Uranium has been a stagnant investment for some time. However, in the last few weeks, particularly after the US Department of Energy (DoE) announcement of a US$150M uranium reserve budget, uranium equities were starting to show signs of life, only to see their legs kicked from under them. The DoE announcement, whist welcome and moderately positive, did nothing to clear up the continued uncertainty as to the US government’s stance on the nuclear energy market in the US. It has been perceived by some as pre-election posturing.
The selling has possibly been triggered by broader market conditions and alarmist news surrounding the Coronavirus impacts in Asia, but right now, it feels like guesswork to understand the uranium investment space. Even the brightest admit to being baffled and operating in a void, so they wait. Uranium equities holders though seem to have lost the FOMO element. They know they can come back in cheaply and have been missing out on other opportunities; even the gold guys have been making money…
Regardless of what the uranium price is doing right now, prospective and existing uranium investors share an unmoving philosophy: this is a sector with big unfulfilled potential. So, if you have settled on the thesis, aren’t jaded by the whole experience and haven’t had to average down for the last several months, it might be the perfect time to start picking winners as these market conditions could create some real buying opportunities for new entrants.
Crux Investor interviewed David Cates, President and CEO of Uranium developer, Denison Mines (TSX: DML). It was an intriguing interview that you can watch by clicking here. There are numerous useful articles on our platform regarding picking uranium space winners and detailing potential red flags. Click here or here to read one.
Cates says Denison Mines has some unique qualities that could set it apart from the pack. It is a question of whether the market believes in the company’s business model and its ability to deliver it. However, as with all things mining, there are a few red flags, such as permitting, but Cates feels that they will be able to resolve this particular issue. Then it’s just a question of funding the CapEx in a difficult market, but Cates tells us they are clear on how they can do this too.
Denison Mines is a uranium exploration/development company with 90% ownership interest in the Wheeler River project, the ‘largest undeveloped high-grade uranium project in the eastern portion of the Athabasca Basin.’
Company page: https://www.denisonmines.com/
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