Tuesday, April 24, 2007

Uranium Players Predicting Uranium Price

I have decided to compile a list of analysts and management who have come out publicly and tried to predict where the uranium price is going. As you notice, some have not given timelines. The dates are as accurate as I can make them, although they might not be exact. Notice that, as the uranium spot price continues to move up, analysts who were more conservative with their targets started to revise upwards. After the crash however..

Oct 8, 2008 JP MORGAN $65.98 avg 2008, $64.75 avg 2009, $71.50 avg 2010, $65 long-term
Nov 28, 2007 PATRICIA MOHR, SCOTIABANK $95-100 in 2008
April 17 CIBC WORLD MARKETS $140 in 2007, $160 in 2008
April 11 BRENDAN KYNE, LEEWARD HEDGE FUNDS $150-200 next two years
Apr 10 NEAL FRONEMAN, CEO SXR URANIUM ONE $150 end of 2007
Apr 10 LAURENCE ALEXANDER, JEFFREY & CO. $115 avg 2007
March 29 ABN AMRO, GLOBAL BANK $140 2007-2010
March 29 JOHN WILSON, RESEARCH CAPITAL RESEARCH $125 2007, $140 late 2008
March 6 Australian Bureau of Agricultural and Resource Economics ABARE $94.20 avg 2007 $103avg 2008
Feb 27 ABN AMRO, GLOBAL BANK $95 2007
Feb 26 PATRICIA MOHR, SCOTIABANK at least $90, appear headed to $100 end 2007
Jan 29 BRENDAN KYNE, LEEWARD HEDGE FUNDS $100 in 2007, $125 in 2008
Jan 8 RESOURCE CAPITAL RESEARCH $90 mid 2007, $115 late 2008
Jan 7 PATRICIA MOHR, SCOTIABANK $90 by end 2007
Jan 5, 2007 PETER GRANDICH, THE GRANDICH LETTER $100 ?timeline
Dec 21, 2006 BART JAWORSKI, RAYMOND JAMES $90 in 2007
Dec 11 ANITA SONI, MERRILL LYNCH $75 in 2007
Oct 18 DOUG CASEY, CASEY RESEARCH $100-150 ?timeline
Sep 12, 2006 CIBC BANK $70 by end of 2007

This list will be updated regularly.

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Sunday, April 22, 2007

Newsworthy Uranium Tidbits of the Week


Like every other country that is in the midst of building nuclear reactors, China is scrounging to secure future uranium supplies. Its Commission of Science, Technology and Industry for National Defense just came out with a report that emphasized the need to mine its own uranium oxide.

While China had finalized an agreement with Australia last year in the hopes of securing the latters' uranium supply, political uncertainty still abounds and the prospects of massive uranium production expansion from new mines in Australia is not likely going to happen. Still, as a testament to how serious China is about securing future supplies, Sinosteel Corporation will buy a 60% stake to manage and operate Australia's Peppinnini Minerals' exploration licences.

Closer to home, several areas near the Tibetan and Kazakhstan borders are being recommended as possible exploration targets. Kazakhstan, of course, has ambitious plans to become the world's biggest uranium producer and is in the enviable position to be geographically bracketed by Russia and China, two of the forerunners in the nuclear renaissance.

Specific companies that could stand to benefit include Urasia Energy, with operations in Kazakhstan and who just merged with sxr Uranium One to become a global uranium producer. Another company is Khan Resources, with a 58% interest in the Dornod project in Mongolia; they expect to mine 4-5 million lbs of uranium over 10 years, with the results of a pre-feasibility study due in mid-2007.

Uranium Futures
Probably a sign that uranium is progressively getting on peoples' radars, the New York Mercantile Exchange (NYMEX) is teaming up with Ux Consulting to allow uranium futures to be traded starting May 7. The reasoning behind this move ostensibly was to provide more transparency in uranium prices. Reaction has been mixed, with analysts not really sure one way or the other how this will affect the overall uranium environment.

Sunday, April 15, 2007

April 15 Uranium Stocks Update: Energy Fuels (TSE:EFR)

In the past week, Energy Fuels has broken out of its consolidation phase to the upside. Several drivers can be attributed, including a recent filing that the Resolute Performance Fund-a $750 million private mutual fund with $150,000Cdn minimum initial purchase and a 70% compounded return since 2005-had bought a 11.4% stake in the company back in the middle of December 2006. In addition, the stock rose double digits when president and CEO George Glasier went on Canada's Business News Network last Friday to espouse the virtues of his potential uranium producer. Below is an excerpt of the interview:

George Glasier, president and CEO, Energy Fuels Inc.

Uranium Regions in the US
We are in three states right now, Colorado, Utah, and Arizona. These states produce significant amounts of uranium. The original company that I was with was Energy Fuels, the largest uranium producer in the United States, produced about 5 million lbs/year, twice as big as next largest producer in the US. The area of Colorado was the first area where uranium was produced in North America, occurred in the 1940s with the first weapons programs.

Near-term Projects
We have our first mine refurbished, production coming out this year from Whirlwind mine in Colorado. Second mine will be in Utah, Energy Queen mine. Tenderfoot Mesa to come out early 2008. Since these are mines that are already developed, CapEx for Energy Queen $1.5 million, the others $1 million, includes all rehabilitation and equipment needed. Drilling budgets $2 million on all of our properties.

We had a raise of $30 million December of 2006, plenty of cash to do everything that we need to do, including putting our first production on the ground at the mill. With our cash position we are completely set to go forward with all of our plans

We are still acquiring properties, have a number under negotiation. We have the database for virtually all properties in Colorado, Arizona, and Utah. So with the database we judge which properties have merit and we pick up properties which can be put into production fairly quickly, within next two to three years.

When Profitable?
Soon as we start milling production, as early as 2008. We only need uranium to be about $30/lb to be profitable, wiggle room given uranium is $113/lb now.


Although there might be some short-term downward selling pressure due to the emergence of free trading shares from the previous financing and some investors wanting to book profits from the latest move, Energy Fuels looks very well-positioned right now. Execution is the key here as this company needs to prove that it can indeed be a uranium producer in short order.


Monday, April 09, 2007

Uranium Spot Price to $113/lb

As the uranium spot price skyrocketed from $95/lb to $113/lb this week amidst increasing demand in the face of new supply concerns, even analysts who have been bullish on the metal have seen their target prices surpassed, and by a wide margin. For example, Patricia Mohr, who oversees Canadian bank CIBC's Commodity Price Index, has had to revise her estimate upwards already this year; her most recent prediction of yellowcake that "appears headed to $100 at the end of 2007" is already $13 lower and 8 months later. No, the era of uranium is far from over, it seems.

Indeed, signs of increased investor attention to uranium has filtered into the United States. Coinciding with the upward price movement in uranium was a new 52-week high for uranium supplier USEC Inc. USEC, which trades under the symbol USU on the NYSE, operates the only uranium enrichment facility in the United States; it also is in charge of recycling uranium taken from old Russian nuclear warheads and converting it into useable fuel. As one can see from the chart, USU has had a nice run, rewarding investors with nearly a double over the last six months and appreciating to a $1.6billion US market cap.

As impressive as USU's return has been, there are comparable uranium stocks with a primary listing in Canada on the Toronto Stock Exchange (TSX) that also trade on the Pink Sheets. Emerging uranium producers Paladin Resources ($4.9 billion Cdn), Denison Mines ($2.9 billion Cdn), and soon-to-be-merged sxr Uranium One ($2.5 billion Cdn) and Urasia Energy ($3.8 billion Cdn) all have 1-year returns that exceeds that of USEC: Denison itself has returned ~250% during this span:

As unhedged uranium producers who have had relatively short corporate histories and were not forced to sign long-term contracts when the uranium market was depressed, they are able to fully leverage the increasing uranium spot price. Increased costs of production certainly remain a concern, something all mining outfits would agree upon, but investors are betting that these emerging uranium powerhouses have managed to find the perfect confluence of emerging production profiles in the background of an ever-increasing prices.

Thursday, April 05, 2007

Momentum in Favor of Uranium Stocks

Five weeks after the violent global correction in stocks, a series of positive drivers have buoyed uranium stocks back near their previous levels. Highlights include:

March 7: Australia's Energy Resources declaration of force majeure on its sales contracts as a result of flooding in its Ranger mine
March 19: Cameco details remediation plan for its Cigar Lake mine, targets 2010 production
March 20: Uranium Focused Energy Fund closes $195 million IPO
March 23: Uranium spot price raised to $95/lb

Because its news regarding Cigar Lake was deemed to be better than expected, Cameco's stock has regained much of its luster, traversing from $36 to $45 on strong volume in a matter of weeks, buttressed by a "top pick" recommendation by RBC with a target price of $60.

Meanwhile, Cameco's upstart competitors which includes Paladin Resources, Urasia Energy, Denison Mines and sxr Uranium One have also benefited from their status as those few uranium producers with market caps >$2 billion Cdn, receiving the lion's share of new investor attention and institutional support. For example, the bulk of monies in the new christened Uranium Focused Energy Fund will be to hold these "uranium seniors".

Thus, as the inevitable countdown to $100/lb uranium continues, the uranium fundamental story seems to be solidifying. However, the caveat remains that another sudden downturn in the broader market, as what happened in May 2006, may temporarily take the wind out of these stocks in a big way. To me, a vital sign of broader investor confidence would be to take out the old TSX Venture high; otherwise, the threat of a triple top looms and whatever momentum uranium stocks garnered in the last few weeks would be in jeopardy.