it has now backed off to $8.61. Its a similar story for this sector with stocks rallying only to have their progress hampered by what we think is profit taking by those who wish to be out and the rally presented them with the opportunity to cut their losses. We have no argument with this sort of activity as it effectively clears out the non believers making way for a sustained rally supported by those who already have a position and wish to increase their stake in the nuclear future and by those new converts who have yet to enter this market.


Taking a quick look at Crosshair's chart:

The technical indicators are heading south with the MACD displaying a negative crossover. CXX tried to join the recent rally with a move up to $1.60 but soon fell back to trade at $1.20 on heavy volume, which is the lowest it has been since August 2007.

With a market capitalisation of $87 million and 72 million shares outstanding it small enough to be buffeted around by speculators and fund managers alike, as a trading can amount to less than $1.0 million a day.

CXX revisted 09th March 2008

On the news front they have been active with the announcement of a C$15.00 million financing deal and the appointment of Paul Hosford, Professional Engineer, as President and Chief Operating Officer.

In conclusion we are not buyers at the moment but mere observers. Crosshair does appear to have suffered more than most and the downside would appear to be limited. However recent rallies have petered out and we need something to give Crosshair a lift. It could come in the form of the general recognition that the long term price of uranium has steadied at $95/lb according to Ux consulting even though the spot price is hanging around at $74/lb.


Crosshair currently trades on the TSX Venture Exchange under the symbol of CXX and on the American Stock Exchange under the symbol of CXZ.

Finally, If you are new to this web site and wish to receive our free newsletter regarding trading opportunities in this sector then please click this link to subscribe to The FREE Uranium Stocks Newsletter.


Thursday
Mar062008

Uranium Market Update 07 March 2008

Uranium is now poised for a strong rally according to the Royal Bank of Canada Capital Markets who have told their clients that:

"We think the sentiment of the uranium market has changed substantially in a very short period . . . our 2008 market balance estimate has shifted to a deficit (from a balanced market) and we think the spot market is set for a strong rally".

Their rationale was predicated on things such as Uranium One reducing production, AngloGold Ashanti warning it may have to declare 'force majeure' and Uranium Participation entering the market and purchasing 900,000 pounds on the spot market. Their forecast for 2008 stands at $110/lb which should bring a smile back to the faces of those who have held on through the downturn. They also report that the long term expectation for both the Ux Consulting Company and TradeTech remains at $95/lb. All grist to the mill, to read the article in full just follow this link.



Moving across to LONDON, Reuters carry a report that the British government have made 18 more sites available for the next generation of nuclear power stations. Mr John Hutton, Secretary for business said that:

"Planning applications for new plants are likely to focus on areas in the vicinity of existing sites and so it's welcome that the NDA is making its significant land and other assets available to the market,"

It looks like a sound move so far but it will be interesting to see how they handle nimbyism (not in my back yard) which will no doubt have a roll to play.

Mr John Hutton also said the government may sell its shares in British Energy, worth around 2.0 billion pounds, however he doesn't say where he intends to spend this cash. Sadly we can see it being consumed somewhere in the public sector, a town hall extension here, a trip or two to an exotic location or the hiring of a few more enablers and creating other non-jobs. To read this article in full please click this link.


And finally to Denison Mines Corporation. When we reviewed this stock on the 12th February 2008, it was trading at $6.40 and we were hoping to pick it up at about $6.00, however it moved faster than we did and is now trading at $8.81. If you managed to bag a few then well done you must be sitting on a canny profit by now and in a short time too! Denison may come off a little from here but don't worry about it, the upside potential looks a lot brighter to us than downside, which we think is limited to a small amount of profit taking.

DML Logo feb 08

Have a good one.

Finally, If you are new to this web site and wish to receive our free newsletter regarding trading opportunities in this sector then please click this link to subscribe to The FREE Uranium Stocks Newsletter.



Tuesday
Mar042008

Our Rating of the Rating Agencies: Junk

The recent decision by some prominent investment rating agencies to maintain their top quality AAA ratings for some of America's most troubled bond insurers has worried us to say the least. Although some agencies such as Fitch Ratings have been sensible enough to downgrade bond insurance companies like Ambac Financial, others are still grading these companies as top quality investments.

Our Rating of the Rating Agencies: Junk

We view this as a drastic judgement error on the agencies part. These bond insurance companies have insured bonds backed by risky subprime loans which are now defaulting left, right and centre. Therefore the bond insurers are being forced to make big payouts on their policies and the fact of the matter is, they don't have enough money to cover all the home loan defaults that will mount up like a rolling snowball during this severe recession.

Please click here
to read our article in full.
Friday
Feb292008

US Financial Sector Continues To Suffer

We took a speculative short position on the US financial sector a couple of weeks ago, via an inverse ETF called Ultra Short Financials ProShares (AMEX:SKF). As an inverse ETF, this investment will go up when the US Financial sector goes down, with a leverage of 2:1. For more details on how this work, please read our article entitled “A Bet Against The Banks”.

SKF 010308


Since we bought SKF at $110.36, the financials have continued to suffer and so our investment has risen to $119.27, a gain of just over 8% in two weeks.

Do we see SKF continuing to make gains? The answer is Yes – simply because we do not see a major upswing coming in the financial sector for some time. The market will occasionally get a boost from a Ben Bernanke interest rate cut, but the success is usually short lived, and the Fed cannot cut rates forever.

Please click here to read the rest of this article.