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Uranium: Dependent on Oil?

Oil pumps 23 May 2008

After taking a severe beating the uranium sector is showing signs of a recovery. Scanning the radar there appears to be a number of differing opinions tabled in support of nuclear power, one of which is the high cost of oil.

There is a school of thought that argues that the price of oil is set go even higher, to $150/barrel and beyond as demand for energy continues to climb. Another argument is that the United States is about to enter its summer driving season putting more pressure on the supply side. Throw in the ‘Chindia’ factor where China and India plus the other emerging economies are expanding at a rapid pace and the projections become believable. On the supply side there are no new world-class discoveries to meet this projected demand. So the word is pile into oil producers and load up with oil futures etc.

Now, if the oil price is going to the moon then the search must be on to find an alternative, please don’t mention ethanol, the idea of burning food just does not do it for us. However, yellowcake does do it for us, as we are firm believers in the nuclear future. As we know, nothing goes up in a straight line, as evidenced with gold recently, when it pushed up through $1000/oz only to experience a pull back to the $850/oz level. The same could happen to oil, and there are analysts calling for oil to drop from its current historic high and return the $80/barrel level. Lets assume that they are correct. If oil does experience a pull back to lower levels will the interest in uranium wane? Do we don our hard hats once again and retreat to the bunker? In our humble opinion oil would have to drop back an awful long way before it could displace nuclear energy and just where is this oil and what about the environmental problems caused by burning oil?

Oil is influential but only in terms of a sideshow; the future of uranium is firmly founded on the fundamentals that support it and not the daily oscillations of an almost spent fuel. Although we agree that the fact that oil is running out is a major factor.

To recap, the world still has 433 nuclear plants up and running, 30 odd being constructed, and almost 300 in the pipeline. No doubt that China will become the front-runner and build nuclear plants at record-breaking speed just as China demonstrated by building the worlds largest airport in record time. As these construction programmes begin to roll it will become clear just how much important uranium is.

The question now is have we got the patience to wait for these things to happen and the investment community to recognise the importance of uranium and then follow through with their hard earned cash? We think so, and that is why we have not sold any of our uranium stocks during this torrid time for the uranium sector.

Going forward it will be volatile so hold on tight to what have purchased as to sell now will be to give someone else a real bargain, probably us!

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Cameco falls on leak!

Cameco Chart 22 May 2008

Cameco fell 5.4 percent, to C$40.52 yesterday on the Toronto Stock Exchange its biggest one-day drop for some time. The drop is attributed to a theoretical leak of arsenic and uranium into Lake Ontario.

The possibility of this leak is based on ‘modelling’ which indicates that there could be some trace elements finding their way into Port Hope harbour.

Lyle Krahn a spokesman for Saskatoon, Saskatchewan-based Cameco, said that the company were taking this possibility very seriously. He went on to say that “Cameco discussed the results at a hearing last week conducted by the Canadian Nuclear Safety Commission”

Operations were suspended at Port Hope in July 2007 after contaminated soil was found on the site. However it should be noted that there is an adjacent complex that also produces uranium dioxide and is currently operational.

Taking a wider view of this problem, which doesn’t bode well for Cameco, it has wider implications for all potential uranium mines that are on the drawing board at the moment. This sort of news will have a negative impact on those currently seeking regulatory approvals and those trying to negotiate a way through the various objections raised by interested parties. For all of the uranium miners and especially Cameco we need Cameco to assess this problem and implement a fix as soon as possible.

On the 21st July 2007 we reported this incident and said:

“This is not only unfortunate for Cameco, it will have a knock on effect across the uranium sector as this sort of problem serves to galvanise the environmentalists into action. We think that it is in everyone’s interest that this leak is indeed contained and that Cameco can rectify this problem quickly.”

To still be in the ‘investigative’ phase almost a year later reflects badly on the management team at Cameco who in our humble opinion should have implemented remedial action as a top priority and put a halt to this sort of negative press.

We now need to see some proactive moves by Cameco followed by some positive news flow.

Have a good one.

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May212008 Portfolio Update 21 May 2008

Uranium Chart 21 May 2008

This chart is courtesy of

This has been a much better month for holders of uranium stocks, as signs of rising stock prices appear to be popping up here and there. Yesterday was especially good with the following stocks leaping to higher levels: RSC: 17.14%, LAM: 16.58%, MGA: 6.79%, KRI: 22.73% and URE: 22.16%.

As regular readers know we decided to adopt a strategy of grin and bear it and not sell any of our stocks and subsequently register the associated loses. Our portfolio has been hammered, however we took the view that the downside was now limited and we kept buy signals on both Laramide and Mega Uranium, which have both made nice gains.

Cameco Corporation – Watch
Cameco was trading at $35.08 when we last updated the portfolio and closed at $42.48 yesterday, good progress by this sectors heavyweight. CCO also recorded profits of
$133 million compared than last year's $59 million, however this translates into a profit of 39 cents a share and came in below forecasts. For example, a Bloomberg survey had Cameco profits at 43 cents a share. We don’t own this stock.

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$9.60 having been as low as $9.00 recently. We bought at $11.97 on 21 November 2006 so U is still showing a 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 has traded as high as $2.87, however it closed at $2.05 yesterday, being up 17.14% on the day. The news flow has been good so we expect this stock to do well as this market sector regains its popularity with investors.

Crosshair Exploration and Mining Corporation Watch
We continue to watch CXX. The stock was trading at about $0.86 and has seen some dramatic moves in both directions, it close yesterday at $0.82. 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 tempting at these price levels.

Laramide Resources Limited – Buy
This stock was trading for about $3.63 at the time of the last update it and closed yesterday at $4.67. It should be noted that most of this gain came during the last two trading days. We bought at $5.78 on the 28 July 2006 so we are still 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. In the last update we said that Laramide may have formed a bottom at $3.00 however we need a little more time for a confirmation, it now looks as though the bottom has been formed so hopefully we can look forward to better things from this stock.

Mega Uranium Limited – Buy
We bought MEGA at around $4.0 on 27 July 2006. MGA was trading at $2.38 last month but has since dropped back to close at $2.36 yesterday, having traded as low as $1.79. Hopefully Mega has found some support at $2.00, and can go on from here to higher ground.

Khan Resources Ltd - Hold
We bought Khan on the 5th March at $3.63 and it has since dropped to $1.08 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 having a torrid time trading as low as $0.85 before yesterdays jump pushed it up to $1.08. We are still holding this stock and wearing a hard hat at the same time.

Aurora Energy Resources - Hold
We bought Aurora on the 5th March 2007 at $14.17 and it is now trading at $4.50, having traded as low as $3.45. Aurora has implemented an outreach programme in an attempt to convey the benefits of their planned mining activities to the community. A resolution to the issues surrounding the granting of a mining license is desperately critical to their activities in the Central Mineral Belt, so lets hope that they are successful.

Strathmore Mineral Corporation - Hold
We bought STM on the 14th April 2007 at $4.96 and it is currently trading at $1.80, having been as low as $1.40, which is a very disappointing performance indeed. STM needs to continue this mini rally and regain the confidence of investors.

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. In the last update we asked is this the low for URE as it was down to $1.78, well it could have been as this stock is showing signs of recovery and closed yesterday at $2.15, bringing with it some light relief!

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 to $6.85, before rallying again to close at $8.59 yesterday. We will continue to watch for the now. If you can handle the volatility then this is the ride for you.

This tiny sector has been hammered so we are pleased to be able to bring you slightly better news. In the last update we said:

“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.”

This is now happening as uranium stocks are moving higher in numbers and not in isolation, which bodes well for us. We know that it has been a really torrid time for investors in this sector but we don’t think that now is the time to sell. The stocks are showing signs of life and some are starting to really kick. We could sell now and register the losses but our belief in the nuclear story remains unchanged so we are sticking with it.

The longer-term price remains strong at $95/lb but the spot price continues to cast its dark shadow on things as TradeTech reports the uranium spot price trading at $60/lb accompanied with the following commentary:

“Two transactions were concluded this week in the spot uranium market with prices at, or very near, today’s spot price indicator. While there remains an undercurrent of uncertainty about future price direction, buyers are beginning to venture back into the market and sellers are less willing to cut prices. One factor contributing to this change in behaviour is the expectation for large volumes of demand to return to the market in coming weeks and months, as rumours continue to swirl about potentially large purchases from the investment community. However, significant demand from this sector of the market has yet to surface. TradeTech’s Uranium Spot Price Indicator remains unchanged this week at $60.00 per pound U3O8.”

We hope that the importance of the spot price diminishes and the focus of attention becomes the long-term price, as this is where the lion’s share of the trade in uranium is conducted.

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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Looking further a field we spotted this report by Reuters in London: “The FTSE 100 FTSE share index closed 2.9 percent lower on Tuesday, 20 May snapping a four-day rally as investors dumped overheated mining stocks, while U.S. data and surging oil prices underscored inflationary concerns.”

Up on one exchange and down on another!


URANIUM ONE: Suspends Honeymoon uranium mine

Uranium one logo 21sep07

In its quarterly report Uranium One has said that the development of the Honeymoon uranium mine, northwest of Broken Hill, has been suspended until a development partner can be found. Executive vice-president Australia and Asia Greg Cochran is quoted as follows:

"What we're doing is we've recognised we need to have a bigger portfolio, and so that, together with sharing some of the cost of development with a partner, has meant that we're moving in the partner mould. It does mean a postponement of course of what is currently going on at Honeymoon but that's just until we get through this stage."

According to the Adelaide Now the company has appointed Rothschild’s to advise on the many options available to them. The mine is not for sale it is just a matter of finding a suitable partner, or partners to share the project with them. If offered for sale it is estimated that the mine would be worth between $100 million and $200 million. This mine is expected to produce about 400,000kg of uranium oxide a year for seven years. If a partner can be found then this would free up resources for the company to expand its Australian uranium portfolio, at the same time it will continue to focus on its three core assets in South Africa, the U.S. and Kazakhstan. Work has commenced on the supporting infrastructure including power, roads, accommodation, etc.

With nuclear power not being the current flavour of the month we expect to see more ‘partnering’ going forward in order to make the best use of financial resources.

Have a good one.

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Aurora’s community outreach programme lifts stock 11.58%!

Aurora small logo

Aurora Energy Resources Incorporated has announced its intention to implement an outreach programme where the focus will be on building community support. The company has said that for the remainder of the year its activities will include a tailings management options study, an environmental baseline program, a community outreach program, a training plan, engineering studies, and ongoing infill drilling.

As we see it this is a good and extremely necessary move if they are to convince the Nunatsiavut Government that the Michelin Project can be developed on a safe basis. This news release also covers technical issues, however, it is the ‘winning’ of the peoples support that is critical to this projects progress.

Meanwhile we found these comments on the National post by RBC Capital Markets analyst Adam Schatzker, who said: "We believe [Aurora's] outreach efforts may generate goodwill among local stakeholders and should bolster the company's reputation," He also rates the stock as an "outperform" with a price target of $8.00. He considers that a "conservative" price target, even though it is roughly double the current level.

Double in twelve months! Yes! That’s our kind of investment criteria, well, if you don’t have dreams they can’t come true, can they?

The stock was up $0.47 to close at $4.53 on Friday.

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A visit to the Green Room!

BBC logo 15 May 2008

The Green Room hosts a series of discussion pieces on environmental topics on a weekly basis at the BBC News website. This week Dr Peter Bleasdale argues that Nuclear power has a key part to play in providing the UK with reliable, low carbon electricity in the future.

So, after years on neglect Britain is moving forward, ever so slowly in our opinion, with the establishment of the National Nuclear Laboratory (NNL). This is one of the requirements in the findings of the white paper entitled: ‘Meeting the Energy Challenge.’

The function of this laboratory is to replace through training the badly depleted skills and technologies that will be required for Britain to forge ahead with its nuclear future. This article goes on to say that

“The NNL will safeguard and develop key scientific and technical skills and facilities that cannot be reliably supplied by the external marketplace”.

This statement comes as a surprise to us in terms of its correlation with the schedule for building new nuclear plants. We understand the sentiment behind the statement but does the United Kingdom have the time to spend training nuclear physicists etc, before they commence on a building programme? As we understand it by 2015 the old nuclear power plants will be in the de-commissioning phase so that leaves just seven short years for the new plants to reach power output mode. Bear in mind that it took Heathrow airport six years to gain planning permission for a new terminal and the United Kingdom is really up against it. Wouldn’t the solution be to run with French or American technology in order to fill the energy gap and concurrently train the new generation of boffins?

It’s not just the research element that is lacking in skilled personnel either; there is also a need for specialists in design, procurement, construction and commissioning areas. These people do not grow on trees so maybe this new organisation will take on a ‘visionary role’ and illuminate the needs beyond their current brief. To some extent you can throw bodies into a project that is behind schedule in an attempt to rescue the day. However, this is nuclear power and the thought of a mad rush in the construction phase does not raise our comfort levels!

We digress. Buried further down in this piece they mention the need for secure supplies, referring to electricity, but we cannot see a mention of uranium. However some of the readers have commented about uranium so just maybe the powers that be will realise just how important uranium is and the United Kingdom will wake up to the fact that other nations are well into the process of securing their supplies – while stocks last!


Dr Peter Bleasdale is managing director of Nexia Solutions, a wholly owned subsidiary of BNFL Group that will be developed into the National Nuclear Laboratory.

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Uranium: 1,100 claims staked close to Grand Canyon!

Interior department logo 14 May 2008

Within 5 miles of the Grand Canyon National Park, there are more than 1,100 uranium claims, a massive increase when you consider that there were only 10 in January 2003, the Department of the Interior reports.

As the search for uranium continues it would appear that nowhere is sacred. The environmentalists are naturally opposed to any mining so close to the Grand Canyon as it is an area of natural beauty. There is also the wildlife along with tourism to be taken into consideration. The explorers will contend that nuclear power unlike coal and natural gas produces electricity without adding to global warming. Richard Wiles, executive director of the Environmental Working Group, is quoted as saying:

"If you can't stop mining at the Grand Canyon, where can you stop it?"

Taylor McKinnon, a public lands advocate for the Centre for Biological Diversity. "Would the water from a flash flood go through the bore hole to the aquifer? We don't know because there wasn't an analysis," referring to Deer Tank Wash where drilling had begun.

It would appear to us that the explorers are going to have to become far more sensitive to the needs of the local people and the environment in general. We have already seen a number of companies run into problems due to moving quickly without taking along with them the objectors. These issues wont go away and need to be handled in a sensitive and transparent manner and dealt with up front before too much money is invested in a project that might never fly.

The Interior Department goes on to say that in “the five Western states where uranium is mined in the United States, 4,333 new claims were filed in 2004, last year the number had swelled to 43,153” A tenfold increase in just four years!

This one could run and run, no doubt more court battles to come.

Have a good one.

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Boston Globe Loog


U308 hits $60/lb!

Uranium spot price 13 May 2008

Just when the uranium stocks look like coming to life the spot price for uranium takes another step lower. According to TradeTech who have reported this decline in the spot market price saying the following:

“May 9, 2008--Spot prices for uranium continued to slide this week with TradeTech’s Spot Price Indicator dropping $5.00 to $60.00 per pound U3O8. Market participants continue to seek the “bottom,” but the ready availability of supplies relative to extremely weak demand has made finding that price point elusive. Some sellers have started firming their offer prices in anticipation of potentially significant purchases by investors, while others remain willing to cut prices in order to conclude transactions. Two transactions are reported in the spot uranium market this week. All active demand remains discretionary with no buyers in a “have to buy” situation”

Now, if the investing community are becoming less reliant on the spot price and are taking more notice of the long-term price this piece of news may be less of a party pooper than usual. We started the week in a positive mood so now we must hope that this move is largely ignored and that the stocks remain steady. If they do then maybe we can begin to think about switching our stance to a more acquisitive one.

Laramide, one of only two ‘buys’ that we recommend at the moment put on 7.9% today so that’s a little more good cheer to keep us going.

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Sorry we don’t cover the other forms of energy such as oil and gas but you can always have a look at Doug Casey’s Energy Speculator by clicking this link.

Have a good one.


Uranium down $2/lb, but stocks stir!

Uranium chart 12 May 2008

Chart courtesy of

According to The Ux Consulting Company (UxC) the price of uranium on the spot market slipped recently $2/lb to $63/lb. However, the long-term price remains steady at $95/lb and over at NYMEX the futures price for most of this year is around $65/lb. But, we can detect some stirring amongst uranium stocks as bargain hunters move to secure stocks at cheap prices.

As we wrote about recently both Laramide and Mega uranium jumped dramatically and also managed to hold onto those gains. To get a feel for what is happening to stocks in this sector we took a peak at a web site called Canadian Uranium Stocks, well worth a visit if you can find the time. This site lists the stocks, along with the latest price, price change, %change, Volume, shares outstanding and market capitalisation. We then scanned the list for those uranium stocks that had achieved a percentage gain of more than 20% on Friday and the following is a list of those stocks. There are also many more stocks that we have not listed showing good gains of between 5% and 20%.

Cash Minerals Ltd. +23.08%
Crosshair Exploration & Mining Corp. +23.61%
Delta Exploration Inc. +20.00%
Ditem Explorations Inc. +26.09%
Mawson Resources J1. +27.78%
North American Gem Inc. +40.91%
Nova Uranium Corp. +20.00%
Pacific Ridge Exploration Ltd. +25.00%
Silver Spruce Resources Inc. +40.63%
Uranium Power Corp. +33.33%
Universal Uranium Ltd. +89.29%

We agree that this is not a scientific form of analysis but it does indicate that there are buyers out there who are prepared to make an investment despite the spot price drifting aimlessly and uranium being out of favour.

We hope that the above brings some good cheer to your Monday and puts you in a positive mood for the week ahead.

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Uranium stocks get a boost!

LAM logo 10oct07 ................ mega logo 10sep07

We have only 2 BUY recommendations in our portfolio of uranium stocks at the moment and they are Laramide Resources Limited and Mega Uranium Limited both up today, 22.37% and 22.95%!

This is what we wrote in the portfolio update, which as you know is published free, on this web site.

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.

LAM is trading at $3.72 and Mega is trading at $2.25 as we write, so if you did bag a few shares at those levels then well done to you. However, we aware that one swallow does not make a summer, but this move upwards will bring some relief to many investors. We adopted a strategy of grin and bear it and there hasn’t been a lot to grin about lately. We have not sold any of our stocks during this grim period and continue to hold on to what we have at the same time we are looking to increase our holdings in this sector. The time to buy is when there is blood in the streets and this sector has been severely beaten up. We may see some retraction after such a jump in uranium stocks prices as some investors choose to take money off the table, hopefully this will be short lived.

We will continue to watch for signs that confirm that the market is about to rally. Gold and silver have also put in a good day so the temptation for investors to transfer funds from uranium to the glittering sector beckons brightly, draining some funds from this sector.

Going forward we see all three metals finishing a lot higher come the end of the year. However uranium will be coming off a much lower base and in terms of percentage increases could well be the star performer over the next twelve months. Once again it’s your money and you must make the final decision, we can only call it as we see it and invest our funds in a way that suits us. One strategy does not fit all investors, so read as widely as you can and take charge of your own investment decisions.

Go Uranium’s go!

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