Joe Reagor of ROTH Capital Partners explains the factors that have kept uranium spot prices down, how much longer they will be in effect, and why uranium should be on investors' radar screens today. He also discusses four uranium companies that are in position to benefit from the looming uranium shortage.
The Energy Report: How do you see the big picture for uranium? Spot prices have dropped recently. Are you still bullish?
Joe Reagor: It's a matter of time horizon. Many analysts, myself included, believed that the uranium price recovery was going to happen in 2014. Then when 2014 didn't happen, we thought 2015. Then when 2015 didn't happen, we said 2016. Here we are in 2016, and uranium is back under $28/pound ($28/lb) again. The recovery isn't happening.
There are two parts to why we're not seeing a spot uranium recovery. First is the uranium spot market has been rather tight in terms of overall percentage of production, and there have been some nuclear plant closures in addition to shutdowns in Japan after Fukushima. Add to that a lot of production growth already build into pipelines that has come on-line and ramping up production and creating a larger amount of spot uranium to be sold into a weak market. Cameco Corp.'s (CCO:TSX; CCJ:NYSE) Cigar Lake is an example of that. So we're getting this extra pressure on the spot market, but if you look at contract pricing, it has remained relatively stronger, in the low $40s. Producers are making decisions based on the contract price, not the current spot price. So there is a disconnect between spot and contract pricing. Continue reading "When Will Uranium Emerge from the Shadow of Fukushima?"→
The Mining Report: The Toronto Stock Exchange (TSX) global index dropped 50% during the past year. Where is the silver-gold lining in this cloud?
Joe Mazumdar: Financing risk for the junior mining sector was highly elevated, to say the least, in 2013 and remains a source of uncertainty in 2014. To reduce the risk of financing a project, we seek projects that generate double-digit returns in the current pricing environment. We also look for management teams with the technical capacity to not only build and operate a mining project, but also to successfully execute the business plan, which includes permitting the project and attracting good personnel. We want to mitigate the technical and execution risks inherent in a project by selecting these management teams. As senior management cannot mitigate all risks such as geopolitical and financing risk, we seek projects in manageable jurisdictions where the management has appreciable relevant experience. Another key is that the underlying asset requires a manageable or "bite-sized" upfront capital requirement. Continue reading "Seven Gold and Uranium Juniors with Near-Term Growth You Can't Ignore"→
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