Spot uranium rally finally buoys stock prices Mon, Dec 1, 2008 Featured Article, Uranium Articles
By Luke Brocki - Exclusive to Uranium Investing News and U3O8.biz
Uranium stock prices have been in the dumps so long spotting winners on the TSX has been all but impossible; after all, even a 10% jump is an easy feat when shares are worth mere pennies. But the bull continues to run wild in the sector thanks to undeniably strong spot uranium. And now that optimism is finally affecting uranium stock prices.
The National Post newspaper likes two Canadian uranium big boys this week, namely Cameco Corp. and Uranium One Inc., both of which have registered some pretty nice gains in recent days.
Cameco is looking good long-term, but dropped 64 cents, or 3%, to $21.01 in early Friday trading, after announcing the suspension of production of uranium hexafluoride at its Port Hope facility in Ontario, citing unreliable and expensive deliveries of hydrofluoric acid.
The Canadian Press reports some 100 layoffs are expected out of a workforce of 440 at the site, given the plant isn’t expected to start up again until mid-2009. CP says the source of the shutdown is an unresolved contract dispute with Cameco’s sole supplier of hydrofluoric acid, a key ingredient in the production of uranium hexafluoride. Despite the setback, Cameco shares are up some 45% since last week, having hit a high unseen in more than two months.
Uranium One was up 6% Thursday, and gained another 10% to $1.23 in Friday’s morning session, bringing its weeklong gains to some 30%. That’s despite, or perhaps because of, news the company declined to make a cash call payment on one of its joint ventures in Saskatchewan’s Athabasca Basin. CP reports fellow miner Pitchstone has covered Uranium One’s payment, thus gaining a majority stake in the formerly 50-50 partnership in the five properties in question.
Uranerz Energy Corp. joined the list of big winners on the TSX Friday, gaining 15 cents, or 25%, to 75 cents.
According to the weekly uranium update from Toll Cross Securities Inc., much of the sector is in the black this week, for the first time in months. Toll Cross says junior explorers were up 13% compared to this time last week, advanced explorers were up 16%, production visibility companies were up by 23%, and producers were up 14%. The Toll Cross Junior Uranium Index gained 16% to 122.67 from 106.
All of these gains are widely attributed to the continued strengthening of spot uranium prices, which have been on the mend for five straight weeks, gaining some 25% since October’s low of US$44 a pound U3O8. Spot prices jumped $2 earlier this week to close at US$55 a pound U3O8. Still, sentiment remains mixed in the spot market; bulls applaud spot uranium’s performance, even saying its long rally is proof the metal is relatively immune from global credit woes, but bears warn many investors remain cautious of ongoing instability and that this lack of aggressiveness could eventually put a dampener on the spot rally.
According to the Toll Cross update, price publisher Ux Consulting left its long-term uranium price unchanged at US$70 a pound U3O8 this week, where it’s expected to remain through the end of December. As for uranium futures, they continue to rise steadily as we look further into the future. December futures are worth US$55, March 2009 contracts are priced at US$57, June 2009 futures are priced at US$58, September 2009 at US$59, December 2009 futures at US$60, and March 2010 at US$65.
SRT Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)