Sean Brodrick – Oil And Uranium Stocks Continue To Be Bright Spots In The Resource Sector, And He Remains Bullish On AI Stocks
Sean Brodrick, Editor of Wealth Megatrends and contributing analyst to Weiss Ratings Daily, joins us to review his thoughts on the energy sector, and why he has been positioning in oil and uranium stocks, as well as the potential for more upside in the artificial intelligence megatrend.
We start off getting Sean’s take on the key macro drivers in the oil price movements and projections moving into the medium-term. He also reviews the types of oil stocks he would invest in for this environment, mostly in the more oily stocks, but not overlooking a few deals in the natural gas space, as well as reflecting on the continued strength and positive outlook for the oil services sector.
Next, we discuss some of the key constructive macro trends in the nuclear energy sector and how that relates to bullish fundamentals for the uranium mining stocks. Sean discusses the strong price action in Cameco (CCO) (CCJ) as a sector major producer and widely followed company; but also highlights his interest in a half dozen other more advanced uranium companies based on better contracting agreements and future expectations for future production growth coming online in this sector.
We wrap up by getting his rationale for buying the dip in the AI stocks, and that despite Wall Street’s propensity to jump on trends when they are peaking, that he sees artificial intelligence as a megatrend that will fundamentally change business and daily life, and that some companies have longer-term growth potential.
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Personally I’m currently invested in both Argonaut and Equinox out of the 4 companies profiled in that article above, specifically because of the production growth and potential for improving margins overall. Those larger projects, having been brutal to build the last few years with higher inflation causing cost overruns and the stocks to get hit accordingly, also now have much lower associated cost profiles than both companies existing portfolios of producing mines.
In both cases AR and EQX are currently somewhat higher cost multi-mine producers. While they are both doing a fairly good job with their current mining operations, I expect that when Magino and Greenstone come on-line for both companies respectively in the near-term, that they’ll have a much different production profile and margins by this time next year, and especially 2 years out. Artemis looks interesting as well, and it is one that our buddy Nick Hodge has flagged a few times in prior interviews with him.
Goldfinger – Robert Sinn – CEO Technician @CEOTechnician – X (Twitter) – 12:25 PM · Sep 3, 2023
“Misspelling its own corporate name in today’s new release was much less important than a story of more production shortfalls, increased market demand, and continued supply risk.”
#energy #NuclearEnergy #uranium $CCJ
https://twitter.com/CEOTechnician/status/1698417027629629806
John Quakes @quakes99 – 11:34 AM · Sep 3, 2023 – X (Twitter)
“Cameco cites ongoing challenges at its #Uranium #mining & milling operations: ‘equipment reliability issues’ ‘operational changes’ ‘availability of personnel with necessary skills and experience’ and ‘supply chain challenges on the availability of materials & reagents.’ ”
If Cameco reduces production as a result of all this, it’s only going to stifle more supply and should keep pushing the spot and term prices higher.
The Uranium space is an interesting one in that there aren’t a dozen or so major producers, and really, outside of Kazakhstan’s production and some from Australia, then Cameco in Canada is one of the only publicly traded Majors in the space and does a fair bit of the current production and U308 supply in the sector. Despite being a big fan of this sector for years now, I’ve still never owned Cameco personally, as I prefer the greater torque of the junior uranium producers and developers. However, I recognize the importance of CCO/CCJ and how so many casual observers track the sector with Cameco, similar to what they do with Gold stocks with Newmont.
I still believe it is better to track the performance of the sectors with a basket of stocks like for gold the GDX or GDXJ or HUI index etc…. and for Uranium the Sprott ETFs of URNM and URNJ are far better than the wonky but somewhat improved URA.
Still, after tracking and trading in this Uranium sector for over a dozen years, I’ve done better buying the dips and selling the rips in some of the smaller stocks, yet diversifying through a basket approach.
This year I’ve also done well accumulating a position in the Sprott ETF (URNJ), and I specifically like it better than the larger (URNM) because URNJ excludes the larger behemoths like Cameco, and Kazakhstan, and also excludes the Sprott Uranium Trust (which is tied more to physical uranium pricing).
URNJ has the “J” for juniors, and actually delivers, and is one of the better ETFs tracking the junior resource space that I’ve seen released in years. Most ETFs that track a specific commodity’s mining stocks are riddled with weightings and inclusions that make little sense or are not even in those commodities, where as URNJ has a solid portfolio makeup and weightings.
I was looking at some uranium stocks last night after you tweaked my interest and Cameco has had quite a run. Which stock do you think will fare better in the future Denison or Energy Fuels. DT
Hi DT. I have a much larger weighting to my (UUUU) Energy Fuels position than I do to (DNN) Denison Mines, likely for the same reason the URNJ has a much higher weighting to Energy Fuels – It is a more established producer at this point (even though Denison used to be a producer in past decades cycles… but it is more of a Canadian explorer/developer at this point). Energy Fuels is typically one of my top 5 weighted positions out of any sector in my trading account.
Energy Fuels not only has a number of US flagship projects underneath it’s umbrella, but it can produce from both hard rock sources and fluid-injected underground insitu sources. Also beyond the Uranium production, it has the ability to produce both Vanadium and Rare Earths, which gives it a critical edge in the critical materials sector. It is partnered with Neo Performance Materials to process old radioactive tailings and pull out the rare earths, which gives Energy Fuels another prong of potential growth outside of the Uranium sector.
Having said that, it’s possible when the uranium mining space really heats up the Denison could outperform, being a more leveraged developer/explorer. DNN/DML is the most advanced uranium developer in the Athabasca Basin, and will likely be next into production in Canada in general, when they try out insitu mining there… which has never been done commercially in the Athabasca basin before, even though it is quite common in Wyoming or Texas or Kazakhstan as a proven uranium mining method.
So…. that is a potential risk if it doesn’t go as planned for Denison, but if it does work, then it is a much lower cost method of uranium extraction compared to hard rock mining/processing and could really earn DNN a premium. Dension also has some additional exposure to the McClean Lake Mill, that processes some of Cameco’s Cigar Lake production material. Denison also has a number of JV exploration projects in the Athabasca Basin that are attractive and could have more bluesky upside. I still like it quite a bit, and have a medium-sized weighting in it personally, and see it as reasonable speculation in the uranium mining sector.
From my vantage point Energy Fuels and Denison aren’t an either/or situation where you pick one over the other, but more an environment where I’m very comfortable just holding both of them in my portfolio. Other Uranium positions I hold are (UEC) Uranium Energy Corp, (EU) enCore Energy, (URG/URE) Ur-Energy, (NXE) NexGen, (UROY) Uranium Royalty Corp, and (URNJ) the Sprott Uranium Miners ETF.
URNJ actually has all the companies I hold but with somewhat different weightings, and also some exposure I’d prefer to see low in companies like Paladin or Fission or currently Global Atomic. However, it’s a pretty good collection of the key companies in the space and is the best ETF I’ve ever seen in the Uranium space for the types of companies I like to speculate in. Over time as we see the Uranium bull market further unfold, I’ll likely just keep rolling profits from the individual companies into it over time and eventually just hold it as my remaining uranium exposure.
Hi Ex, thanks for the feedback, after reading your prior posts I liked your write-up on URNJ. I think that is the way to go for most people but having a TFSA we are not allowed to buy American listed stocks so I will look at the individual stocks with a Canadian listing. Thanks again for sharing your information, you have always been on the cusp, and now more so. DT
Sure thing DT. I’ve been trading the Uranium stocks since 2010/2011ish to present, and the broader setup now is the most constructive I’ve seen it – on a macro sector level and on a number micro company levels. Things may have gotten a bit juiced up in the short-term, so I did harvest a few partial position gains the end of last week in profitable positions that were well in the green. (reducing the overall positions down by 15-20% as they’d grown in portfolio weighting with the gold and silver stocks taking it on the chin so much this year).
Yes, some of the better larger and more well established companies have dual listings in the US and Canada (like Cameco, Energy Fuels, Uranium Energy Corp, Denison, Encore, Nexgen, Ur-Energy, etc…). I like that as it provides more liquid trading from the larger US capital pools, but still allows solid Canadian participation… so another arrow in their quiver.
URNJ – Top 10 Holdings (75.10% of Total Assets)
Name – Symbol – % Assets
Paladin Energy Ltd PDN 13.24%
Uranium Energy Corp UEC 13.13%
NexGen Energy Ltd NXE 12.97%
Energy Fuels Inc EFR 10.42%
Denison Mines Corp DML 4.79%
enCore Energy Corp EU 4.63%
Boss Energy Ltd BOE 4.45%
Deep Yellow Ltd DYL 3.97%
Fission Uranium Corp FCU 3.90%
Ur-Energy Inc URE 3.61%
Here are the remaining holdings in URNJ – (making up the additional 25% of the weightings):
CGN Mining Co. Ltd. 1164 HK 3.27%
Uranium Royalty Corp. UROY 2.43%
Global Atomic Corp. GLO CN 2.15%
Bannerman Energy Ltd. BMN AU 1.97%
Lotus Resources Ltd. LOT AU 1.76%
IsoEnergy Ltd. ISO CN 1.72%
F3 Uranium Corp. FUU CN 1.17%
Alligator Energy Ltd. AGE AU 1.14%
Consolidated Uranium Inc. CUR CN 1.11%
Berkeley Energia Ltd. BKY AU 1.05%
Laramide Resources Ltd. LAM CN 1.02%
Aura Energy Ltd. AEE AU 0.89%
Elevate Uranium Ltd. EL8 AU 0.89%
Mega Uranium Ltd. MGA CN 0.86%
Peninsula Energy Ltd. PEN AU 0.81%
GoviEx Uranium Inc. GXU CN 0.74%
Skyharbour Resources Ltd. SYH CN 0.55%
Forsys Metals Corp. FSY CN 0.48%
CanAlaska Uranium Ltd. CVV CN 0.41%
Uranium, Lithium, Copper, Gold and Silver and Changing Attitudes Toward Commodities
Sprott – September 1, 2023
“John Ciampaglia, CEO of Sprott Asset Management, discusses why a higher uranium price will help incentivize much needed production for the world’s growing nuclear fleet. John also discusses his outlook on gold, silver, copper, lithium and more.”
Uranium Attracts Institutions | Oil Breaks $85 | China Shocks Twitter
Resource Talks- Sep 3, 2023
“In this episode, I was joined by Anthony Young, investment manager at Edendale Capital, James Sykes, uranium geologist, and Luc ten Have, a magician who has somehow figured out a way to make money in the otherwise impossible junior market.”
“Anthony and I talked about oil’s breakout above $85, lithium’s dead-cat bounce, and copper’s growing supply challenges.”
“James Sykes and I talked about uranium’s breakout above $60, the $110M-dollar institutional investment that came into the space this week, Kim Kardashian, and some nuclear news.”
“Luc ten Have, founder of GoldDiscovery, and I talked about a very risky junior exploration stock that he bought this week, that ended up closing the week over 200% higher, and what he plans on doing with it next.”
Justin Huhn – Uranium Story Keeps Getting Better as the World Embraces Nuclear
Commodity Culture – August 23, 2023
“Founder of Uranium Insider Justin Huhn presents the latest catalysts and tailwinds he sees for the uranium sector, including shifting political winds that continue to turn in favor of nuclear energy. Justin gives an update on planned reactor builds around the world, the latest developments in small modular reactor technology, and much more.”
00:00 Introduction
00:22 Impact of Coup on Niger Uranium
04:38 Main Tailwinds for Uranium
07:48 Current Risks in the Sector
10:24 Sweden’s Plan to Build 10 Reactors
13:13 China’s Nuclear Dominance
17:41 Reactor Builds and Investment Thesis
22:06 Green Party of Canada’s Nuclear Pivot
26:42 Small Modular Reactor Outlook
As for the Uranium stocks, in general, most stocks have been surging higher for months since bottoming in the March-April timeframe.
Got Uranium stocks?
Here’s a 2 month candleglance chart for a dozen of the more popular U-stocks, but most have been ripping higher for 4-5 months. (except GLO Global Atomic for the obvious geopolitical risks in Niger).
Here is an image of the 6-month candleglance charts for the same dozen Uranium stocks:
https://cdn-ceo-ca.s3.amazonaws.com/1ifa2i1-6-Month%20Candleglance%20Uranium%20Stocks.JPG
Ex, this market is for suckers, the debt will never be paid the only logical conclusion is a reckoning, the information is available, but you must be far-sighted enough to foresee, what is going to happen. DT
Four New Gold Pits Underway
Steve Skjonsby – Canadian Mining Journal – September 1, 2023
“It has been decades since the Canadian mining sector has seen multiple open pits under construction. Four new gold open pits are coming onstream in the next six months, setting the stage for heightened commissioning activity. The new operations will contribute over 1.3 million oz. of annualized gold production when fully commissioned. If all goes as planned, in 2024, Canadian gold production should exceed 8 million oz. of gold and set the stage to surpass the national gold production record set in 2021.”
“All these projects are far from ‘cookie cutter’ and are adapting to the jurisdictions they are operating in. Both Magino [Argonaut Gold] and Greenstone [Equinox Gold] will have on-site natural gas generated power due to the lack of available capacity from the grid, while Côté Gold [IAmGold] made significant design changes through the incorporation of a high-pressure grinding roll and vertical grinding technology to maximize the utilization of available grid power. The Blackwater project [Artemis Gold] is constructing a 135 km 230 kV transmission line to provide power to the site and utilize three-stage crushing to initially keep power consumption low.”
https://www.canadianminingjournal.com/featured-article/four-new-gold-pits-underway/