General market commentary with a focus on Uranium
Click download link to listen on this device: Download Show
I’ll just repost this information from the 10th, 5th and 4th on the subject of Uranium.
On February 10, 2015 at 9:42 pm,
Shad says:
As for the Uranium comments, I am not in agreement with Rick. There is plenty of demand that will be hitting the markets in 2015 and 2016 when many of the existing producers long-term contracts expire (where they are currently selling their production in these contracts way over spot price). Germany is not a big player in nuclear and pales in comparison to the USA, Russia, France, what China has and is building, Japan, Indian, S. Korea and many emerging markets in S. America & Asia.
I am just going to repost this thread from the 5th because I’m not retyping all that:-)
On February 5, 2015 at 6:41 pm,
Shad says:
Here is a nice summary from the CEO of Paladin Energy in their Jan 19th, 2015 Quarterly Activities report. They’ve had some major financial drama in the downturn but they’ve been in the game for a while and are still major players, so I think they’ve got a better handle on the Uranium scene than most. Enjoy!
URANIUM MARKET COMMENTS
During the December quarter, the uranium spot price continued to demonstrate significant volatility, having risen from US$28.10/lb in mid-CY2014, reaching US$44.00/lb by the middle of November. During the latter half of the quarter, the spot price declined to US$35.50/lb, as near-term demand decreased and a limited number of suppliers reduced offer prices to complete end-of-year sales.
The term contracting market showed a substantially greater volume for CY2014, exceeding 80Mlb as compared to around 20Mlb during CY2013. As has been the case in the recent past, the majority of the long-term agreements involved non-US utilities, which were predominately located in the Asia/Pacific region. US utilities tended to execute smaller volume agreements with deliveries confined to the mid-term market period (2015-2018), providing for limited deliveries post-2019/2021.
TradeTech’s long-term U(3) O(8) price, which declined to US$44/lb-US$45/lb through most of CY2014, increased during the December quarter to US$50/lb at the end of November and held at that level to year-end.
The Japanese reactor restart program continued to make progress during the December quarter. In mid-November, the governor of Kagoshima Prefecture granted his approval for the restart of the Sendai 1&2 reactors (Kyushu electric Power Company), which are undergoing final documentation reviews and plant inspections by the Nuclear Regulatory Authority (NRA). Actual operations are now anticipated to commence during the first quarter of CY2015.
Furthermore, the NRA released its draft report, which states that the Takahama 3 & 4 reactors (Kansai Electric Power Company) meet safety standards introduced subsequent to the Fukushima accident. The Takahama reactors will now move into the local government approval phase.
Global uranium production totalled 155Mlb during CY2013. However, due to operational cut-backs at facilities such as Rossing (Namibia) as well as placing Paladin’s Kayelekera Mine (Malawi) and Uranium One’s Honeymoon ISR Mine (South Australia) on care-and-maintenance, CY2014 worldwide uranium output is expected to be reported at less than 150Mlb and perhaps close to 145Mlb.
Written by: John Borshoff
Managing Director/CEO
On February 5, 2015 at 9:28 pm,
Birdman says:
Uranium suffers from politics of every stripe and persuasion. The public fears it, the media misrepresents it and some environmentalists would like to see it outlawed for use altogether. It is probably not the best example to use to make the point but there is no question it is a resource and a commodity. I would like to take it more seriously but like a lot of others have already experienced your investment can go up in smoke on the news of a single incident like Fukushima, Three Mile Island or Chernobyl. So nobody likes that element of unpredictability when they take stock in a good mine no matter how good the outlook is for price.
On February 6, 2015 at 6:21 am,
Shad says:
Birdman – All the more reason to be a contrarian investor in the space while the sentiment is so low, (if you have the nerves and vision for it). Nuclear energy is abut 20-25% of the overall base power load for the world, there are around 400 reactors in place, about 60 being built world-wide, and another 80-100 planned. That is not up for debate and is a fact whether people agree philosophically or not, and will not be changing any time soon, no matter how much whining about it there is.
Japan will be forced to put their reactors back on line this year, and have been a mess ever since they turned them all off in fear. Many companies have only been working 2-3 days a week and there are strict power curfews in effect because out of a knee-jerk reaction to 3 reactors, they shut down their whole fleet of 40 reactors which was an over-reaction and has cost them dearly. They’ve had to import oil and coal just to make it the last 4 years and that has put them further into debt = not very smart.
As a result of the silly low pricing, many of the suppliers have been taking projects off line for the last year, or putting development projects on hold, so there is a large supply deficit projected form 2016-2019, and prices only have one way to go —- Up.
Most hard rock producers need a Uranium price in the mid $50s to $60s to be profitable and that is a fact. There are insitu miners like URZ, URG, and Uranium One that can produce in the mid $20′s but they only make up a small percentage of the market and cannot supply the world.
The pricing must come back up or they’ll be no meaningful supplies. The arrangement where Russia traded in old nuclear warheads for nuclear supply ended in 2013 but the effects carried into 2014. That is clearly over now with all the tension, and the supply is working its way through the system, and energy companies will be coming back to the table this year and next to set up new pricing terms.
Most of the long term contracts were set around $54-$60 in prior years and that is the only way companies have survived the 2011-2014 bloodbath, because they have not been selling their supplies at the spot price. However, many contracts expire this year or next, so the pricing will have to rise to meet the cost of production.
The supply demand fundamentals are there, the infrastructure is already in place (unlike Nat Gas, Solar, Wind, Geothermal) and Coal is the real relic and polluter, but will still take time to phase out. The publics fear of nuclear is valid but largely misplaced. 3 accidents in the last 50 years, doesn’t change the fact that 100′s of millions of people depend on nuclear for their power everyday. Also, Oil/Gas/Coal are not going to win over the environmentalist agenda, where Nuclear gives off water vapor and no greenhouse warming gases. I believe this will be highlighted more and more as the Agenda 21 madness is pushed by the UN.
On February 5, 2015 at 11:50 am,
Lawrence says:
Bird, you are really off base on this one. Uranium price is mostly have nothing to do with other commodities. When it peaked in 2007, other commodities went up another year and half. When other commodities languished in 2008, Uranium was rising!!! till march 2011 and crashed after nuclear accident. Got a reason to crash since Germany, Japan even China halted nuclear reactors and Germany and
Japan sold their uranium stock pile for cash. Uranium is very unique in it movement. It is not in the commodity crowd. Also contract price is a lot higher, which is 90% of the sales.
On February 5, 2015 at 12:43 pm,
Dan, calgary says:
Good points Lawrence and Bird. Nothing is cut and dry in the uranium field as far as I am concerned.
On February 5, 2015 at 7:13 pm,
Shad says:
Agreed Lawrence & Dan. Uranium is a unique marketplace, it has bottomed, and will start the slow grind up from here. I took larger positions in the two new US insitu uranium miners – URG – Ur-Energy, and URZ -Uranerz (getting acquired by UUUU – which will make the new Energy Fuels the biggest US producer). Cameco and Areva as the biggest majors in the space, and while very undervalued, they won’t have the multiples of the mid-tiers and juniors as this space comes back alive.
The mid-tiers are Uranium One (now privately owned by the Russian conglomerate ARMZ), Paladin (PALAF), Denison (DNN), Ur-Energy (URG)Uranium Resources (URRE), Uranium Energy Corp (UEC), and UEX Corp (UEX). The ETF (URA) doesn’t track all these well but offers a different kind of exposure to the space.
There are some other exciting explorers in the space with great projects like Fission (FCUUF) or Laramide (LMRXF) that are worth watching as well.
2015 will be the beginning a huge 3-5 year Uranium Bull. China is not on hold any more and is building reactors like crazy, and the MiddleEast is building nuclear reactors, and the US & Russia have made deals with many South Amercian and Asian countries to assist them with new reactors. Japan will be restarting a few of its reactors in the next few months. Germany was not a major player in Uranium anyways. France is a big player in this space, but the US, Russia, China and eventually India will the biggest players.
Lastly, all the environmentalists are finally starting to realize that Nuclear energy gives off water vapor aka steam as it’s by project, not soot, smog, and poisonous fumes like coal, oil, and gasoline, and it doesn’t destroy ecosystems like dams. Solar and Wind are great but only 1-2% of the power grid at this time, and many environmentalists even block people from building them, so you can’t win. The fact is that Nuclear makes up about a fifth of the power grid, and is the answer for many emerging countries to meet their base power requirements. Coal is starting to be phased out, and Nat Gas is starting to be phased in, but those will be gradual changes that take decades. Uranium’s time to shine is the next 3-5 years.
For the haters – yes Fukushima was absolutely a rare and horrible disaster. Many are upset, and a little warry, and rightfully so – it was mess, and old plant, a horrible design with the back up generators in the basement below sea level, and spent fuel rods in the attic), and a terrible cleanup operation. What a cluster*&%$. But most of the new plants would not have fared so badly, most electric companies do a better job of designing backup plans, and there are many new ideas coming into the space to use Thorium (less radioactive waste) and even a company IBC Alloys (IAALF) working with MIT and Texas A&M to use Beryllium coated Uranium pellets to burn at a much lower temperature and be more stable as a Nuclear fuel preventing meltdowns.
I think the time to get into select uranium producers & good explorers that meet all the normal criteria for quality juniors. Just my 2 cents on the subject.
Reply to this comment
On February 5, 2015 at 7:35 pm,
Shad says:
I love investing in something like this when it is at its bottom in the stocks, the commodity prices are half of what they need to be for 80% of the miners and producers to be successful, and there is sentiment that has been absolutely terrible….just terrible. Anybody noticing that 2011-2014 were the blood in the streets years in this sector, and barely anyone has been willing to touch it with a 10 ft pole. yet every day millions of people get the power for their electric cars, smartphones, and refrigerators from Nuclear power safely and clean powered. Anyone feeling a bit contrarian?
On February 5, 2015 at 7:48 pm,
Lawrence says:
Thanks Shad, great summary. You know more in this field. Good information. This is a sector with some of my dead money. 🙂
Only thing is that I feel UEX is a smaller play. Even it has good resource, it is not producing actively. I also has two uranium plays, one is Pinetree capital and the other Jet Energy, these were both Grandich’s recommendation. I lost quite a lot in PNP but not much in JET (former CXX). I could not see how feasible they are but I am holding them.
Good luck to all of us.
On February 5, 2015 at 7:50 pm,
Lawrence says:
I do own Cameco, Paladin and Denison as my major holdings.
On February 5, 2015 at 8:06 pm,
Shad says:
Wise on the Cameco, Palladin, and Denison. I would recommend UUUU (currently via the shares of URZ at a discount to UUUU due to the planned transfer ratio of .255 in June merger).
Cameco is the biggest and will outlast any downturn and is the 800 lb. gorilla, but doesn’t have as much percentage upside. Denison is solid, has been a player for decades, and buys and sells assets regularly to keep it fresh. Denison also helps with mine reclamation and environment clearance to decommission mines, which will always be in need. Denison is how Energy Fuels (UUUU) – my ultimate favorite pick at todays pricing, got the white mesa mill – the only – I repeat only…. conventional Uranium mill in the USA (that’s called a monopoly) and there are 2 more in N. America.
Paladin has been through the ringer, and many have given up on them, but I think they’ll survive. They just gave away part of the company ownership to the Chinese, but that was wise to survive and live to fight another day. They are a little better financial footing, have their Kayelekera Mine is on care and maintenance due to the pricing environment, but they just stated in January that they are going to release as PEA to get the mine up and running again when the pricing gets up north of $50-$60. They’ve been in the space a while and are a big supplier, but had bad rain storms that messed them up post Fukushima, some fatalities, missed guidance, and hit rock bottom. However, I think they are now a turn-around story and have their ducks in a row to make a gradual comeback.
On February 10, 2015 at 9:46 pm,
Shad says:
Here is the post from the 4th as well, so all this Uranium info is in one place:
On February 4, 2015 at 9:56 am,
Dan, calgary says:
BTW, Uranium is sneaking up again.
On February 4, 2015 at 3:57 pm,
Shad says:
Yes it is. I increased my positions in URZ (for the takeover by UUUU), and URG. I like the in-situ recovery plants because they are easier to get permitted (especially in Wyoming). UUUU will be the largest US miner/processor of Uranium after this merger with URZ in June. I expect with prices continuing to rise that Energy Fuels will be re-rated up. It has made 3 other acquisitions in the last 2 years and on the Denison deal they have one of the only operating Uranium mills in the country. Their hard rock mining needs higher prices north of $60 but the insitu margins allow for pricing in the low $20s, so this will help both companies be a stronger united company in the new UUUU. It has been smacked down because both sides feel the other side gave away the farm, but most analysts feel the deal is fair and will pass the necessary votes this summer. Unlike Oil, I feel very comfortable bottom fishing in Uranium at present because it has bottomed since 2011, there is a supply deficit, Japan will be turning on their reactors this year, and the starting in the 2nd quarter I expect a noticeable increase in the Uranium miners.
On February 4, 2015 at 4:04 pm,
Shad says:
Obviously Cameco, and Areva are still the global leaders in the Uranium space, but they won’t have as much upside as Uranerz (soon to be merged with Energy Fuels), or Ur-Energy. As for Uranium One it got taken private under the Russian company ARMZ, so it is out of the equation. Paladin is a wildcard because it has great assets and mines, and fair amount of experience, but its financials and debt are terrible, the dilution is horrible with 1.67 Billion shares outstanding. I believe if the go bankrupt or (more likely) do a big reverse stock split, that after the dust settles that the new entity will go much higher, but I am waiting to see how that plays out.
On February 4, 2015 at 4:42 pm,
Lawrence says:
Also add in Denison mines and UEX.
On February 4, 2015 at 7:01 pm,
Shad says:
Yes both are great companies with good management.
Sorry this is so long, but to discuss Uranium and only mention Germany (not a player at all in the space) and only the Uranium Participation Corp technicals, is not a fair or well-rounded discussion of the space.
It would be like discussing Gold based on what Cambodia is doing and how Sandstorm Gold is doing technically and basing a macro opinion on that….not a real picture of the space by any stretch.
I would agree with Rick on watching AAPL and add IBB and BKX to the watch list.
APPL is the big cap bellweather. IBB is the speculative tell for the market. And the banks are the life blood.
In this environment, IMHO, one has to be:
* nimble
* open-minded
and as always:
PREPARED
Then, it comes down to risk management.
My 2 cts,
GL to all investing/trading.
LPG
Mickey Fulp has been mentioning uranium for months, lots of research from him if anyone is interested.
Personally I wish they would switch to thorium.
I read awhile ago china plans to be switched over by 2050 if I remember correctly.
My understanding is thorium reactor is not mature in technology and efficiency is low and cost of building it is a lot higher. More importantly, thorium can not be used to build bombs so it does not interest most of the governments. They want to own A bombs.
Actually the original design for nuclear plants did involve Thorium, and it showed great promise, because the spent fuel wasn’t as dangerous as Uranium. Some of it had to do with supply, some the bombs, but I believe the fleet of Nuclear Submarines that the US military use were more efficient on Uranium as feed fuel. Some are advocating going back and pursuing the Thorium plants first discussed in the 40s and 50s.
Another interesting company IBC Advanced Alloys is working with MIT and Texas A&M to develop a Beryllium coated Uranium fuel pellet that will burn at a much lower temperature, be much less volatile, and would prevent future meltdowns. It is still in the testing phase right now, but has shown a lot of promise. If that idea catches hold it could change the entire industry and quell the fears.
As for Mickey Fulp, He has been a Uranium bull for decades, and has some great insights, however, he is very opinionated about certain companies. He caters to his sponsors (of course), often highlights odd-ball explores, and he neglects to mention some of the big changes in the lineup of key mid-tier explorers or producers.
I would backtrack and check Mr. Fulp’s record, and for that matter David Morgan’s predictions. Also other seers records and predictions.
Good idea Stephan!
As long as I’m the voice of caution. All newbies ought to see the second half of the Keiser Report episode 714.
Would a grexit be a major event? Some people are predicting a sizable move in gold if it does.
I would think that a grexit would definitely be a major event bb.
To me it would add fuel to the fire of the importance of holding gold. Would it take gold to $1600 or higher? I personally do not think so.
I’ve been using an 1187.60 target for April Gold since last week. Here is the oriiginal trading ‘tout’ and updates since:
The very precise bounce from 1216.20, a midpoint Hidden Pivot support, has validated the bearish pattern shown. It projects to 1187.60 (please note that the original target has been adjusted upward by 0.50), a little more than $40 below levels that obtained late Monday night. A plunge to the target is not a foregone conclusion, since a rally today or tomorrow exceeding 1245.40 would negate the target and provide at least temporary respite for bulls. However, if the futures should trade more than $1.50 below the red line, or close beneath it, that would significantly shorten the odds of a finishing stroke to 1187.10. Night owls looking for opportunity should use patterns from the 30-minute chart or less to create an entry trigger. At the moment, a bearish impulse leg is developing on the ’30’, where A=1233.80 at 8:30 p.m. EST. ______ UPDATE (February 17, 6:53 p.m. EST): Sellers smashed the 1216.20 pivot, all but guaranteeing more downside over the near term to the 1187.60 target flagged above. I like this target enough to suggest bottom-fishing there with a stop-loss as tight as four (!) ticks. Use camouflage, though, if you intend on buying more than one contract.)
Thanks Rick
Thank you Rick!!!!
Huh? Did Rick get the numbers right for Uranium Participation Group?
UPG’s latest bounce has come from within two cents of an important Hidden Pivot target at 4.1176 (U.S. OTC market price, symbol URPTF) that was not evident to me when I did the interview this morning. It was a logical and promising spot to try bottom-fishing. However, if the stock relapses and breaches suppotr by more than 3-4 cents, I would infer that it is headed down to at least 3.1859, or perhaps 2.635 if any lower. Both are ‘back-up-the-truck numbers, as far as I’m concerned, but I’d suggest tight stops of no more than 5 cents if bottom-fishing,
U.to looks much better technically than URPTF IMHO.
Agreed, although I can’t imagine why the charts would differ. I could see $5.00 om U.TO over the next couple of months.
Thanks Rick, that is strange as the two charts seem to diverge a bit. Maybe more because of an exchange issue.
Uranium Participation Group. Weekly, 3 year chart. (Thanks, Irwin, for pointing out a while ago how to modify these charts from stockwatch then to post them with the changes.)
http://stockcharts.com/h-sc/ui?s=U.TO&p=W&yr=3&mn=0&dy=0&id=p73813609487
This is my “shot in the dark” or “ready, fire, aim” stock. I own some. U308 Corp.
http://stockcharts.com/h-sc/ui?
s=UWE.TO&p=W&yr=3&mn=0&dy=0&id=p85368607801
If you want to acquire some good Uranium companies then the #1 pick of the litter is going to be Energy Fuels (as it is acquiring Uranerz). I would also recommend Ur-Energy, Uranium Energy Corp, Uranium Resources, Denison, maybe Palladin as a contrarian bet, and of course Cameco.
Thanks Shad.
Apparently, if the URL is too long it will not work.
http://stockcharts.com/h-sc/ui?s=UWE.TO&p=W&b=5&g=0&id=p88940070386
Gold price action since the $1130 low in November 2014 has been a rally then a correction:
As of last weekend:
In US dollars it is a 51% retracement of the rally, 1130.40 to 1307.80 and back to 1216.50.
In British pounds it has retraced 50% of the rally almost exactly 712 to 872 then back to 792.
In Euros, this gold correction has retraced 36.5% of the rally, 907.40 to 1160.50 then back to 1068.10, almost a 38.2% Fibonacci ratio.
These are good levels for a chance of a bounce.
If it moves lower, perhaps it might get away with doing a 61.8% correction in USD and GBP and a 50% one in Euros but that’s about the limit, surely. Those targets would be $1198, 1034 Euros and 773 GBP.
It should stop there, otherwise it is a bear market.
As of Wednesday 18 February it looks like gold is wanting to do the 61.8% corrections!!
Today’s lows were $1198, 1050 EUR and 776 GBP, getting very close to the lower targets given above.
Interesting thoughts on the 61.8% retracement to $1198 Silverbug Dave. Based on that we could have had a short term bottom today then.
My thoughts almost exactly, Shad.
But we have a few more dollars to go to get a confirmation that this is the bounce off my 1200 target line. So far so good.
Longshoremen stand off showing no respite. Baltic Dry Index down 6 to 516
RICK IS SPOT ON with his thoughts on uranium…………