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Cameco Corporation: Port Hope Clean Up Impacts Bottom Line

Cameco logo 07 Feb 08

The world's number one uranium producer reported earnings of 17 Canadian cents a share, for the quarter, up from 11 Canadian cents a share a year earlier, however fell short of analysts expectations.

In a statement Cameco said that the:

Port Hope fuel services production and SFL supply totalled 1.7 million kgU in the fourth quarter of 2007 compared to 5.2 million kgU in the fourth quarter of 2006. Suspension of UF6 production at Port Hope continued in the fourth quarter as work progressed to determine the extent of subsurface contamination, assess possible methods of managing it, and determine how to prevent future contamination”.

Although revenue was down to C$494 million from $512 million, Cameco's results were helped by a 49 percent rise in realized uranium prices, which offset the impact of a 39 percent drop in uranium sales volumes. The sales of uranium dropped to 5.5 million pounds from 9.0 million pounds for the quarter, however sales were at an average price of $38.92 a pound, up from a year-before $22.35.

The news did not do much for the stock price as it closed down $0.13 to $32.19 on a volume of 3.9 million shares traded. Set in the context of a drifting uranium price it is difficult to see a recovery in the near term. However, Cameco is the giant of the uranium industry and could be now approaching levels that are attractive to both investors and fund managers.

Taking a quick look at the chart we can see that it has come off a fair way since the heady days of $50 plus for this stock. But also note that the Technical indicators are at the bottom of their respective ranges and the stock price is a long way below its 200dma, which tells us that a sharp snap back is a possibility. We are not buyers at the moment but this situation will be monitored closely as an entry point would appear to be getting closer.

Cameco Chart 07 Feb 08

Have a good one.

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Sub-Prime Crisis: What If?

By now we are all familiar with the term 'sub-prime' and have observed the ramifications of this problem as it spread across the globe. However it raises another question;

What if
the very same banks and managers of the the sub-prime problem are also the responsible for finance in other areas of industry?

If these people can make an almighty mess of loans for houses, what sort of mess have they made in the financing of projects in other areas such as; pharmacy, retail, autos, property, petro-chemical, oils and gas, etc?

Please click here to read our full article.

The Future US Dollar Carry Trade

Most investors are familiar with the concept of the yen carry trade. It is where a trader will borrow say 1,000,000 yen from a bank in Japan at about a 1% interest rate. The trader then converts these yen into say US dollars and uses the dollars to buy bonds yeilding say 5%. Therefore the trader is looking at making a profit of 4% on his trade (5% - 1% = 4%).


This works well so long as the yen doesn't getter stronger against the dollar. Many professional currency traders would leverage their trade by say 10:1 and so make 40% profit instead of 4%.

The carry trade affects every area of the financial markets, including uranium. Please read the full article by clicking here.

The BBC: A Debate on Nuclear Power Stations

One of our readers has alerted us to this debate on the BBC World Service where three experts in the field of nuclear power generation discuss the reasons for the revival of nuclear power in the UK and elsewhere in the world.

The participants are Malcolm Grimston, Professor Robin Grimes and Dr Paul Norman. The debate takes about 26 minutes to listen to and you may find it interesting.

Click this LINK to listen to the show.

Uranium Price Slips on Micro Analysis

The day to day imbalance of uranium supply and demand continues to spook investors as near term supply increases and near term demand remains static. Any movement in the the spot price of uranium can trigger a mini stampede as investors rush to buy or sell uranium stocks depending on whether the news is positive or negative.

Uranium Price Slips on Micro Analysis

On the negative side of this see saw we have news reported by Bloomberg that Uranium oxide concentrate for immediate delivery was offered at $78 a pound today, checking other sources we have Tradetech with uranium at $82/lb and the UX Consulting Company have uranium at $86/lb. Some of these anomalies can accounted for with each organisation having different cut-off and reporting dates which generate slightly different results.

On the positive side of the see saw we could argue that the Futures market has uranium prices ranging from $85- $88/lb, but this is a fledgling market and it will take some time to build credibility as serious market indicator. The major factor in favour of uranium is the constant stream of announcements by various utilities and government departments to push ahead with a programme of nuclear power to meet the escalating demand of both industry and the domestic user. We struggle to find anywhere an announcement regarding a reduction in the requirement for nuclear power. However it does take time to navigate the planning process, raise the finance, design, procure, construct and commission such power plants.

This brings us to the near term imbalance between supply and demand whereby any increase in supply compared to what appears to be a static demand manifests itself in negative headlines for uranium stocks. Given the range of numbers laid out above it is interesting that the most negative figure hits the headlines. Newspaper people tell us that bad news sells newspapers, but fail to explain why their circulation has been dwindling for years. We also need to keep the spot price in perspective as it accounts for only a tiny portion of the trade in uranium where utilities and suppliers enter into long term contracts by mutual agreement, the detail of which is not always available to the public.

The decision to place your hard earned cash into various market sectors is entirely yours to make as its your money. Our decision is to stick with our holding in uranium stocks despite the short term battering we have been through. Why? Well this is a thinly traded market and as witnessed a few days ago some of these stocks jumped by as much as 30% in one day. The fundamentals, when we look a little further ahead, are still in place for future demand to sky rocket. Our financial system is still awash with cash with more being printed every day. Investors are waking up to the fact that paper assets are not as solid as first thought as evidenced by the gradual recognition of the precious metals sector as a place to actually make money. Both gold and silver are transparent in terms of what they are worth on a daily basis, a characteristic let to be bestowed on uranium. As the quality uranium stocks continue to make good progress and start to mature as companies, their value will be recognised and stock prices will move up rapidly. The question is one of patience!

Stay tuned to the uranium sector by subscribing to our FREE Uranium Stocks Newsletter, just click here and enter your email adress to subscribe.

Greenpeace Questions On Nuclear Power Answered

We always try to see both sides of an argument and always listen to what each side is saying in any particular case, even if we strongly disagree. Therefore we subscribe to Greenpeace and other anti-nuclear groups to hear what they have to say and we always treat their points with an open mind as if we are wrong on something, we would rather know sooner than later!

Greenpeace Questions On Nuclear Power Answered

Recently Greenpeace encouraged its supporters to put questions to the UK business secretary John Hutton regarding his stance on nuclear power and the future of Britain's energy and his proposals to build new nuclear and coal-fired power stations. Greenpeace gave some examples of what questions to ask him (as shown below) and we have done our best to answer them in an attempt to persuade Greenpeace that nuclear power is the most viable option for beating climate change.

Why have you given the green light for new nuclear power stations when they will at best only deliver a 4 per cent cut in carbon dioxide emissions sometime after 2021?

Firstly, please note that Greenpeace have not provided figures for how much other energy sources will reduce carbon emissions. For example, even if every area of Britain that was suitable for windmills was covered in them, it would only provide 10% of electricity demands. Secondly, the reason this figure may appear low is because the government is talking about building nuclear power plants in 2's, 3's and 4's instead of doing what is needed, which is at least 50 more reactors in the UK to combat climate change. This would dramatically decrease UK carbon emissions. They need to have these new nuclear plants built by five years ago and as that is not possible, the second best option is to start right away. Delaying the beginning of British nuclear expansion will only make the situation worse.

Why have you given the green light for new nuclear power stations when the first will come online in 2021 at the very earliest, long after the predicted 'energy gap' is due around 2015?

The reason the nuclear plants are coming online after the energy gap is because they should have been built sooner. Perhaps if there had been less opposition to nuclear power by groups such as Greenpeace, British politicians would have been more willing to update and expand nuclear power. They need to have these new nuclear plants built by five years ago and as that is not possible, the second best option is to start right away. Delaying the beginning of British nuclear expansion will only make the situation worse. This point raised by Greenpeace actually strengthens the case to begin building more nuclear plants ASAP.

Even though the Committee on Radioactive Waste Management said it wouldn't advise on dealing with waste from new nuclear power stations, energy minister Malcolm Wicks said on Newsnight that it would be dealt with by deep geological disposal. If this wasn't advice from CoRWM, where did it come from?

We cannot comment on where the British government takes its advise. However, the best thing to do with the radioactive waste is to follow what the French have done and are still doing today. Store the waste in special containers until we find out how to deal with it. After all, we only discovered nuclear power a generation ago, imagine what the next generation could discover.

How will the government achieve emissions reductions of 80 per cent by 2050, as suggested by Gordon Brown, if new coal-fired power stations are approved?

If Britain builds more coal power plants, we agree, this makes the situation worse. Therefore they need to stop building coal fired power stations and start building nuclear power plants on a large scale, to meet emissions targets.

You said recently on Channel 4 News that "we've got to solve the problem of climate change and energy security with the technology that is currently available". As carbon capture and storage has not been proven commercially, how can any new coal-fired power stations be justified?

It cannot be justified we agree. Therefore the government must turn to nuclear energy, a technology that is viable, available and carbon emission free.

Why does the UK not have a feed-in tariff system similar to that in Germany to help encourage renewable energy, including micro-generation of electricity in homes and businesses?

This sounds like a good idea, however “micro-generation of electricity” is not going to close the energy gap. These measure may help, but it will take nuclear power to fill the coming energy shortage.

Why has your department always seemed so hostile to renewable energy and favoured nuclear power, as demonstrated in leaked documents?

Nuclear power is probably favoured as it works and is a far more viable option to solving Britain's energy shortage and security problems.

How do you hope to meet the UK's share of the EU's proposed renewable energy target in twelve years' time when only Malta and Luxembourg generate less than us?

This problem is not a priority. The first and foremost priority is to supply Britain with a secure, stable and sustainable supply of energy. The government should build many more nuclear power plants to secure the UK with energy, then worry about jumping through hoops for Brussels. After all, is the primary concern of the British government meeting the needs of the British people or is it meeting targets set by the European Union?

If you are a member of Greenpeace or are against nuclear power, please post any questions you have in the comment box below and we will answer them to the best of our ability.

Stick with those uranium stocks, nuclear energy is the power of the future. Stay updated on the nuclear industry, uranium and uranium stocks by subscribing to The Uranium Stocks Newsletter FREE of charge. Simply click here and enter your email to subscribe.

How Far Will The Fed Go?

In the Federal Reserve meeting this week, we will almost certainly see another interest rate cut of at least 25 basis points, with the more likely option being a cut of 50 basis points. This will give stocks across the board another boost and deal another blow to the US dollar.

How Far Will The Fed Go

The majority of investors know that Ben Bernanke intends to continue to cut rates as much as he can to try and prevent a recession in America. However what is not known yet is just how far the Fed will go in their rate cutting policy.

Are rates heading to zero? Is Bernanke going to follow the policy of Japan when times get hard?

The Full Article is on our gold website, , please click here to read.

Uranium Stocks: A Bounce Back!

Helped partially by the Fed Rate Cut, uranium stocks have bounced in recent trading after falling sharply since the beginning of 2008.

LAM 250108

One of the biggest gains was made by our Laramide Resources, which rose nearly 30% in just one day! Since the beginning of the week, LAM has risen from around $3.00 to nearly $5.00 which is a massive turnaround. Laramide is be no means alone in its rise, as other quality uranium stocks have also bounced. Two of our favourite stocks, Ur-Energy and Mega Uranium, have risen roughly 25% and 40% in the last few days respectively.

MGA URE 250108

The first conclusion one draws from this recent activity in uranium stocks is, that the emergency Fed rate cut has triggered a rise in every stock on the market. This of course is true and has had a big effect on the stock market this past week.

However when one takes a deeper look at what has gone on here we discover that there is a much bigger force driving these uranium stocks higher. It's our good old friend, fundamentals.
These are all great companies, with great fundamentals and a great outlook for the future. The recent positive news releases have reminded investors just how undervalued these uranium stocks are at present. Laramide reported drill results of 77 Metres @ 0.12 % U3o8 from 13 metres depth at their Westmoreland project. Mega Uranium also had some good news as they found 140 metres of 0.042% U3O8 and 0.76% copper at Igor, plus 76 metres of 0.417% U3O8 and 7.37% copper, and Ur-Energy had some test results showing 84% to 93% recovery at their Lost Creek property in the USA.

These good results are an indication of the great fundamentals that are backing the rise of quality uranium stocks, and will continue to push them in years to come. Investors appear to be realising how much money these companies stand to make out of their uranium projects at current U3O8 prices, let alone how much they will be worth in the years to come as uranium prices head towards our target of $200/lb.

Please remember that this will not be a smooth ride by any means as this is a small and highly volatile sector, as proven in the last month alone! However we think that it is a good idea to buy on dips such as this one and hold out through the storms, patience and resilience will pay off big time in the years to come. Buying on drops such as this one is the best way to make serious money as this uranium bull market continues. To stay updated on the uranium market and uranium stocks, please subscribe to The Uranium Stocks Newsletter completely FREE of charge. Just click here and enter your email address to subscribe.

Uranium Stocks: Monopoly Anyone?

Anyone who has investments in the uranium sector as we do, would have felt the effect of yesterdays drop, and the decline in recent months. In our opinion, uranium stocks are currently massively undervalued and have been sold off regardless of their great fundamental long term outlook.

Most uranium stocks are now below where they were in August 2007, when the summer credit crunch caused all stocks to be sold off dramatically. This is a cause for concern as the August lows had appeared to be a support level and if uranium stocks are going to fall through this level, technical analysis suggests we will have to hold on tight for further falls in uranium stock prices.

However the difference between this drop and the one seen in August is that this drop was fuelled by a lot less volume as shown in some examples below. After the massive drops in August we wrote that “this mass of volume suggests total capitulation”. At present we are trying to see a “bottom” in uranium stocks but we have not yet seen the masses of selling volume that we saw in the summer and this suggests that we have not yet seen the last crowd of sellers throw in the towel.

Uranium Stocks: Monopoly Anyone?

However even at current levels, there must be bargain hunters out there looking at these incredibly undervalued uranium companies and perhaps getting a little tempted. After all the fundamentals for uranium and nuclear power are the same as they were back in April where uranium was $138/lb. Also do not forget that uranium is still at $89.50/lb which is a great price for most uranium mining companies and stocks with potential projects in the pipeline. Perhaps when uranium producers start publishing impressive profits from mining uranium and selling it into these considerably high uranium prices, we may see some investor confidence returning to this sector.

There is a saying that “There are no problems, only opportunities.” Well how about this for an opportunity. A large scale hostile takeover of the entire uranium mining industry, buying out every explorer, near term producer, producer and any company with a decent project, some sort of uranium resource and the possibility to mine yellowcake. Why not?

The fact of the matter is that although takeovers and mergers were frequent when uranium stocks were going up, there has been little or no action since they started going down. However when a company's stock prices is low, that is in fact the time to be buying or making takeover bids, not when they are rocketing.

Take Uramin as an example. Uramin was bought by Areva for nearly $8/share and yet if Areva had waited until now they probably would have got Uramin for around $3. Therefore why aren't larger uranium companies such as Areva and Cameco, picking up junior explorers with quality projects? It is probably due to the fact that it would not be “popular” but the great investments are made when the product is not popular at all.

Bring that principle to a larger level, and one could launch a full scale takeover of the uranium mining industry for less than you may think. The total market value of every uranium stock listed on the Canadian exchange is under C$30 billion, this includes giants like Cameco and tiny exploration outfits that are only worth seven figures. Now the question is, who would want to buy a controlling interest, possibly a monopoly, in the uranium industry?

Firstly, if we could raise this kind of finance, we would certainly take the opportunity. However until we are offered the finance to carry this out, (email if you have some spare cash!) we must look to other possible buyers. The second buyer could be a large mining company such as Cameco, BHP or even an energy giant such as Exxon looking for exposure to uranium and nuclear energy. The third option would be a government interest looking to secure a supply of uranium for a future fleet of nuclear power plants that are going to provide energy for their rapidly growing economies and populations. Areva buying Uramin was effectively the French government buying more uranium to fuel their nuclear plants, so if China and India are going to move toward nuclear energy, why wouldn't they also look to secure a supply of uranium, especially with a stockpile of over a trillion dollars!

This is of course mere speculation on our part, but nonetheless it is still a possibility.

However going back to the uranium stocks at the moment, our gut feeling is to buy when things are bad, when there is “blood in the streets”. Therefore this suggests that we should be loading up on uranium stocks right now, but we are not buying as of yet as we are no sure that total capitulation as occurred, so there could still be a further downside to uranium stock prices. In the long term, nuclear energy is the power of the future and uranium is the fuel. Therefore despite the ups and downs, our uranium stocks should move much higher over the years to come.

When we think that we have hit the bottom we will be buyers again.

To stay updated on uranium stocks and the uranium industry, please subscribe to The Uranium Stocks Newsletter completely FREE of charge. Just click here and enter your email address to subscribe.
Jan212008 Portfolio Update 21 January 2008

We are at a critical junction as many uranium stocks prepare to test the lows made in August 2007. Some uranium stocks have already broken this support but we are waiting to see if other stocks follow suit. Therefore the majority of our stocks are marked “Hold” as we wait to see how events unfold. The markets in general have suffered a sell off so far this year which has contributed to the sell off in uranium stocks although the severity of the sell off in this sector is difficult to understand.

Going forward we anticipate more difficulties in the financial markets with corresponding knock on effects for certain commodities. However it is difficult to see uranium stocks going much further down as they have already suffered more than most and there will come a point when they represent too much of a bargain to be overlooked.

Cameco Corporation – Watch
Cameco was trading at $35.30 on the TSE recently and therefore this stock has fallen back to its August low. We are waiting to see if Cameco can hold this level, however in the long term we this the troubles at Cigar Lake holding this stock back considerably.

RPT Uranium Corporation – Watch.
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 now languishes at $0.19, which is disappointing but not unlike many other junior uranium stocks, which have also been taking a battering.

Uranium Participation Limited – Hold
U is trading at C$10.10 which is roughly where it was at the height of the credit crunch in the summer of 2007. We bought at $11.97 on 21 November 2006 so U is now 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 so are pleased to see it trading at $2.87, totally defying the downturn in the rest of the uranium industry and we are in profit by about 24%

Fronteer Developments Group - Hold
Fronteer has been transferred to our gold investment account as we now consider it to be more of a gold play than a uranium play even though it still owns the lions share of Aurora Energy Resources, which we track here.

Crosshair Exploration and Mining Corporation – Neutral.
Having taken a small profit we continue to watch CXX. The stock is trading at about $1.76 and has performed better in the last couple of months than other uranium stocks.

Laramide Resources Limited – Hold
This stock is trading for about $4.22 and we bought at $5.78 on the 28 July 2006 so we are hoping Laramide will resume its march upwards soon. 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.

Mega Uranium Limited – Hold
We bought MEGA at around $4.0 on 27 July 2006. MGA is now trading at $2.25 so we are once again back in negative territory. MGA has a very good cash position and is well managed so we expect to see it trading a lot higher in the near future and it is worth keeping in mind that stocks such as Mega are very volatile and so have the potential to move upwards again very quickly.

Rodinia Minerals Inc. – We have decided to remove this stock from our watch list for the moment to concentrate on other uranium stocks. We wish the company the best of luck in the future.

Santoy Resources Limited – Watch
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.

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 on Friday at $1.28 and appears to be back to the same price that the company floated on the stock market. However we do need confirmation, as does the marketplace, that the outstanding license issues in Mongolia have been resolved. Also note that Laramide Resources took advantage of this turbulence and bought 5.6 million shares in Khan, a good investment in our opinion.

Aurora Energy Resources - Hold
We bought Aurora on the 5th March 2007 at $14.17 and it is now trading at $10.77 much to our disappointment, but the company still 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 $1.95, which is a very disappointing performance indeed.. STM has been weak recently, which is disappointing to us, however we will hold, for now.

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 $2.28, as the stock has taken a beating in the last 20 days or so. Ur-Energy had been making a good recovery so hopefully the recovery can get back on track for this stock.

UraMin Incorporated – gone to that big AREVA in the sky!
We bought UraMin on the 15th May 2007 at $6.72 and sold it for $8.36 on the 22nd June 2007 for a gain of 24.4% in 6 weeks.

Lets hope for better week.

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