same place, same industry, similar timeframe

Hey PEN followers, I just came across this article and couldn't help comparing it with where PEN is and where they are going. Although he is talking about uranerz, I couldn't help myself seeing similarities with the PEN story and thinking what a good thing we are on. Surely the bargain basement prices for PEN can't last much longer with stories like this pointing people in our general direction. Same country, same industry, same location, same extraction process, similar timeframe. Enjoy!

The Single Uranium Stock to Buy Right Now

Over the past few weeks, I've been talking to some of my contacts in the uranium space. After some digging and a lot of phone time I came across a trading opportunity so good that I had to get it out now, before it got away from us...

You'll remember that uranium was in a mania between the years of 2005 and 2007. On the Venture Exchange in Vancouver, nearly 600 "uranium" companies started trading literally overnight.

But like all manias, this one ended in a tsunami wave of misery, heartbreak, and bankruptcy.

Junk uranium companies went belly-up almost as soon as they started trading.

However, the demand for uranium never diminished. And we can now pick at the carcass... and buy quality uranium stocks for a fifth of the price they were valued at just two years ago.

Given the push worldwide for cleaner energy, we think it's a given that nuclear energy will be a growing component of the mix for years to come.

What I'm trying to get at is that nuclear energy is at once a clean, reliable, and growing energy source. One that should be embraced even by the greeniacs. And to some degree, it has...

Patrick Moore, a founder of Greenpeace, has wholeheartedly embraced nuclear energy as one of the best ways to reduce emissions. Even President Obama believes that nuclear must be a part of the path toward sustainable clean energy.

Obama, in his State of the Union Address in January:

To create more of these clean-energy jobs, we need more production, more efficiency, more incentives. That means building a new generation of safe, clean nuclear-power plants in this country.

Obama has pledged $54 billion to build more nuclear power plants.

Like it or not, the nuclear power industry is ramping up.

And while the industry is heavily regulated and reactors incredibly expensive to build technology and engineering advances are solving many issues facing the industry, such as disposal.

Nuclear power capacity worldwide is increasing steadily, with over 50 reactors under construction in 13 countries.

Most reactors on order or planned are in the Asian region, though there are major plans for new units in Europe, the United States, and Russia.

But for the type of gains we're interested in, we look beyond the obvious. And that means looking beyond reactors to the raw ore needed to produce the fuel that powers them.

That means uranium.

Now pay close attention, because this is the part where you make money...

This particular play should give us gains on the order of 50%-100% in a matter of months.

Buy Uranerz Energy (AMEX: URZ, $1.50)

Now, let me get something out of the way right upfront. While I expect nuclear power to supply power demand for decades into the future, longer-term, we'll see a switch to another technology and another fuel most likely thorium.

But that's years away. For now, uranium is the name of the game.

And this company offers a unique opportunity in the uranium space.

Uranerz owns proven high-grade uranium properties in mining-friendly Wyoming. The company is due to receive its permitting by July of this year. When that happens actually, before it happens we should see gains of up to 100% or more.

Once the company has permits in hand come July, the stage will be set for production next year. They're 90% of the way there. But in terms of the stock, I expect we'll see a premium of another 75% to 150% from current levels when they announce the permit.

If you've paid attention to Uranium Energy Corp (UEC), you can appreciate how the market values the certitude of having the final permits in hand.

They were trading at .20 last April when they started to get their permits. The stock now trades for $3.68 a 1,700% gain.

As I mentioned before, URZ is in Wyoming, the most mining-friendly state in the nation. In fact, of the seven ISR (in-situ recovery) permits issued in Wyoming since 1981, URZ management members were directly responsible for the acquisition of three of these permits.

URZ already has two long-term contracts (one with Excelon) comprising almost 50% of its production.

Now, based on when these contracts were inked, I calculate that they're priced between $65 and $70/lb. for about half of our production. Excelon operates the largest nuclear fleet in the U.S.; the third largest in the world. They clearly understand the value of URZ's uranium deposits.

More highlights:

We expect the company to increase the resource base from between 30% to 60% in the next 6 months;
Cash in bank: $28 million; capital cost to get to production: $35 million;
Producing company by 2011;
Next door neighbors are Cameco, Arriva, and Uranium One - all among the biggest players in the world;
Once the permits transfer over, URZ will be the next takeover target for Uranium One;
Very large institutional following: near-term price range of $3;
Included in the Russell Index;
There's very little chance that this property won't go into production, since Wyoming has never denied a permit;
Denison Mines, another uranium powerhouse, owns 8.5% of the company.
This all takes a big part of the risk off the table.

Now in terms of the industry, China has 20 or more reactors within two years of coming online. India and Russia are also driving this. There are 53 new nuclear facilities in various stages of construction right now. So I think the demand side of the equation is solidly in our favor.

Also worth noting is that Uranium One sold their fully-licensed Texas property to UEC and bought the Christiansen Ranch, which lies adjacent to the URZ properties in Wyoming, paying $35 million and that's not counting liabilities...

You see, Uranium One understands the high-grade nature of the ground that URZ owns, as well as that which surrounds the properties. Could this be their first step in positioning themselves for a takeover bid?

You bet.

Long term, URZ plans to exploit their fully-owned Wyoming properties with advance permitting, continued exploration, and development drilling, with a medium-term goal of producing 1.5 million pounds u3o8 per year.

Given what happened in the case of Uranium One from just before they announced permitting, I expect interest in URZ to pick up steadily in the coming months.

Simply put, we need to be out in front of this. I'll have a more detailed recommendation for you in the coming weeks. But the reason I'm sending this incomplete report out now is simple: timing is everything.

Buy URZ at current levels for triple digit gains in the coming months.

Profitably yours,



Brian Hicks