cameco's u is spoken for

Cameco's U is spoken for. Let the fight for what's left begin :) Here is a recent article from the Financial Post in Canada hilighting how supply is tightening:

CAMECO'S CHINA DEAL MAY ONLY BE THE BEGINNING - World hunger for uranium driving sector stocks higher.
By Jonathan Ratner, Financial Post November 26, 2010

- Cameco Corp.'s latest deal to supply China with uranium is helping drive the entire sector higher. Shares of the world's second-largest producer of the nuclear fuel have risen 70% since early July as investors and utilities realize that China's reactor build program is for real.

"This is a pretty large deal, so if anyone else was hoping for prices to drop again so they could negotiate a contract, they've actually just seen a significant amount of future supply eaten up," Octagon Capital mining analyst Rob Chang said. "It could be the gun that fires to begin the race for more contracts." Cameco shares rose 4.4% after the deal was announced on Wednesday, while Uranium One Inc. jumped 6.9%, Denison Mines Corp. surged 14.7%, Paladin Energy Ltd. climbed 3% and Crosshair Exploration & Mining Corp. was up 25%.

Cameco has agreed to supply 29 million pounds of uranium concentrate to stateowned China Guangdong Nuclear Power Holding Co. (CGNPC) under a longterm agreement through 2025. China's largest cleanenergy enterprise operates three nuclear power stations and is building another 14 nuclear power plants, the most currently under construction worldwide.

Earlier this month, CGNPC signed a 10-year supply deal with Kazakhstan's Kazatomprom for approximately 5.3 million pounds per year, as well as a US$3.5-billion, 5.6 million pounds per year agreement with Areva.

The current rally in uranium stocks was sparked by Cameco's deal in June to supply China National Nuclear Corp. with 23 million pounds of uranium concentrate through 2020.

"For Cameco to be supplying to China Guangdong Nuclear, it's a great win for them. It says they'll have access to other utilities; they'll be the first choice," Mr. Chang said.

"Utilities are trying to grab long-term material because they know that based on the supply-demand numbers, the uranium spot price is probably going to go higher from here." Since China has the fastestgrowing nuclear demand in the world, BMO Capital Markets analyst Edward Sterck expects Cameco will continue to sign off-take agreements with Chinese entities.

While Cameco shares were penalized in recent years due to flooding and other problems at its Saskatchewan operations, it has benefited lately from the four-month run in uranium spot prices.

Uranium recently climbed to US$60.50 from about US$40 per pound in June, according to Ux Consulting.

"China's immense hunger for supply is undeniable, regardless of the eventual goal, and recent buying activity demonstrates this," Raymond James analyst Bart Jaworski said in a recent report.

While speculators are re-entering the uranium market, analysts believe the commodity will behave a little more rationally than it did in 2007, when spot prices topped out above US$140.

When the nuclear reactors currently being built come into operation, they will require uranium each year for several decades.

And with demand hitting the market, there is an expectation that reactor life extensions in Germany will place additional demand in the spot and medium-term markets in 2011.

Dundee Securities analyst David Talbot pointed out that not only are the Chinese aggressive buyers, but the Russians are attempting to take over various companies such as Uranium One Inc.

It received final approval from the U.S. Nuclear Regulatory Commission on Wednesday for its sale of a controlling stake to Russia's state-owned JSC Atomredmetzoloto (ARMZ).

The Canadian, American, Australian and Kazakh governments have already approved the deal. At the same time, Korean, Japanese and French nuclear concerns are becoming fully vertically integrated and are actively seeking fuel by any means for end-users that buy their reactors.

"India has barely gotten started," Mr. Talbot told clients last week, adding that "the United States is essentially nowhere to be seen during what we believe are the early days of this buying frenzy." A new uranium-backed fund, the Global X Uranium ETF, is likely contributing to Cameco's rise. It has attracted more than US$65-million in assets since its Nov. 5 inception, 18% of which is in Cameco, the ETF's largest holding.

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