Once we broke support a few months ago in the metals market, I began pointing to much lower levels b...
This Miner Is Positively Glowing
06/20/2013 6:30 am EST
Supplies are dwindling and prices will increase, bathing this company in the limelight, but you can buy in before things heat up, says Brien Lundin of Golden Opportunities.
Uranium and junior uranium stocks had a huge run about five years ago, when the price of uranium spiked to almost $140 a pound. But then prices started to slide, and most of those junior exploration companies moved on to other business models.
We had the beginnings of a new rally a couple of years ago, but Japan's Fukushima disaster in Japan put a quick end to that. Now, the next big rally in uranium and uranium seems about to begin, for one very simple reason: Insufficient supplies meet irreversible demand.
There are three key factors you need to know about uranium:
- Nuclear demand is going nowhere but up. China alone is set to multiply its nuclear power output sixfold. And despite Fukushima, Japan has more nuclear reactors planned or being built now than before the disaster!
- The cost of uranium is so minor in comparison to the other costs of running a nuclear reactor-only about 3% of the total-that the price could multiply many times over without any impact on demand.
- A significant portion of global supplies is about to disappear, throwing the market into a supply deficit. The Highly Enriched Uranium agreement with Russia is expiring soon, and the uranium supplies from Russia's nuclear weapons will no longer come to the market.
The global uranium market will go into a supply deficit while demand keeps rising. Unlike the last big run in uranium, the junior companies that are still around are either producing uranium or about to start—or are building huge new resources with the drill bit. Today's juniors could multiply many times over in value if uranium prices even approach the last highs.
My special report provides full details on this situation, and shows clear ways to potentially profit, including recommendations like the following stock.
If there's any company that could be labeled an innovator and leader in the junior uranium space, it's Uranium Energy (UEC). When I met the company's dynamic young CEO, Amir Adnani, back in the early 2000s—before the company even went public—I was struck by Adnani's energy and vision to rejuvenate in-situ recovery (ISR) uranium production in the historic resource areas of the southwestern US.
Since then—through boom and absolute bust in the sector—Adnani and his team brought UEC into production, where it stands virtually alone today in the junior sector.
And the future looks even brighter. As prices surge later this year, UEC will be in prime position to leverage those gains with rapidly growing production at a per-pound cash cost of just $21.
UEC's Palangana Mine in south Texas generated 48,000 pounds of U3O8 in the fiscal quarter ending January 31, 2013, a 19,000-pound increase over the previous quarter. With the startup of Production Area 3 in December 2012, production is ramping up quickly: Palangana produced 28,000 pounds of U3O8 in February alone. The steady production increase should persist throughout 2013.
The company is debt-free and has $12.3 million in cash and 36,000 pounds of uranium (market value of approximately $1.6 million) available for sale. It maintains a strong liquidity position, and has the ability to generate cash on an ongoing basis-a very rare commodity indeed, in this or any junior resource sector.
Furthermore, UEC has a large and growing portfolio of properties, focused in Texas, Wyoming, New Mexico, Arizona, Colorado, and Utah, in all stages of exploration and development.
UEC is actually in production—and with a rapidly growing production profile—just as global uranium prices are poised to rally. It's a perfect recipe at the perfect time.
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