Wednesday, January 25, 2006

Japan + Kazakhstan --> Stock Uranium as China Looms




Ikuko Kao of Reuters News Service reports:

"Japanese firms are boosting investment in uranium sources in Central Asia as a revenue stream, since an expected surge in global demand for nuclear fuel is likely to keep prices at record-high levels"

Analysis: yes, the price of spot uranium is up to $36.5/lb, and shows no signs of slowing down. Simple supply and demand economics. Price is expected to shoot up to $45 next year. Some of the more adventurous analysts have speculated that it could go up to $500/lb. But let's just keep it conservative and say the probability of uranium price getting higher is very likely and that it will go lower, not so much. There is just not enough production right now; less than 10 companies in the world are actually getting uranium out of the ground.

Sumitomo Corp. and "Kansai Electric Power Co., Japan's third-largest trading firm and second-ranked utility, agreed on Monday with Kazakhstan's state-run KazAtomProm to jointly develop a uranium deposit in the country"

Analysis: why on earth would such big companies in Japan ever be interested in Kazakhstan?

"It's very important to look beyond oil to find a new income source especially when uranium prices are almost promised to rise to new highs," a spokesman at Sumitomo said.
Resource-poor Japan imports almost all of its oil and gas needs and has a government policy of supporting nuclear power with an aim to build five new nuclear power plants by 2010."


Analysis: it's true. Nuclear power supplies 20% of the electricity in this world. That is a ton of power. And there's only so much supply. We are actually not producing nearly enough uranium right now to supply demand, but the deficit is being made up by converting old Soviet weapons. Unfortunately, that particular agreement ends in about eight years. Supply will even be stretched further, as new nuclear plants are being built. But by who?

"Japan will still have to import uranium and wants to avoid competition with China, which has also been rushing for stakes in projects and to secure resources to meet energy demand.
"We need to secure uranium stakes before the competition with China starts over again," the Sumitomo spokesman said. "


Analysis: and there it is. Just as China (and India) is driving the oil boom, it also will drive the uranium market. China is planning to build 2 new power plants every year for the next twenty years. Other countries around the world are doing the same thing (although not nearly as drastic) and others still are contemplating whether or not to delve more into nuclear power (whole other discussion). If you can imagine that with only 440 or so power plants right now, more being built, and supply destined to drop off rather sharply until a massive amount of production is undertaken some time in the future, you can understand why uranium investing makes some sense.
 

10 Comments:

Anonymous benben said...

Nice blog. Are you goign to suggest some TSX or ventures stocks for your log readers to take a look at?

8:15 PM  
Blogger Spelunca said...

indeed i will! feel free to post suggestions on your fav stocks too. after all, we're all in this together

6:42 PM  
Anonymous benben said...

Sure. I will share with you what i have already bought for the uranium stock.So far, i bought only UUU. And i heard lots of ppl are saying this stock might be going high soon.

9:29 PM  
Blogger Spelunca said...

lol. this is just gravy because i bought UUU as well and am just finished doing a piece on it. please feel free to add suggestions!

1:32 AM  
Blogger charlottebandit said...

I also enjoy this board too. Especially for uranium bugs like us! :)

I'm coming on "late" concerning the early stages of the uranium bloom. Cameco is selling at $78 when others got in at <$20s.

3:26 PM  
Blogger charlottebandit said...

Diamond said:

" feel free to post suggestions on your fav stocks too. after all, we're all in this together"

I agree. I'm a grad student who just finished his studies (12/05) and looking for a job (MS Network Security), so I had some time all last week to figure out how the uranium process works from acquisition to production. I made up my mind after looking at this stock or that stock as so many sounded so great!! I still have some more to go concerning understanding Sample analysis, Metallurical Testing and such. :)

The permit process takes about 3-6 years just about everywhere around the world.

======================

(Core)

- UrAsia: (producer & CHEAP!! among other things)


(Resource Banks)

- Paladin Resources: (2006 producer: Namibia. Malawi site will be online in 2008-9)

- Strathmore Minerals: (2 projects have already begun the permit process: production in 2009-11). Other sites going through feasibility studies (Phase 1).

- SXR Uranium One (Dominion site: production 2007-09). Honeymoon project (Australia-BIG) is already fully permitted!!!! They are waiting for uranium prices to go up so it's better for them & shareholders.


(Advanced Exploration)

- Northwestern Minerals Ventures: ($0.77) as of 1/30/06. Started the permit process on the Firefly site (1/06) and has greatest reward potential because of the low price. Will be in production in 2009-12.

- Ur-Energy: bought a boatload of old mines in US & abroad. Haven't started permit process yet, but will make $$ (hopefully) because so many old mines (closed for political & $$ reasons) are located in the US making it feasible and cost effective for quick transportation.

=====================

- UrAsia (now)
- Paladin (now & 2008)
- SXR Uranium (2007 & when prices higher!)
- Strathmore (2009-11)
- Northwestern (2009)
- Ur-Energy (2009-10???)

=====================

I picked each stock to complement the other when one might be thin with Ur-Energy being after 2010. These smaller exploration companies won't be in production (if ever, $$$) until 8-10 years from now. I'm not waiting 10 years from now for some cake (unless it's yellow-cake!!!) :)

Make sure you do due diligence before buying any stocks.

3:53 PM  
Blogger charlottebandit said...

Although I may be completely wrong about everything (don't think so), be discreet with what you learn until AFTER you purchase the amount of shares you desire.

There are other great companies out there, however jumping in on a low price has come and gone. Cameco will go up & split, but the % increase won't be as large as these other companies meaning larger profit margin.

God bless you.

- Martin

3:56 PM  
Blogger Spelunca said...

you list out some very intruiging companies charlotte.. i agree with your strategy of picking up producers or will-shortly-be producers. I haven't made up my mind on really big companies like Cameco and BHP Billiton yet..sure, they might not increase in the way that microcaps or small caps might, but the risk is substantially less and they are sitting on some of the world's biggest and best uranium deposits.

10:19 PM  
Anonymous Anonymous said...

all pics are great what are the chances of market crashing. Any one please put out your insights. Is there going to be a market crash?

8:47 PM  
Anonymous Anonymous said...

Bhp is on the news alot. What is your input

1:07 PM  

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