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Very interesting article


WA Business News

Analysis: uranium a big
opportunity
Opinion: 16-March-11 by Tim Treadgold
Buy when others are fearful. That piece of advice made Warren
Buffett one of the world's richest people, and it could make a
fortune for anyone prepared to plunge into massively discounted
Australian uranium stocks.
The challenge is to believe that radiation leaking from Japan's
earthquake-damaged nuclear power plant will not prove fatal to the
worldwide nuclear industry.
On balance, that's a fair assumption because despite days of
negative publicity, and calls from a number of governments for
inquiries into the nuclear industry, there is an even greater problem
which has been temporarily pushed into the background - an
insatiable demand in every country for more electric power.
Nuclear, love it, or hate it, has become an essential part of
electricity production around the world.
If it was turned off tomorrow the world would endure rolling black
outs - until more coal and gas-burning power plants were built,
sparking an even more intense debate about carbon emissions.
As politically unpopular as uranium is today the reality is that the
world needs it as a fuel source, and while some countries will vote
to not embrace nuclear they will also be voting to price themselves
out of world markets thanks to high electricity costs, or power
shortages which limit industrial investment.
When the dust settles in Japan it too will be forced to face the
reality of trying to run an economy on high-priced fossil fuels, such
as oil and gas, or to revert back to nuclear and pray that better
design leads to stronger reactors, and that another magnitude 9
earthquake doesn't happen too soon.
Alternative energy sources such as wind and solar are simply not an
option for Japan. It must have big, base-load, power stations to
drive its factories, and as it emerges from the current crisis it will
need more power than ever before, and it must be cost-effective
power.
The bloodbath which has been Australian uranium stocks this week
will serve two purposes. It will kill most of the no-hopers, companies
that have simple jumped aboard the uranium express because it
seemed like the best way to make a quick profit from gullible
investors, and it will leave a hard-core of quality companies.
One man prepared to stick his neck out and suggest which
companies will survive and prosper from this latest shock to the
uranium industry is Warwick Grigor from BGF Equities.
A perennial resource sector bull Grigor was working on an update to
his regular uranium sector review last week, before Japan's
earthquake. Earlier today he stuck his neck out further than ever,
telling clients that the real disaster with Japan's nuclear problem
was "the media beat-up".
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Analysis: uranium a big opportunity - WA Business News
http://www.wabusinessnews.com.au/en-story/1/87536/Analysis-uranium-a-big-opportunity[16/03/2011 4:57:27 PM]
"This is a speed bump to the aspirations of the nuclear power, not
a termination of the growth phase," he wrote.
Grigor's wrong about the beat-up. The Fukushima crisis is real and
has been reported responsibly by most media outlets.
He's right about the inevitability of the uranium rebound, and that
means investors with a reasonable appetite for risk will be looking
for bargain basement buys, while hoping that they're not buying a
falling knife.
Grigor's top picks in the uranium sector are A-Cap Resources,
Energy and Minerals, Extract Resources, Peninsula Energy and
UraniumSA.
He could have added "get 'em while there hot", but that was
obviously a step too far in a nuclear-spooked environment even for
a uranium bull.
Article tags: extract resource