PEN - URA - s232 - Lance

I am a significant investor in Uranium and in particular PEN, these are my observations and no advice is being given.

I read with interest posts regarding PEN here. What interests me in PEN is that since January 2018 when the share price was 45c its has declined to the current level of 32c. This period also marked the time Global X URA announced their rebalancing which completed 31st July 2018 in which PEN was significantly sold in the intervening period.

The good news is that URA has achieved the Index weighting in PEN and no shares have been sold since the rebalancing has been completed, the other good news is that PEN is still part of the only Uranium and Nuclear components ETF in the world and that URA is some 20% below where it was when the spot price was at last at this level. Why is this good? IMO URA has lost ground to make up and as the share price increases and AUM grow they will be a buyer again in PEN. URA through its rebalancing has diversified risk and in doing so has also attracted significantly more institutional buyers...institutions traditionally buy low and sell high!

The other good news is s232 in the USA, while I am sure many investors in this space are aware of s232 the effects on companies like UUUU are clearly apparent, in addition investors will be aware of additional trade sanctions being considered with regard to Russian uranium imports. IMO many investors outside of Australia probably are not aware of the Lance project being one of a handful US mines and significantly the benefits therefore Lance will have in either a successful s232 petition or sanctions on imports to the USA. I have read numerous reports where we are likely to have dual pricing in Uranium should these events occur and that the spot price for USA mined Uranium in order for it to be profitable to mine would be north of $60.

While history is not always a guide to the future IMHO I do at least believe short term PEN could increase 40% to the 45c level prior to the URA rebalancing and new Index announcement. Longer term I just find it interesting to compare where if for example spot prices do increase to $60 world wide (a figure many researchers and analysts have said is the price point which on average most mines have covered costs and making a profit) then where was PEN when we last had a $60 spot price? In February 2011 the spot price was circa $60 and PEN was AUD 5.20 18th February 2011. This would be a great point to reflect on should prices in this bull market continue to develop.

In between though I also compare where the spot price was in 23 October 2015 when PEN reached AUD 1.37 a relatively short time ago...the spot price then was circa $36.96. As all investors in Uranium also know Cameco announced the end of July that they are closing McArthur River indefinately and have advised widely they will not consider opening again at anything under $40 spot price. Investors will also be aware of Kazatompom have announced an IPO in the 4th Qtr which is anticipated to raise the spot price, so this with the s232, sanctions and financials buying Uranium like Yellow Cake and launches of Trebica investments leads me to believe we could see a $40 spot price sooner than many expect.

Another interesting development is that IG index will not provide any leverage on PEN and will only accept sells for those who currently have a position. I understand this only occurs when the market believes the share will only go in one direction....ummmmm which direction is that?

Any comments would be welcome as all views provide a balanced outlook. GLA DYOR