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Uranium: Survey Predicts Higher Prices Ahead!

RCR logo 02 June 2008

An Australian company, Resource Capital Research (RCR) believes that an expected improvement in the price of uranium is part of the reason behind an improving outlook for uranium stocks on both the Australian and Canadian exchanges.

A senior analyst for RCR, John Wilson, said that “positive market sentiment has returned, driven by indications the spot uranium price is about to head up, combined with relative stability in the equity markets following the sub prime rout.”

The survey goes on to say that the market valuation of Australian companies with one or more uranium projects (266 companies) is up 23% over the past month, up 12% over the past 3 months, and down 8% over the past 12 months. This is not dissimilar to what we have been witnessing on the Toronto Stock Exchange where a number of uranium stocks have demonstrated signs of life including one of our ‘buys’ Laramide which is up 60% over the last month.

There are two more interesting snippets in this article are as follows:

Firstly, America's Congressional Budget Office reported that nuclear power would be commercially competitive compared to conventional fossil fuel technologies at a carbon price of $US45/t. Rising prices of competing energy sources - both spot oil and thermal coal prices, which spiked over $US130/bbl and $US130/t respectively, reinforces the commercial potential of nuclear energy.

Secondly, Planned and proposed construction of new nuclear power reactors worldwide has increased "strongly" in the past two years. From January 2007 to May this year there was an increase of 89 reactors from 222 reactors to 311 reactors (+40%). This compares with 439 nuclear power reactors currently in operation and 36 under construction.

To read the article in full just click this link.

We are pleased to see that this is a positive view from the southern hemisphere and thank one of our readers, W, for alerting us to it.

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New Nuclear Plants for Britain!

Gordon Brown 29 May 2008

The British Prime Minister, Gordon Brown, has said that is it time to become more ambitious with the plans for nuclear power for Britain. Three cheers for the British PM!

As we see it the United Kingdom government have adopted a softly, softly approach to nuclear power by first of all introducing the idea of replacing the old plants and are now going a tiny step further by recognising the need for more nuclear power plants. Having got this far they really need to get their skates on if they are not to fall through the energy gap and enter a period of rotational black outs! As well as replacing 23 existing plants a further 14 new sites have been identified as possible sites for new nuclear plants.

According to John Hutton, Business Secretary no "artificial cap" will be put on the proportion of electricity to be generated by this or any other source of "low-carbon energy". Well this should open the gates a little. The Prime Minister goes on to say that: "We want to do more to diversify our supply of energy and that's why I think we are pretty clear that we will have to do more than simply replace existing nuclear capability in Britain.”

The Liberal Democrats along with Green Peace have criticised the government and the Conservatives have backed the building of new nuclear power plants as long as no public subsidy was involved. On the other hand the French firm EDF has said it plans to construct 4 nuclear power plants without subsidies in the UK - the first by 2017, we wish them every success!

As we understand the situation most of Britain’s nuclear plants will be decommissioned by 2015 so we are wondering just happens between 2015 and 2017? Don’t tell me, an accelerated construction programme! Now just where have you heard that one before?

Still it’s a start; at least the politicians have taken the blinkers off so the United Kingdom can now approach the starting gate of the race to keep the lights on!

Have a good one.

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Britain’s nuclear clean up bill to top £73bn!

Britain’s antiquated nuclear power plants are due to be decommissioned at a considerable cost. A total of nineteen power plants, some of which are over fifty years old have now outlived their usefulness.

Referring to the clean programme at Britain’s biggest plant, Sellafield, Jim Morse, a senior director at the Nuclear Decommissioning Authority had this to say:

"We've still a lot to discover, we haven't started waste retrieval in those parts of the estate where the degradation and radioactive decay has been at its greatest. No-one's done this before. It's very difficult to find another measure. There's nothing in engineering terms that allows you to extrapolate from what you have today."

Some of the nuclear waste was dumped into ponds in the early years and will now have to be retrieved, broken down into storable elements and encased in concrete until a decision can be made on their future. Our understanding is that the French store their nuclear waste in a similar fashion. It remains to be seen just how long this waste will remain dangerous, some estimates have been as high as 10,000 years, but we don’t really know exactly.

A spokesman for the Department for Business, Enterprise and Regulatory Reform had this to say about the costs of this mammoth operation:

"As the NDA continues its work to establish - for the first time - the scale of the challenge, the assessment of the costs involved will naturally need adjusting,"

He also went on to say that the next generation of nuclear power stations would produce less waste than those currently being dismantled, and that the power generators themselves would be obliged to pay for the costs.

Its good to see that they are getting to grips with such a prickly problem, however the costs are more than we imagined and will need to be built-in to the power generators feasibility studies in future.

Have a good one

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Laramide: Up 2.52% Today!

Laramide Resources Limited continued its rival with the stock price moving up to $4.89, a vast improvement on the $3.04 that it traded at earlier this month.

This uranium stock, along with MGA are the only two stocks that we have held ‘buy’ orders on throughout this difficult period for this sector, so we are pleased to see it coming back to life with a gain of almost 60% in a few short weeks.

Taking a quick look at the chart we can see the rapid improvement that this uranium stock has experienced as support at $3.00 held fast and a mini rally began.

LAM Chart 26th May 2008

The recently released results don’t look too bad either for the Westmoreland project located in North West Queensland, Australia, with this summary taken directly from Laramide’s web site:

“These results included drill hole WDD08-24 which intersected 27 metres @ 0.14 % U3O8 and drill hole WDD08-27 which intersected 13 metres @ 0.17% U3O8 from 8m plus 18 metres @ 0.32% U3O8 from 30m”

The Vice President of Exploration, Peter Mullens had this:

“The results are generally within ranges of expectation and continue to confirm our belief in the technical merits of the project. Mineralization in the northern part of the Garee Lens is generally lower in grade than the southern half; however current drilling has identified some higher grade material which was has previously not known. Higher grade mineralization in drill holes WDD08-27 and WDD08-28, confirms the presence for high grade pods within the broader moderate grade mineralized zone”.

Things are looking up!

Laramide has a Market Capitalisation of $287 million and trades on the Toronto Stock Exchange under the symbol of LAM

Have a good one.

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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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