The Next Uranium Bull Market
Three Great Ways to Profit from the Next Uranium Bull Market
Uranium prices have been trading in the $40-$45 per pound range for the past several months.
But due to rising demand, slow mine development, and depleting stockpiles, many analysts have been forecasting price projections of $50-$55 per pound for next year.
Some — including Haywood Securities analyst Geordie Mark — believe uranium prices will average $65/lb next year, and climb to $85/lb in 2012.
For investors, this rebound in uranium prices means the opportunity to profit in the next uranium bull market.
And in just one minute, I'm going give you the details on my top 3 uranium stocks right now. But before I do, it's important to understand something about uranium resources...
Governments Scramble to Secure Uranium Resource
According to the Nuclear Energy Agency and the International Atomic Energy Agency (IAEA), worldwide uranium demand is rapidly increasing.
This has prompted most major producing countries to recently increase activity and expenditures to identify and secure new economically-feasible uranium deposits and bring them into production.
Here are a few headlines from just the past month:
Iran searching for new domestic uranium deposits
TEHRAN – Iran said Wednesday it is making the search for new uranium deposits in the country a top priority now that it has started up its first in a planned network of nuclear power plants.
Russia inks new uranium deal with South Africa
MOSCOW – Russia agreed on Friday to supply more low-enriched uranium to South Africa's only nuclear power station, a contract that will give Russia's uranium trader nearly half of Africa's biggest market for enrichment services.
The rush is on because future uranium supplies may not be able to meet demand. In such a case, uranium prices would be expected to react positively.
Right now, there are 435 nuclear power plants around the world with a combined capacity of over 370 Gigawatts (GWe); the world's nuclear electrical capacity is responsible for about 15% of the world's power generation.
Each year, these plants require approximately 77,000 tonnes of uranium oxide (U3O8) concentrate containing 63,000 tonnes of uranium (tU).
But in 2009, mine production was only able to supply 60,000 tonnes of U3O8 containing 51,000 tU.
|A nuclear reactor requires about 200 tU/yr to generate one GWe of capacity.|
The supply deficit had to be made up from secondary sources including stockpiled uranium held by governments and utilities.
However, it's well-known that many civil uranium stockpiles have been largely depleted. So it seems like there's only limited time until tapping into reserves isn't going to be enough to satisfy demand.
And with 56 new nuclear power plants under construction right now, and 200 more planned, global demand for uranium may soon exceed supply and drive uranium prices back over $100 per pound and beyond.
The price of uranium has just moved higher in few several weeks, trading at multi-monthly highs and prompting interest in the sector from commercial and retail investors.
The overall market seems bullish with many new large buyers emerging over the past several weeks. The volume of uranium and number of registered spot market deals have climbed in the past few weeks.
All this could be leading to a spike in uranium prices in the near term. And that means right now may be the best time to start acquiring high-quality uranium assets.
Earlier this week, I spent a few hours researching uranium stocks. And after going through about 15 different uranium development and production companies, I've found what I believe to be the three best profit opportunities.
Three best ways to profit from the next uranium bull market
The best way to profit from a rebound in uranium prices today is to own high-quality uranium stocks that control advanced-stage mineral projects.
Here are three rapidly developing opportunities that may benefit as a result of swelling uranium prices.
Uranerz Energy (AMEX: URZ)
|Market Cap:||$76 million|
Drilling at Nichols Ranch
Uranerz Energy (NYSE: URZ) is a uranium pure-play engaged in the acquisition, exploration, and development of uranium mining projects in the Powder River Basin of Wyoming.
Wyoming's Powder River Basin has some of the highest grade uranium deposits in the world that are amenable to the In-Situ Recovery (ISR) method of mining uranium.
The big advantages of ISR in Wyoming include low capital costs, low operating costs, and low very environmental impact. Wyoming is already the largest uranium producer with the largest resource base in the United States, and has a long history of using the ISR uranium mining method.
Uranerz has 38 wholly-owned and joint-ventured uranium projects in various stages of activity in the Powder River Basin.
A few of the Powder River Basin uranium properties are well-advanced. The company has submitted federal and state mining applications to build and operate the Nichols Ranch ISR Uranium Project.
The central processing facility at the company's Nichols Ranch project is being licensed for a capacity of 2 million pounds per year of U3O8.
Commencement of operations at the Nichols Ranch ISR Uranium Project is dependent on receipt of required regulatory approvals, but is currently projected for the second half of 2010.
Uranium Energy (AMEX: UEC)
|Market Cap:||$156 million|
Hobson ISR Uranium Processing Facility
Uranium Energy (AMEX: UEC) is a well-financed U.S.-based exploration and development company focused on near-term uranium production in Southern Texas.
The company has a large portfolio — over 30 uranium projects that stretch across the Southwestern United States in Texas, Wyoming, New Mexico, Arizona, Colorado, and Utah.
The Western U.S. region has historically been the most concentrated area for uranium mining in the United States because it's one of the most prolific uranium mining regions in the world.
Uranium Energy's flagship Goliad ISR project is in the final stages of mine permitting for production.
The company also has several other development-stage uranium projects including the fully-licensed and permitted Hobson processing facility and the Palangana ISR project, which is fully permitted.
Ur-Energy (NYSE: URE)
|Market Cap:||$78 million|
PRI Smith Ranch ISR Mine
Ur-Energy (NYSE: URE) is an aggressive junior mining company focusing on exploration and development of uranium properties in the United States and Canada.
In the United States, the company’s current Wyoming properties contain 25 million pounds of uranium resources. Ur-Energy says the potential for additional discovery exceed 60 million pounds.
The company is currently working through the regulatory processes necessary to bring its Lost Creek Wyoming uranium deposit into production with a processing facility capacity of 2 million pounds per year.
In Canada, Ur-Energy has two exploration projects in the Thelon Basin in the eastern part of the Northwest Terrortories: Screech Lake and Gravel Hill. The company is currently working with First Nations groups working towards an exploration agreement for the Screech Lake project.
While the Athabasca Basin in Saskatchewan is better known and contains 65% of the known future capacity of global uranium production, the Thelon Basin is highly prospective for unconformity-type uranium deposits — the highest grade uranium deposits known on the planet.
Be on the lookout for rock-bottom prices
I plan on building a personal position in these and other uranium stocks over the course of the next six months, looking for rock-bottom prices during what I believe will be a second economic meltdown.
And I recommend investors also allocate 10% to 20% of their junior mining stock portfolio to high-quality uranium companies.
Editor, Wealth Daily
Investment Director, Hard Money Millionaire and Underground Profits