There are several reasons to remain bullish uranium. Some good reasons include: increased worldwide energy demand, decreased carbon footprint and inexpensive when used as fuel. Chernobyl, Three Mile Island and Fukushima Daiichi have all created a negative sentiment towards the metal. The problems associated with public opinion seem to be derived from a fear of radiation, and it's thought that nuclear fuel and nuclear warheads can cause the same damage. There is no doubt that it could take decades to educate the planet about the differences, but-- as with all things-- time will decrease the negative stigma.
I do believe that nuclear power is a safe means of producing electricity, but there are a few problems that need to be rectified. The first is the decommissioning of old reactors. Although these reactors are safe in normal situations, newer models are not only safer, but also produce more energy from the same amount of fuel. The second is education. The average person only knows about nuclear power from the three disasters named above. They also do not understand why these accidents happened, and what it took for them to occur. Lastly, government needs to let uranium miners run their businesses. The Russian HEU program was great for the public to feel safe through the dismantling of its nuclear missles, but it was terrible for business. It was nearly impossible for a uranium miner to run a business over that time frame, with the large flow of enriched uranium run from that agreement.
I still believe uranium will be a very good business going forward. Here are a few names to consider.
Ur-Energy (URG) has a market cap of 157.3 million. This low cost producer has Wyoming acreage in the Great Divide Basin and Shirley Basin. Last year it was the first Wyoming uranium company to receive its WDEQ final class one permit (water disposal well). It also received its WDEQ air quality permit. The state engineer holding ponds permits were granted. The NRC pre-license exemption for limited construction was granted. Wyoming Game and Fish approved the wildlife management plan. Its 2011 draft NRC license was received. Ur-Energy also signed its first long term uranium sales agreement-- a new NI 43-101 preliminary assessment validating the Lost Creek Project. Ur-Energy also announced a Nebraska property acquisition. URG has an on site processing facility that is centered with respect to mine acreage. This decreases costs, and URG claims it has near term, low cost production of less than $20/lb. It is also looking to acquire more properties. Click here to access more information on Ur-Energy. Ur-Energy is a low cost producer. Its in-situ production creates a low cost environment, profitable even at today's prices. It is well positioned to sign more contracts for pending uranium production.
Crosshair Exploration and Mining (CXZ) produces uranium, vanadium and gold. It has a market cap of 34.57 million. It has uranium / vanadium projects in Labrador, uranium in Wyoming and gold in Newfoundland. It is planning to acquire the Juniper Ridge property from Strathmore Resources in Wyoming. Juniper Ridge has a historical resource of 6.97 Mlbs. of uranium. Bootheel has N143-101 uranium resource of 1.09 Mlbs. indicated and an additional 3.25 Mlbs. inferred. Labrador has N143-101 uranium resource of 7.52 Mlbs. indicated and an additional 9.55 Mlbs. inferred. Labrador's vanadium resource is 42.82 Mlbs. indicated and an additional 93.62 Mlbs. inferred. Newfoundland's Golden Promise has N143-101 gold resource of 89500 oz. inferred. For more information on Crosshair please read Crosshair Exploration and Mining: Several Growth Opportunities. Crosshair is an interesting company. Historically, Crosshair outperforms the industry when the price of uranium is rising. When the price of uranium begins moving upward, it will likely repeat this dynamic.
Extract Resources (EXRLF.PK) has a market cap of 1.82 billion. It has the fifth largest uranium deposit in the world. It has expectations of 15 Mlbs. of uranium per year. Husab has 367 Mlbs of in-situ uranium. Cigar Lake has a total resource of 347 Mlbs of uranium. Cigar Lake is one of the largest uranium deposits in the world. A company this size, with this large a resource, seems to be a bargain. Extract estimates production costs of $28.50/lb. Total costs are $32/lb. I really like this company and its long term potential. This company has much better long term potential than other companies on this list.
Blue Sky Uranium (BKUCF.PK) has smaller market cap of 15.44 million. It has assembled a 600000 hectare land package in Argentina. Its Anit project has a grade of .04% uranium. Blue Sky is in its beginning stages, but the company is optimistic it will have several large finds in Argentina. This is a purely speculative name, and has not set a date for production. I would stay away from companies still in the exploration phase with no set date, or no long term plans for production. I would also purchase stocks that are in uranium friendly locations.
JNR Resources Inc. (JNRRF.PK) has a 14.96 million market cap. It has acres in the Athabasca Basin. JNR Resources has very good locations to mine uranium. These locations are close to some of the biggest players in the industry (Cameco). Most importantly, it is in an area with very high concentrations. This company is still in the exploration phase. This company is in a very good basin with large historical production. JNR Resources is also located in a region that is friendly to uranium mining. Although I would not purchase this stock, it is better than other speculation plays.
U3O8 Corporation (UTREF.PK) has a market cap of 50.31 million. This company is focused on South America. It has interests in Colombia, Guyana, and Argentina. Colombia's NI 43-101 is 20 to 25 M lbs. U3O8 believes there are several different materials that have value in its acreage. Phosphate, uranium, vanadium, yttrium, rhenium, molybdenum and silver. In Guyana, the company plans to grow its resource potential to NI 43-101 to 20-25 M lbs. In Argentina it plans to grow its NI 43-101 to 20-24 M lbs. This company is still in exploration phase. U3O8 may have more upside as a rare earth producer than uranium.
Bannerman Resources (BNNLF.PK) has a market cap of 80.65 million. Bannerman is interesting based on in the ground resource, compared to company market cap. Etango has a defined deposit of 212 Mlbs. It's in the top 10-15 in the ground deposits in the world. This mine will produce approximately 5 to 7 Mlbs. of uranium per year for over 20 years. The resource estimate of Etango was increased by 40% in 2010. 70% of the deposit is within 200 metres from the surface. This is a world class deposit. It has a mine that can produce a large resource over the course of two decades. Namibia is supportive of the uranium industry, making this a very good location. Bannerman looks to have a very bright future, and I really like this company. Virginia Energy (VAERF.PK) is an exploration stage uranium company. Although speculative, it has joint ventures with three notable partners, including Denison (DNN). The variable that controls Virginia Energy's future is Coles Hill, the largest untapped uranium deposit in the United States. Virginia Energy controls 30% of this play. Coles Hill has NI 43-101 compliant measured and indicated resource totaling 119 million pounds of U3O8. Virginia Energy also controls over 200000 hectares in the Athabasca Basin, Saskatchewan and the Otish Mountains of Quebec. It also owns the Hawk Ridge copper-nickel project. It has several other uranium projects plus coal in Bow River, Saskatchewan. It has a gold project in La Ronge, Saskatchewan. Its Coles Hill is a very interesting play, and worth watching its progress.
In summary, I want to emphasize that companies in production, or those getting close to production, are good investments. Companies with very large resource deposits would be the exception. Another variable of interest is geography. New uranium producers in the United States should be busy as utilities try to find uranium to cover the Russian HEU agreement shortfall. Another good location is Asia, as uranium production close to Asia will be better equipped to supply China and South Korea with fuel for their increased nuclear energy presence.
BMN Price at posting:
32.0¢ Sentiment: LT Buy Disclosure: Held
(20min delay)