Uranium Stocks A Dead Cat Bounce?
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Topic: Uranium Mining Stocks — April 7th, 2009
Chart courtesy of u308.biz.
When we scan the horizon in this tiny sector we can see that a number of uranium stocks have improved dramatically since their low point at the close of 2008 in what could be a dead cat bounce. Is this the beginning of a recovery, well we certainly hope so, however, we must keep these recent improvements in context. The fact of the matter is that they have been decimated with some stocks down as much 97% so an improvement since Christmas of two to three hundred percent is nothing to celebrate but it is step in the right direction. If you are a new comer to this market sector then these gains are the stuff of your wildest dreams however if you have been involved for sometime the road to recovery is a long one.
Apart from one or two mentions this sector is attracting very little in terms of air play as the mainstream continues to wrestle with the results and ramifications of G20, IMF gold sales, bailouts for the banks and just where can we hide those toxic non-performing assets? In the meantime the spot price for uranium drifts in a southerly direction and is currently trading at $42/lb as depicted by the above chart according to both TradeTech and UxC.
The longer term uranium price remains steady at $70/lb which is depicted by the chart below kindly provided by TradeTech
Over at NYMEX the futures prices for uranium range from $42/lb for June 2009 to $52/lb for December 2009 delivery.
Apart from the occasional pop northwards by a stock, such as Denison putting on a 26.29% gain yesterday, the order of the day appears to be a fairly static one. The broader markets have put in a terrific spurt over last four weeks and may now take a breather, if they do sell off we suspect that it will put a damper on this sectors progress as the financial turmoil tends to cloud the real issue of just where we are going to get the power from in the not too distant future.
Have a good one.
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The seems to be a divergence between Australian uranium stocks as compared to other regions.
This http://australianuranium.com.au/australian-uranium-graph.html takes you to a chart of the Australian Uranium Share Index
Australian Uranium Share Index
The ALTEX-Australia Uranium Index is Australia’s leading Uranium share price index. The Australian Uranium Index tracks the performance of all companies listed on the Australian Stock Exchange that have a primary focus on the exploration and production of Uranium
Comment by Sparty — April 7, 2009 @ 1:19 pm
“Apart from the occasional pop northwards by a stock, such as Denison putting on a 26.29% gain yesterday, the order of the day appears to be a fairly static one”.
I cannot understand why you, purporting to a responsible uranium website, continue to ignore the continued exciting emergence of one of the greatest potential accumulations of uranium in the world at Rossing South in Namibia. And some of the most substantial share price gains for any share anywhere in the world during the last year, due entirely to the successful discovery of uranium.
Mineweb (Barry Serjeant) reported on 3 April that shares in Extract Resources (ASX:EXT) had risen 526.7% in the last year; Kalahari Minerals (AIM:KAH), which owns 39% of Extract, had risen 360.2%; and Niger Uranium (AIM:URU) , which owns 14% of Kalahari, has risen 526.7%. The majority of these gains have been made in 2009.
Comment by Robert Wallace — April 7, 2009 @ 3:58 pm
Both comments make good points, when I look at my healthier uraniums portfolio (ASX) I hope Bob is more wrong than right with his use of “dead cat bounce”.
It is useful to compare the AustralianUranium.com ASX graphic with their
Global Uranium Share Index Chart and you see the dramatic difference.
http://australianuranium.com.au/global-uranium-graph.html
The big question is, to what extent is the difference due to the influence of EXT in their chart. Go to Yahoo Finance page type in EXT.AX and see the rocket like rise as the stock is bought by at least three competing corporate entities, RIO, Kalahari and Polo. I have just looked at the pdf file for the ALTEXYellow index and they give no breakdown into stocks. They say it is made of 23 stocks and the top 5 comprise 92.3 of the total market cap. So the sudden increase in the $1.178Bill market cap for EXT probably has a heavy effect.
I note some overdue gains in other value stocks, for example ACB with near 100 mill lbs of shallow Karoo U3O8 in Botswana and ticking the boxes towards a mine has been in the doldrums for months, was near 10c = a market cap of AU$11 mill in late 08, now is worth $27 mill, still I think a great bargain for the long term and Bob, I will be very surprised if ACB sags back to the 10c levels again. But I have been surprised before.
Bannerman BMN (BAN.TO) lead EXT in Namibia for years drilling resources near Rossing then 18 months ago, EXT made their high grade discovery and at the same time BMN came under legal attack from Savanna a little marble quarry who claimed they were over-pegged. BMN (which actually has a larger resource than EXT but at a lower grade - plus 100 mill lbs), has settled with Savanna now and has recovered from being under 30c in late 08 to closing at $1.20 yesterday supported by 3 weeks of incr vol, market cap now $188 mill only 16% of EXT.
Even Marathon MTN which has a sizeable hard rock resource circa 70 mill lbs (650ppm) at Mt Gee in South Australia and who have come under enviro attacks plus related beaten up compliance issues, on Monday nudged above 50c for the first time in almost six months. Market cap $40 mill says market still worried MTN have fences to mend with the SA Govt.
So, Bob I hope the last few weeks improvement in ASX uraniums is a bit better based than being a dead cat bounce but I agree we must always be wary.
Comment by Warwick Hughes — April 7, 2009 @ 10:19 pm
Yes Robert alerted us to this stock on the 17 March 2009 and we did say that we would put it on the Watch List - since then it has moved up from $3 to $5 to record a fantastic gain. As it is new to us we are wary of adding it to the Buy List due to our own lack of knowledge about this particlular company.
So we take our hats off to you guys for spotting this one and also taking the time to inform both the team here and our readership about it.
The question for us now is what is a good entry point? Holders of a particular usually answer ‘Today’ as they are already fans of the stock. All we can add is that it looks excellent and we are very interested.
Comment by Uranium Stocks — April 8, 2009 @ 3:16 am
One small Australian compnay with a miniscule market cap AUD$27m with cash of AUD$22m and no debt due and minimal liabilities is GGG.
GGG has the rights for up to 100% of the Kvanefjeld uranium and rare earths deposit in SW Greenland. JORC resource 223mlb U3O8 and 2.6mt
REO with upside potential. Scoping study commencing 1Q09. Govt
indicates support for by-product uranium production (Nov ‘08).
Read more
Comment by Sparty — April 8, 2009 @ 4:28 am
Namibian Uraniums
Australian Uranium Stocks - Producers Australian Uranium Stocks - Explorers with Operations in Australia Australian Uranium Stocks - Explorers with Operations Not in AustraliaA - Z List of Australian Uranium Companies
Alternative Energy Indices
Comment by Sparty — April 8, 2009 @ 4:38 am
Sorry all Post 6 didn’t work….
Australian Uranium Stocks - Producers
Australian Uranium Stocks - Explorers with Operations in Australia
Australian Uranium Stocks - Explorers with Operations Not in Australia
A - Z List of Australian Uranium Companies
Alternative Energy Indices
Comment by Sparty — April 8, 2009 @ 4:44 am
I will try again.
Australian Uranium Stocks - Producers
Australian Uranium Stocks - Explorers with Operations in Australia
Australian Uranium Stocks - Explorers with Operations Not in Australia
A - Z List of Australian Uranium Companies
Alternative Energy Indices
Comment by Sparty — April 8, 2009 @ 4:46 am
Looks like we have a lot to do!
Comment by Uranium Stocks — April 8, 2009 @ 6:12 am
with the dearth in uranium supply in the medical profession as well as the likelihood of a covert arms race I can only see the price of uranium increasing dramatically. i have done well with AVX found on the Canadian Venture Market Exchange. Bought at .03 and within two months at .16.
Comment by gabriel — April 9, 2009 @ 10:50 am
gabriel,
Well done. Do you plan to take some money off the table or are you sticking with it?
Comment by Uranium Stocks — April 10, 2009 @ 12:00 am
I had a quick look at the AVX website.
Altair Ventures Inc.
http://www.altairventures.ca/index.aspx
They say, “Altair Ventures is a junior gold exploration company..”
I had a quick look around at their News but could see no mention of uranium. Did I miss something ?
But HEY, good profit, who cares, gold or yellow-cake.
Before I go, a quick question for a dumb Australian, what is the significance of the suffix - exchange ID’s in Canadian stock codes such as XXX.V, XXX.TO and then XXX.TX
Does V signify Vancouver or Venture ??
I have always assumed TO is Toronto, so what is TX ?
At least downunder I have only heard of the ASX.
Comment by Warwick Hughes — April 10, 2009 @ 1:40 am
Extract Resources Limited (ASX:EXT) drops 22.55% to close at $3.95, can anyone offer an explanation for this sudden reversal in fortunes for this stock?
Comment by Uranium Stocks — April 11, 2009 @ 3:06 am
I doubt there needs to be an explanation Bob, other than profit taking after a rocket like rise in price. Maybe Polo or whoever eased off their buying.
Comment by Warwick Hughes — April 11, 2009 @ 3:47 am
Profit taking is a good enough reason for the fall, we were fishing a little to see if there was something we had missed.
Comment by Uranium Stocks — April 11, 2009 @ 5:23 am
Re EXT and its recent price correction:
I see several factors none of which are more than misty doubts….
1. Huge flooding in Namibia and some talk of civil unrest
2. Profit taking -
3. Fat Prophets- EXT A Sell and Sky Business News gurus suggested profit taking last week
4. The recent EXT presentation to the Namibian govt. may have brought some issues to the surface. (This could also be part of BMN’s lesser fall)
5. One of the substantial holders shaking the tree to dislodge the weaker hands.
(Number 4 is my worry point)
Comment by Sparty — April 11, 2009 @ 9:05 am
Sparty you say.
1. Huge flooding in Namibia and some talk of civil unrest
The flooding is up north in the Caprivi Strip, the Zambesi seems to flood regularly, as many rivers do. I can not see possible connection to the uranium projects.
There has been unrest for decades by various tribal groups in and around the Caprivi Strip. Not unusual for Africa. Can you give a link to any news items claiming this is a significant risk to Namibia.
you also say.
4. The recent EXT presentation to the Namibian govt. may have brought some issues to the surface. (This could also be part of BMN’s lesser fall)
Have you got a link to this presentation ? I can only see a one page blurb on the EXT ASX website. scroll down for Extract.
http://www.asx.com.au/asx/research/listedCompanies.do?coName=E
It is hard to figure what you are worrying about if we can not read the presentation.
Comment by Warwick Hughes — April 12, 2009 @ 1:11 am
Hi I agree with you Warwick that there seems to be very little to go on…. That is why my post started: “I see several factors none of which are more than misty doubts…”
My list can be seen as a fishing trip for info…. your response was helpful.
I am hoping for point 5. but 4 would be a worry…. and you are right there is nothing in the readily available news.
So Tuesday will be an interesting day.
(I do hold EXT and I did take some profits early last week. Mostly because EXTs performance over the last few years has netted me a 10 bagger and consequently I had too big a proportion of my portfolio in EXT)
Comment by Sparty — April 12, 2009 @ 1:49 am