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CEO.CA members discuss high-risk penny stocks which can lose their entire value. Only risk what you can afford to lose.
@nicholaslepanThe World Nuclear Association reference scenario projects world uranium demand as about 65,220 tU in 2016. Due to the absence of Japanese consumption in the last couple of years and low prices there has been some stockpile build-up over 2013-16, which will come in as secondary supply in the next few years. Here are some mines expected to come into production soon: Husab in Namibia (280 million tonnes of uranium ore. Mining is expected to last nearly 20 years), Salamanca in Spain 2017, ten year period the project is capable of producing an average of 4.4 million pounds of uranium per year at a cash cost of US$13.30 per pound and a total cash cost of US$15.06 per pound during steady state operations $BKE.L), Temrezli in Turkey, 2018, $URRE, Mkuju River in Tanzania - Uranium One, Mulga Rock - 2019 - Australia - Vimy Resources $VMY.AX . #uranium
@nicholaslepanFT Consensus Recommendation for $CCO Cameco: As of Feb 14, 2017, the consensus forecast amongst 14 polled investment analysts covering Cameco Corp advises that the company will outperform the market. This has been the consensus forecast since the sentiment of investment analysts improved on Oct 09, 2014. The previous consensus forecast advised investors to hold their position in Cameco Corp. 1 analysts has a buy rating, 6 outperform and 7 hold. The 13 analysts offering 12 month price targets for Cameco Corp have a median target of 15.95, with a high estimate of 21.00 and a low estimate of 13.50. The median estimate represents a 2.84% increase from the last price of 15.51. $CCO is currently trading down 12 cents to $15.39 on 1.565 million shares. #uranium
@mtlzoom#uranium is hot commodity all over the world. For example, India will soon create additional reactors in order to push clean energy agenda. The energy produced covers only 3% of their needs. In short term they are expending to 20%. Guess where they are getting the uranium from? :)
@jhmThe Murky Future of Nuclear Power in the United States: "the United States could lose considerable influence over standards governing safety and waste management, nuclear experts say. And the world may show less willingness to move toward potentially safer designs. [...] In the meantime, the main stage for nuclear development will move overseas to places like China, Russia, India, Korea and a handful of countries in the Middle East, where Westinghouse will have to find partners to build its designs." https://www.nytimes.com/2017/02/18/business/energy-environment/nuclear-power-westinghouse-toshiba.html
@Lukester599Good comment @Barracuda. I believe the same thing. This rally has been dangerous (as well as highly profitable to traders, which I am not), because it was not underpinned by any real substantive strengthening of demand. So due to the supply overhang it will revert to acting like a dead mackerel untill the whole underlying deficit explodes into investor visibility when the tide finally turns. But that tide turn ain't now.
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@Bimbeebop@Lukester599 The spot price reversed it's direction after dropping for as long as it did correct? Up 40% since December. That's substantive enough for me.
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@barracuda@Lukester599 One consideration is that the flat futures price for #uranium means that the uranium shares are probably mis-priced,, i.e. cheap. Why? Because those #uranium prices are obviously wrong. Futures curves are always wrong. If they were right, there would be NO price fluctuations. There is a strong possibility that the market is "off sides" in the #uranium stocks.
@Excelsior@Bimbeebop - I agree that the increase of the #Uranium price from below $18 to $25-$26 has been a noteworthy percentage increase, as was the US/Russian agreement to quit dumping so much #Nuclear fuel into to the spot markets from a program that was supposed to have ended a few years ago and completely disregarded the metrics of that program, as it relates to limits and the amount sold and pricing. This had further tanked the spot price the last few years and trashed many of these mining companies share prices. In 2015, 86% of uranium supply came from mines and 14% came from decommissioned nuclear warheads and other secondary uranium production sources.
There was some misplaced elation from Trumps tweets, but in contrast, the Kazakhstan reduction of output of 10% was a valid sentiment and price driver. So when people say it was an unwarranted move up, they clearly are not following the space or following the macro drivers.
Lastly, the longer-term offtake agreements will be getting negotiated from 2017-2020 and this will only drive prices higher, as no companies are making money at $25 and need #Uranium closer to $50-$60. Let's get real, spot pricing can't camp out here for years or there won't be any Uranium mining companies left.
Anyone that seriously believes U will be stuck at this same level flat for 3 years doesn't understand how these off-take agreements will be adjusting pricing up when power and utility companies come back to the market.
So a short term sideways to down consolidation wouldn't surprise me at all, and a pullback of 20% should be bought, but a 2-3 year stall would be the end of the industry as we know it, so odds are pricing will head higher moving into 2020 and the Uranium mining stocks will be rerated accordingly.
@Excelsior@barracuda - good point on the disconnect in the pricing reality and where the futures are trading as a projection.
$URG$URE Ur-Energy and $UUUU$EFR Energy Fuels both have off-take agreements in the $40's & $50's and I can't see them renegotiating at $26. ;-)
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@Wannabeinvestor@Excelsior, @barracuda, these agreements that $EFR and $URE have are mostly legacy agreements. I keep in touch with a nuclear industry consultant who advises nuclear utilities for a living. his take on term contracts is that over the past couple of years term contracts have increasingly been based on spot + margin to cover for cost of capital primarily. he also says graphs with supply gaps are rubbish, there is plenty of U3O8 available. his summary for 2016 is primary production of ca 60k tons, secondary supply off ca 16k tons and reactor requirements of ca 61.5k. he thinks the flow of secondary material into the spot market will carry on for the foreseeable future. he also tells me UxC and TradeTech do not actually have access to term contracts, so whatever they report as term prices are just a speculation. he thinks up to 10 reactors online in Japan by the end of 2018 and about 25 by 2023. the man is rather conservative in his outlook. putting the above in perspective may explain why U3O8 producers have not seen much of a rally as opposed to some developers/ explorers.
@Excelsior@Wannabeinvestor - Thanks for those updates and insights from the nuclear industry consultant. Those are good projections on the production and secondary supply figures.
Agreed that the market is still working through oversupply at present, and that there is no shortage of U308 (hence no supply gaps). However, there have been a few reports put out that most of the power and utility companies have not been that active purchasing in some time as a result.
That is interesting about his comments on UxC and TradeTech not having access to the term contracts, but their websites claim to track purchases and longer duration prices by the power companies, and I can't see them just pulling numbers out of their rear ends. :-)
As more reactors are built in Asia and the Middle East over the next few years, there will be more buyers coming into the market. Nobody can really predict where prices will be other than they will be moving up.
When the off-take agreements are negotiated, the point was that they won't be at current spot prices, and over time these will nudge the longer term prices higher. Good stuff and much apprecited.
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@Pon@Wannabeinvestor,@Lukester599,@Excelsior do you or your friend think the bottom is in? My concern is some of these companies won't last until the good days return, and how many more years before we have a bull market? I'm also concerned about dilution. Are we being optimistic too soon? When more reactors go online in Asia and Middle East, will they come to US for #uranium?
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@Excelsior@Pon - It's hard to imagine #Uranium going back below $18 again (although anything is possible in resource investing); but it would appear that the bottom was the end of 2016.
Will it be a rapid rise up in pricing? Not likely, due to the oversupply situation, and while pricing may muck around in the $20's for a while, the trend will be heading up going into 2018 and beyond.
Could the uranium market be getting a bit ahead of itself at current levels? I recommend investors pull up a 5 year or 10 year chart and look at the recent move up coming out of late last year. It's just a little blip, and needs to be put into perspective.
The average investor (even the gold & silver investors that thought their bear market was bad) just don't realize just how extreme the move down in these miners has been since 2011.
For the miners to have clawed back a little bit is encouraging, and for those invested it seemed like a big move (and it was), but relative to the increases that will happen to many of these miners, this wasn't even the first inning of the game.... it was just the first base hit. ;-)
This chart that goes back to 2011 should at least put things into perspective of where we are today with #Uranium Miners, and how the recent rally factors into the big picture.
@Wannabeinvestor@Pon, he does think we may have seen the bottom but he also cautions that the spot market is volatile. For example, unlike the recent assertations by Cantor whereby the bulk of Japanese inventory is in completed fuel assemblies that are specific to the reactor they were designed for, he claims TEPCO alone is sitting on quite a bit of EUP, not fabricated fuel, in their inventory which is highly sellable and TEPCO's finance guys are pushing for this material to be sold. His also thinks that many existing mines can cover their cash costs at $25/ lbs, so he thinks a sustained re-rating of uranium prices in the near term can only happen if mine supply were to be curbed further.
@Wannabeinvestor@barracuda, he was quite surprised by the rally in spot (and $U). two weeks ago he said he'd be very surprised if spot broke $30/lbs as part of this rally. so far he appears to be right, although in my view the biggest roadblock for the uranium rally turned out to be the Toshiba/ Westinghouse bombshell.