Uranium One’s woes in
The uranium market is already dealing with an annual supply deficit of some 50-70 million pounds. And
As a quick recap, a former head of the Kazatomprom, state uranium agency in
One of the most intriguing possibilities to come out of this news is that this is a Russian-Chinese power play to prevent a Japanese from completing their purchase of a part of these assets from Uranium One, which is due to close on June 15.
Despite the annual production shortfall, there is clearly a lot of secondary source uranium around still from the de-commissioning of warheads – or else the current price – and the futures price – would be a lot higher.
But if the power play described above is true, the point is that governments are seeing a future shortage, and are moving aggressively now to secure supply. If they are essentially nationalizing uranium deposits by buying them, what does that mean for the free market? Less supply and higher prices.
Even if that scenario doesn’t play out, just the threat of it should keep a firm bid under uranium for a long time.
And that should be good news for the stock prices of uranium producers and developers (hopefully explorers too!) with assets in
Analyst comments from several brokerage firms are already echoing this theme. From Toll Cross Securities in
“Over the past week several stories have unfolded, underlining the important role that geopolitical risk can play when securing a supply of uranium…
“It also serves as a reminder of how important political stability is when sourcing a reliable supply of nuclear fuel. Although it is unclear whether the changes at Kazatomprom will affect production in the short term, the validity of existing sales contracts may be affected, potentially bringing these buyers back to the market…
“..it may not matter, in the end, how foreign companies acquired their interests in
From GMP Securities in
So where should investors look for gains in North American uranium stories?
There are a few near term producers in
Fronteer Development Group (FRG-TSX) with 134 million pounds in Labrador, and Uracan Resources (URC-TSXV) with 40.7 million pounds at their Double S deposits in Quebec have two of single largest resources currently of any one deposit in North America, giving them strong leverage to a rising uranium price.
Also, producers Denison Mines (DML-TSX) and Cameco (CCO-TSX; CCJ-NYSE) have raised significant money lately that could be earmarked for the acquisition of one of these fast developing companies.
No one knows how the situation with Uranium One will turn out, but the increased tension in the uranium market should be positive news for investors – particularly those investing in North American assets.
-- Posted Friday, May 29 2009 | Digg This Article | Discuss This Article - Comments:
Previous Articles by Guest Authors
UraniumSeek.com, Gold Seek LLC
The content on this site is protected by U.S. and international copyright laws and is the property of UraniumSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on UraniumSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.
The views contained here may not represent the views of UraniumSeek.com, its affiliates or advertisers. UraniumSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of UraniumSeek.com, is strictly prohibited. In no event shall UraniumSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.