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Oil and Uranium Outlook

April 5, 2016

LPG joins us today to share his outlook on the oil and uranium price. Oil continues to have the same poor fundamentals in terms of over supply but uranium is a bit different. For all the the analysts who are bullish on uranium it is surprising that we have not seen a more steady price driver.

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Discussion
32 Comments
    CFS
    Apr 05, 2016 05:22 AM

    Not only is there a developing supply shortage in uranium, but in the future this shortage WILL INCREASE, not decrease.

    CFS
    Apr 05, 2016 05:25 AM

    The difference in speed of response of price changes in oil versus uranium is because of the difference in contracts. Oil is often bought spot. Uranium is often bought by LONG-TERM contracts.

      LPG
      Apr 05, 2016 05:06 AM

      CFS,
      I don’t understand your comment that “Oil is often bought spot”.
      Pricing for oil is on the futures market. Reason for that is because of delivery time.
      Maybe there’s something I’m missing….
      My 2cts.
      LPG

        Apr 05, 2016 05:15 PM

        I think the point CFS was making is that much of the price moves in Uranium come from where energy companies renegotiate longer term sales and off-take agreements with the Uranium producers. As a result, when those contracts get negotiated over the next 2-3 years, it will cause the spot price to jump suddenly, because it is a far less liquid market that the Oil market. The Oil market trades 24 hours a day, so the pricing moves up and down in a more orderly way. You can chart and trade Oil spot price, but it is nearly impossible to do that with the Uranium spot price, because it isn’t really traded on the futures market.

        The place to go for Uranium pricing is Tradetech:

        http://www.uranium.info/

          LPG
          Apr 05, 2016 05:59 PM

          Hello Shad,
          Thanks for the link. I had actually just bookmarked a link to Cameco website today where they display prices too.
          Once in a while, I look at these prices… so doing a google search to find a chart each time –> errrr…. bookmark maybe ? —> duuuuuhhhh
          Thanks again,
          LPG

            LPG
            Apr 05, 2016 05:02 PM

            Great site btw.
            Thanks again Shad.
            Best,
            LPG

            Apr 05, 2016 05:28 PM

            Yes, I believe the prices Cameco displays are based of the TradeTech numbers. TradeTech tracks all the large and small transactions from power and utility companies to get at an average spot price. They also have a number of well respected analysts that put out articles on the sector and are like the Kitco of Uranium.

            I also like the Investing News Network for press releases, editorial, and industry news.

            http://www.uraniuminvestingnews.com

            LPG
            Apr 05, 2016 05:56 PM

            Thx for these additional details on TradeTech/Cameco data Shad.
            Best,
            LPG

            Apr 06, 2016 06:40 PM

            Glad to share. Thanks again for covering the Energy space in your editorial. I’m thinking along the same lines you are with both Oil and Uranium.

    Apr 05, 2016 05:01 AM

    GSP says I am not impressed with oil performance. What up LPG :p
    https://www.youtube.com/watch?v=gX3sEGtG8mQ

    LPG
    Apr 05, 2016 05:08 AM

    Mad Max,
    I remember that moment actually.
    I’m a biiiiiiiiiiiiiig GSP fan actually. I know he has his chunk of haters, but he’s a great athelete, imho.
    Best,
    LPG

      Apr 05, 2016 05:14 AM

      haha i love GSP. GOAT. If Mcgregor would have won he would have called out GSP for super fight but he lost. GSP will be back soon but will do super fights only i think.
      Anyway cheers my friend.

        LPG
        Apr 05, 2016 05:18 AM

        Wasn’t aware GSP would be back soon. So thanks for the input Mad Max.
        **** Big Al, Cory, apologies for that distraction/off topic moment on the blag 🙂 ****
        Best,
        LPG

    Apr 05, 2016 05:18 PM

    Plot the 6×24 monthly MA for CCJ(Cameco). Until CCJ breaks $15+ conclusively for a number of months, I’m just observing this bell weather as proxy for the industry sector.

      LPG
      Apr 05, 2016 05:14 PM

      Hello Marty,
      Hope all’s well.
      I had ruled out Cameco as I thought it would not be enough “exotic” for me.
      But I just took a look at the chart and find it nteresting…
      I’ve gotta look at financials/valuation on this one.
      Cheers & Thanks again,
      LPG

        Apr 05, 2016 05:33 PM

        I in no way say to own Cameco, just the standard to consider as proxy for that sector.

          LPG
          Apr 05, 2016 05:02 PM

          Marty,

          It’s all good re: Cameco.
          I don’t buy a stock on someone’s recommendation.
          I only buy after doing some work on it. And if i don’t understand, I stay away. Ask Doc’/Richard: he’s had this experience with me in the past – incl. very recently. 🙂

          Best to you,

          LPG

      Apr 05, 2016 05:39 PM

      LPG, of course you have Areva as the behemoth in France & Europe. As aside note, I was in Marseille in 1970 for 2 days

        Apr 05, 2016 05:51 PM

        Great point Marty. Everyone talks about Cameco as a primary producer, but they often leave out Areva and Uranium One (now private) as the other 2 “Majors”. Rio Tinto is also a large producer, but it diversified into many commodities and is not a Uranium company.

        Energy Fuels, Paladin, and Energy Resources of Australia are the only 3 mid-tier producers in the Uranium space.

        Ur-Energy (URG), Uranium Energy Corp (UEC), and Peninsula Energy are the only 3 small producers currently.

        ** So there ya go…. 3 Majors, 3 Mid-Tier, and 3 Small producers.
        ___________________________________________________________________________

        Denison (DNN) and Uranium Resources (URRE) are successful prior producers, with advanced stage projects, permits in place, big defined resources, and they will both be going back into production once prices are higher, but they both have decades of experience as successful producers and they understand commodity cycles well (that’s why they’ve survived all these years). Denison has part ownership of the one the 3 mills in North America, and they have an environmental mine reclamation business that brings in revenue while they wait (kind of like Alexco).

        Uranium Resources just acquired Anatolia Energy in Turkey, which is an insitu-miner, and they’ll be fast-tracking that asset into production in the next year due to the very low costs and good economics even at $30 Uranium, while they wait out higher prices for their hard rock assets.

        There are 2 other near-term Uranium producers in a development stage at present – Western Uranium (WSTRF) (has tolling agreement with Energy Fuels); and Toro Energy (TOEYF) – the next producer emerging in Australia.

        – There was a 5th development stage company – Khan Resources, but it is has been in arbitration with Mongolia for 5 years, and actually they are finally reaching a settlement this May, but I believe the mine is being nationalized and they are getting paid about $70 million, so they may go into acquisition mode with that warchest.

        The other 35 companies out there are all Explorers, with the 4 most popular all being in the Athabasca Basin (Nexgen, Fission, UEX, and Canalaska).
        _________________________________________________________________________

        Since people said they are OK with targeted lists, I’m going to post my Uranium watch-list, since the topic actually included Uranium today. There are some interesting explores on this list that may get acquired and 3-4 may make it into production. Enjoy!!

        Uranium Company Name Symbol

        ALDRIN RESOURCE CORP. AOUFF
        ALX URANIUM ALXEF
        ANFIELD RESOURCES INC ANLDF
        ANGLO-CANADIAN MINING CORPORATION ANGUF
        AREVA SOCIETE DES PARTICIPATIONS DU COMM ARVCF
        ATHABASCA NUCLEAR CORP YWRLF
        ATOM ENERGY INC ATURF
        AZINCOURT URANIUM AZURF
        BAYSWATER URANIUM CORPORATION BYSWF
        BERKELEY ENERGY LTD BKLRF
        BLUE SKY URANIUM CORPORATION BKUCF
        BRAZIL RESOURCES INC BRIZF
        CAMECO CORPORATION CCJ
        CANALASKA URANIUM LTD CVVUF
        CANEX ENERGY CORP BDRCF
        CENTRUS ENERGY CORP LEU
        DEEP YELLOW LTD DYLLF
        DENISON MINES CORPORATION DNN
        ENERGY FUELS INC UUUU
        ENERGY RESOURCES OF AUSTRALIA LTD EGRAF
        EROS RESOURCES CORPORATION BPUZF
        FISSION 3.0 CORP FISOF
        FISSION URANIUM CORPORATION FCUUF
        FORSYS METALS CORPORATION FOSYF
        FORUM URANIUM CORPORATION FDCFF
        GLOBAL X URANIUM ETF URA
        KHAN RESOURCES INC KHRIF
        KIVALLIQ ENERGY CORPORATION KVLQF
        LARAMIDE RESOURCES LTD LMRXF
        LIBERTY STAR URANIUM & METALS CORPORATION LBSR
        MARKET VECTORS URANIUM & NUCLEAR ENERGY NLR
        MAWSON RESOURCES LTD MWSNF
        MEGA URANIUM LTD MGAFF
        MESA EXPLORATION COR MSAJF
        NEXGEN ENERGY LTD NXGEF
        PACIFIC BAY MINERALS LTD PBMFF
        PALADIN ENERGY LTD PALAF
        PANCONTINENTAL URANIUM CORPORATION PUCCF
        PENINSULA ENERGY LTD PENMF
        PLATEAU URANIUM INC PLUUF
        PUREPOINT URANIUM GROUP INC PUMGF
        SKYHARBOUR RESOURCES LTD SYHBF
        STRATECO RESOURCES INC SRSIF
        TORO ENERGY LTD TOEYF
        UEX CORPORATION UEXCF
        URANIUM ENERGY CORPORATION UEC
        URANIUM PARTICIPATION CORPORATION URPTF
        URANIUM RESOURCES INC URRE
        UR-ENERGY INC URG
        WESTERN URANIUM WSTRF

          LPG
          Apr 05, 2016 05:05 PM

          Thanks for this too Shad.
          Best,
          LPG

            Apr 05, 2016 05:23 PM

            Good conversation today around energy LPG. I’m with you that there is no rush for the Uranium miners, but I’ve started seeing higher volumes and more interest in a number of the companies over the last 7-9 months, and some of the explorers like Nexgen, Fission, UEX, and Canalaska have had starting share price appreciation due to their optionality factor.

            My opinion is that the mid-tier producers, small producers, and near-term producers will have the most torque once price contracts are negotiated in 2017-2019, so I’ve been getting positioned in them, but have exposure to the better explorers as well.

            Apr 06, 2016 06:41 AM

            Excelsior,
            If I may?
            There is a 4th fully permitted producing Uranium mine in Australia that is on care & maintenance ATM. its all ready to rock n’ roll when price wventually rises (yes I am a shareholder)

            Apr 06, 2016 06:44 AM

            Sorry, hit send too soon ! Damn it !
            Excelsior, its ASX.BOE
            Shares were suspended today iirc awaiting further drilling results to increase the resource base.
            Cheers.

            Apr 06, 2016 06:46 AM

            Its their so called ‘Honeymoon project’.
            Cheers.

            Apr 06, 2016 06:52 AM

            Thanks Skeeta – very interesting about Boss Resources Ltd. At first I thought you were talking about Boss Power, who acquired a company I held last year (Anthem Resources) and have transformed into Eros Resources Corp in the very recent past.

            Concerning Boss Resources Ltd that you just mentioned, I am familiar with the Honeymoon project from when I was an investor in Uranium One (before it got taken private by the soviet conglomerate ARMZ). It appears Boss is acquiring the Uranium One Australian asset. A very interesting move. I was wondering how a company got into production so quickly from out of nowhere, but they are buying the production. Probably very wise, and it looks like a good deal for Uranium One.
            _________________________________________________________________________

            Acquisition Terms

            “Boss has entered into an agreement to acquire 100% of the issued share capital of Uranium One Australia which owns the Honeymoon Uranium Project (“Acquisition”). The consideration for the Acquisition includes:

            A $200,000 site access fee (paid) which gave Boss the exclusive right to access the Honeymoon Uranium Project and conduct all its due diligence
            An initial cash payment of approximately $2,442,000 (comprising an amount of $2,115,000 plus a care and maintenance contribution of approximately $327,000) (“Closing Amount”)

            $3 million under a promissory note and repayable within 24 months of completion of the Acquisition
            $4 million under a promissory note issued and repayable within 48 months of completion of the Acquisition
            Boss will also make the following contingent payments to U1 upon successful recommissioning of the Honeymoon Uranium Project:

            $2 million payable in cash and/or shares upon the later of restart of the operations with commercial production or 5 years of completion of the Acquisition
            10% of the net operating cash flow of the Honeymoon Project payable annually up to a maximum of $3 million”

            http://bossresources.com.au/honeymoon-uranium-project/

            Apr 06, 2016 06:09 AM

            The Uranium industry has all kinds of new alliances, restructures, mergers, and acquisitions over the last 2 years. Denison sold out on the assets turning them over to Energy Fuels. Energy fuels bought the best insitu producer, Uranerz, and brought it under their fold. Energy fuels also just acquired Mesteña Uranium in March, another insitu producer that was a privately held company. Boss Power won all it’s litigation and was cashed up and bought out Anthem Resources. Denison tried to merge with Fission, but the deal didn’t go through, so an Asian energy group came in and bought a big chunk of Fission. Uranium One is now selling one of their Aussie assets to Boss Resources. Uranium Resources acquired Anatolia Energy the Turkish insitu producer. As mentioned above, in May Khan will be awarded $70 million to cease activities in Mongolia, and they’ll likely acquire some other low lying fruit.

            Things have been heating up in the Uranium space lately, and this is another reason I truly believe we are at bottom in this sector, and have a new lay of the land for this next bull cycle in who the players are, and who the up and coming development and exploration stories are. It is a completely different kind of commodity and energy sector than investing in Gold or Oil, but I believe offers all kinds of opportunity.

            Apr 06, 2016 06:15 AM

            That should have said Dension sold all their US assets to Energy Fuels. I really need to start proof-reading. Denison also just did a huge transaction at the very end of March on all their African assets. This seems like a very smart plan for both parties.
            __________________________________________________________________________

            Denison and GoviEx to Combine African Uranium Assets

            TORONTO, ONTARIO–(Marketwired – March 30, 2016) – Denison Mines Corp. (TSX:DML)(NYSE MKT:DNN) is pleased to announce the execution of a Definitive Share Purchase Agreement with GoviEx Uranium Inc. (CSE:GXU) to combine their respective African uranium mineral interests to create the leading African-focused uranium development company.

            Under the terms of the Transaction, GoviEx will acquire Denison’s wholly owned subsidiary, Rockgate Capital Corp., which holds all of Denison’s African-based uranium interests in exchange for approximately 56.1 million shares of GoviEx plus approximately 22.4 million common share purchase warrants of GoviEx . Upon completion of the Transaction, Denison will hold 25% of GoviEx shares outstanding and 28% of GoviEx shares on a fully diluted basis.”

            http://denisonmines.mwnewsroom.com/press-releases/denison-and-goviex-to-combine-african-uranium-assets-tsx-dml-201603301048588001

            Apr 06, 2016 06:21 AM

            It would appear that Denison is laser-focused on the Athabasca Basin at present, because they divested their US and African assets, keeping net smelter royalities, partial exposure to those properties, and share exposure to their partners Energy Fuels and GoviEx.

            However they are drilling away on their Athabasca properties and control part of one of the main mills and processing centers. Whoever controls the mill controls the district. Cameco controls the other mill.

            Denison has also been hitting some very impressive drill results in the Athabasca Basin at their Wheeler River property near the Gryphon deposits, just like NexGen, Fission, UEX, and Canalaska, and dozen other companies exploring that area.
            _______________________________________________________________________

            Denison Intersects 3.9% eU3O8 Over 9.2 Metres, Including 6.7% eU3O8 Over 5.3 Metres, Near the Gryphon Deposit
            TORONTO, ONTARIO–(Marketwired – March 10, 2016)

            http://denisonmines.mwnewsroom.com/press-releases/denison-intersects-3-9-eu3o8-over-9-2-metres-including-6-7-eu3o8-over-5-3-metre-tsx-dml-201603101046273001

            Apr 07, 2016 07:04 AM

            Excelsior,
            Strangely,
            I think the most possibly leveraged play to the uranium price on the ASX never seems to be brought up anywhere ?
            Admittedly I am a small shareholder.
            I believe it is also available on the TSX?
            Cheers.

    Apr 05, 2016 05:20 PM

    Big Al: “What do you guys think of LPG’s comments?” I think he’s one of the best you’ve got. Always very interesting with an angle on things that a listener might not have thought of. And – from other posts – he knows music is so much more important than ego. Good balance. This one’s for you, LPG: https://www.youtube.com/watch?v=cWDOAK8XPuE

    LPG
    Apr 05, 2016 05:31 PM

    Herbert,
    Thank you for the Youtube link. Fwiw, I really enjoyed it.
    It made me realize I don’t have any music from Django. Time to look for some LPs from him I guess (I normally go for CDs/Hi-Res files… but I suspect this type of recording projects a better presence on an LP format).
    Thanks again for the music + Best to you & Good luck investing/trading.
    LPG

    Apr 05, 2016 05:34 PM

    One to watch… TST

    TELESTA THERAPEUTICS INC(TST:TSX, CA)

    0.115CAD0.03(35.29%)Volume: Insane Volume for no news

    QUOTE DETAILS
    Open 0.0850 P/E Ratio (TTM) —
    Last Bid/Size 0.1100 / 704 EPS (TTM) -0.02
    Last Ask/Size 0.1150 / 183 Next Earnings 12 May 2016
    Previous Close 0.0850 Beta 0.19
    Volume 28,408,619 Last Dividend —