Not if but when

But, low spot prices bring long term contract prices down and also militate against new uranium mining developments and expansions and have already seen some casualties in mine closures. Meanwhile the post Fukushima demand drop-off in Europe has somewhat countered the end of the Russian Megatons to Megawatts programme whereby uranium had been supplied to western markets via the decommissioning of much of Russia’s nuclear arsenal.
Utilities have also been building up inventories which are at the highest levels in 20 years thus securing supplies purchased at the lower prices, while, Newton averred, prices WILL rise substantially, the high inventory levels will put this timing back.
Thus in terms of uranium miners, the low grade operations, which provide the bulk of the world’s supply at present are rapidly becoming hugely uneconomic as long term contracts run out and need to be renegotiated at lower levels and in terms of new projects grade is going to be key. Indeed Newton likened high-grade uranium projects as like gold – although perhaps with the gold mining sector facing its own price problems at the moment this might not have been the best analogy!

The final speaker was David Sadowski of Canadian broker Raymond James who covered the investment angle. Why invest now? For the long term. Prices are depressed and can’t fall much lower as overall global demand is increasing as Eastern nuclear power expansions come on line and, probably, Japan reinstates at least a part of its nuclear power generation industry. Sadowski sees the current uranium surplus turning to deficit, but probably not until 2020 so he sees the short to medium term ‘iffy’ but longer term price performance very strong.
Key factors for investment in uranium plays are grades, depth, metallurgy, access, additional exploration potential, orebody geometry/mineability, land tenure/ royalties, permitting and geopolitical factors. And it terms of the companies themselves investors should look out for capital access, management track record, management invested in the company, capital structure, forward sales (hedging), shareholder base, trading liquidity and newsflow. Most of these factors apply to any resource company of course. If one does one’s due diligence there are still good stocks to be picked up - even in a hugely depressed sector like uranium.

http://www.mineweb.com/mineweb/content/en/mineweb-uranium?oid=252981&sn=Detail