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URANIUM & ALTERNATIVE ENERGY 4

SAGI

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STOCK ALERT:
All leading stocks mentioned a few posts above relating to Uranium appear to have made a HIGH and appear to be making a turn downwards. My suggestion is to bring STOP LOSS to PAR if you did purchase in the last few days and have some profit. CCJ/CCO.TO, DML.TO/DNN and PDN.TO all appear to have hit resistance if they continue to remain within five to ten percent losses they may find support and consolidate and begin moving up again. If however they continue to move downwards CCO.TO may find support in around the 19 dollar region, DML.TO around 1.15-1.20 region and PDN.TO around 0.45 region. Trade carefully and keep those stop losses in place.

SAGI
 

fat panther

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From SEARCHER in another thread


Quote Originally Posted by searcher View Post
Guest Post: Nuclear Restarts Spell Trouble for LNG




Submitted by Tyler Durden on 01/27/2014 18:26 -0500



Submitted by Nick Cunningham via OilPrice.com,

There are two major factors that have emerged in the last five years that have sparked a surge in LNG investments. First is the shale gas “revolution” in the United States, which allowed the U.S. to vault to the top spot in the world for natural gas production. This caused prices to crater to below $2 per million Btu (MMBTu) in 2012, down from their 2008 highs above $10/MMBtu. Natural gas became significantly cheaper in the U.S. than nearly everywhere else in the world.

The second major event that opened the floodgates for investment in new LNG capacity is the Fukushima nuclear crisis in Japan. Already the largest importer of LNG in the world before the triple meltdown in March 2011, Japan had to ratchet up LNG imports to make up for the power shortfall when it shut nearly all of its 49 gigawatts of nuclear capacity. In 2012, Japan accounted for 37% of total global LNG demand.

The combined effect of shale gas production in the U.S. and skyrocketing LNG demand from Japan opened up a wide gulf between the Henry Hub benchmark price in the U.S. and much higher oil-linked prices around the world. LNG markets, which are not liquid, could not meet the surge in Japanese demand. Platts’ Japan/Korea Marker (JKM) price for spot LNG floated between $4-$10/MMBTu the year and half before Fukushima. In the few months after the meltdown, the JKM price quickly jumped to $18/MMBTu. Almost three years later, the JKM price for month-ahead delivery in January 2014 hit $18.95/MMBTu.

In contrast, Henry Hub prices – despite reaching a more than two year high – were only $4.50/MMBTu for the first week of 2014. After factoring in the costs of liquefaction and transportation – somewhere in the range of $4-$5/MMBTu – companies could still make a substantial profit taking U.S. gas and exporting it to Asia.

Thus ensued a scramble to permit and build LNG export facilities in the U.S., often by retooling and turning around what were once import terminals. As of December 6, 2013, the U.S. Department of Energy had 28 applications for LNG export facilities to countries without which the U.S. has a free-trade agreement (five of them have been approved).

Cheniere Energy (NYSE: LNG) has been the primary beneficiary of DOE’s policy to incrementally approve LNG exports. Cheniere has already signed contracts to deliver gas to Britain’s BG Group, France’s Total, India’s Gail, Spain’s Gas Natural Fenosa, and South Korea’s Kogas. Its stock price has soared since it received permission to begin construction on its Sabine Pass liquefaction facility on the U.S. Gulf Coast, which would allow the export of 18 million tonnes of LNG per annum (MTPA) in Phase 1. From August 6, 2012 – the day before it received its permit – until the market close of January 10, 2014, Cheniere’s stock price climbed from $14.66 to $46.37 per share, more than a three-fold increase.

Other companies are lobbying the government to quickly approve more export terminals, but it is more than likely that only the first-movers will make some serious money with the stragglers left behind. While its competitors are awaiting permit approvals, construction is already underway at Cheniere’s Sabine Pass liquefaction facility.


LNG Expansions Around the World

Australia plans to triple its LNG capacity over the coming four or five years, which will allow it to surpass Qatar as the largest LNG exporter in the world. There are seven liquefaction facilities under construction in Australia, with a capacity of 62 million tonnes per year. This means that by 2017, according to the International Gas Union (IGU), Australia’s LNG export capacity will reach 83 MTPA.

Australia’s projects are further along and closer to their target market of Japan, so many will beat out U.S. proposals. Despite all the buzz in the U.S. about LNG export terminals, and the more than 190 MTPA of applications on backlog with the DOE, very little of that will be actually constructed (it is pretty easy to merely submit an application). The IGU estimates the U.S. will only bring online an additional 8 MTPA or so over the next four to five years, up from about 2 MTPA last year. Australia is where the action is.

Chevron (NYSE: CVX) is heavily invested in Australian LNG and already has several terminals up and running with more capacity coming online in 2015. BG Group (LON: BG) is scheduled to start exports of LNG at its Queensland Curtis facility this year. These companies are well-positioned to serve the insatiable demand from Japan.


Market Disruptor – Japan’s Nuclear Restarts

So conventional wisdom tells us that there is a boat load of cash to make riding the LNG wave. But aside from the historic price volatility for natural gas that should give investors reason for pause, looking over the horizon, there is one big factor that could disrupt LNG investments: if Japan moves to restart some or all of its nuclear reactors, many LNG terminals may cease to be profitable.

Japan was once the third largest producer of nuclear power after the U.S. and France. After the Fukushima meltdown, Japan replaced its 49 GW of nuclear capacity with imported LNG (which jumped 24%) as well as imported coal and oil. Yet Japan may be in the cusp of a return to nuclear. According to DNV GL’s LNG blog, the restart of all of Japan’s 50 nuclear reactors would mean it could displace about 51 million tonnes of imported LNG.

This amounts to about one-fifth of the entire global LNG trade, and would cause a significant drop in the JKM spot price. This means the spread between the landing price of LNG in Asia and the wellhead prices of say, Australia, or the United States, would narrow. Without that arbitrage, it wouldn’t make sense to send liquefied gas around the world from many places. Marginal projects would be forced out virtually overnight.

The Japanese government put in place new safety regulations last summer that utilities must meet in order to receive approval to restart their reactors. Japan’s Nuclear Regulatory Authority (NRA) is currently reviewing applications from seven utilities to restart a total of 16 nuclear reactors, or about one-fourth of Japan’s nuclear fleet. More applications are in the offing.

While anti-nuclear resentment runs strong in Japan these days, the government is facing quite a bit of pressure to return to its nukes. Post-Fukushima, Japan posted a trade deficit for the first time in decades due to the huge cost of importing coal, gas, and oil. By one estimate, turning half its nuclear fleet back online could save $20 billion per year, good enough to wipe out a big chunk of its trade deficit – which widened to $12.6 billion in November 2013. Prime Minister Shinzo Abe supports nuclear power, making a return to nuclear more likely.

If the Japanese public and government can begin to trust the new regulatory regime, and accept a return to nuclear power, its LNG demand will plummet. As the largest LNG importer in the world by far, this would leave many LNG projects stuck at sea.

In particular, LNG terminals in the U.S. – which are not the lowest cost producers – would be in trouble. Not all companies that have applied for permits will actually move forward with investment, and thus, would be less vulnerable to nuclear restarts. But the ones that do move forward are taking on the risk as well as the potential reward. But with LNG projects proliferating around the world, many companies will be competing for a smaller pie should Japan return to nuclear power.

Cheniere Energy is the first that comes to mind. Dominion Resources (NYSE: D) is another. Dominion hopes to move forward with a $3.8 billion retrofit of its Cove Point facility on the Chesapeake Bay, which is also the subject of a growing environmental backlash. Some Australian projects that are further behind may lose out as well, such as the Arrow LNG project, a 50-50 venture between Royal Dutch Shell (NYSE: RDS.A) and PetroChina (NYSE: PTR). Woodside Petroleum (WPL) has already scrapped its original plans for the Browse LNG project because of high costs. Its Sunrise project, mired in political disputes, may yet get off the ground, but would be vulnerable to Japanese reactors. Russia has major LNG expansion plans, which would face stiff competition if Japan’s reactors turn back on. Novatek (LON: NVTK) has plans to invest $15-$20 billion in its liquefaction facility on the Yamal peninsula, and Gazprom hopes to put $13.5 billion into a facility at Vladivostok – although the latter would at least be in a very advantageous location.

The future of LNG may indeed be bright, especially when considering that global energy demand has nowhere to go but up. But, investors should be aware of the very large threat that Japanese nuclear reactors present to upstart LNG projects.

http://www.zerohedge.com/news/2014-0...ll-trouble-lng
 

searcher

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Climate change, polar vortex’s and nuclear energy

Richard Mills - Ahead of the Herd | January 26, 2014


What does nuclear energy have to do with a polar vortex, record cold/snow and climate change? Read on to find out…

From the World Nuclear Association (WNA) we take the following numbers as updated January 3[SUP]rd[/SUP], 2014. An important point to remember is I’m only going to use demand numbers from ‘future reactors envisaged in specific plans and proposals and expected to be operating by 2030.’


Facts:

  • Currently there are 435 reactors operating worldwide producing 375,264MWe. Operable already means connected to the grid.
  • Currently there are 71 reactors under construction. Under construction means first concrete for the reactor has been poured, or a major refurbishment under way.
  • There are 172 reactors on order or planned. Planned means approvals, funding or major commitment in place, mostly expected in operation within 8-10 years.
  • There are 312 reactors proposed. Proposed means specific program or site proposals, expected operation mostly within 16 years.
  • Tonnes uranium required for reactors in 2013 = 64,978t



71 reactors under construction + 172 reactors on order or planned + 312 reactors proposed = 555 NEW reactors expected to be connected and supplying power to the grid WITHIN 16 YEARS!

Tonnes uranium required in 2013 was 64,978t, 64,978/435 = 150t uranium per reactor.

555 new reactors times 150t = 83,250t new uranium per year in 16 years.

Adding to that number an industry standard 900 MW LWR typically needs around 350 tons of low enriched uranium fuel on start-up, and about 150t per year after that.

These numbers are driven even higher by the increased demand from the industry for future bigger reactor sizes of up to 1200 MW per power plant.

In 16 years, in 2030, we could be using as much as 148,228t (326,101,600 lb) uranium per year – if all the new reactors are built and no reactors are taken-offline.

Demand forecasts for uranium depend largely on installed and operable capacity. Once nuclear reactors are commissioned its very cost effective to keep them running at a high capacity. When demand load changes, utilities can burn more, or less fossil fuel to meet the changing requirements.



Nuclear Saves New England… “In New England, natural gas electricity generation faltered so muchthat regional grid administrator ISO New England had to bring up dirtier coal and oil plants to try to make up the difference. Nuclear energy didn’t have many problems at all and actually became the primary provider of electricity in New England, just edging out gas 29% to 27% (Hartford Business). Oil generation made up 15% while coal accounted for 14%… coal stacks were frozen or diesel generators simply couldn’t function in such low temperatures. Gas choked up – its pipelines couldn’t keep up with demand – and prices skyrocketed. Nuclear did quite well throughout the vortex period. The entire fleet operated at 95% capacity, a ridiculously high value (NEI).” James Conca, Polar Vortex – Nuclear Saves the Day, Forbes

The latest forecast from the World Nuclear Association (WNA) has a base casedemand of 205 million pounds of U3O8 for reactors in 2020 and 255 million lb for 2030.

UxC pegs its base case at 275 million lb with a high of 355 million pounds for 2030.

Current annual global uranium consumption is 190 million pounds, annual global mine production is 140 million pounds, resulting in a current 50-million pound deficit.

That’s today’s deficit. In 16 years time we’re suppose to ramp up uranium production (according to the WNA & UxC base cases), anywhere from 65,000 million lb all the way up to 135 million lbs new mined uranium? Two base case scenarios are telling us we need to at least double, maybe even triple, mined uranium production in just 16 years.

In 2010, 22% of uranium came from secondary sources (uranium stocks held by miners, power plant builders and plant operators, as well as government stockpiles) this number had shrunk to 14% by 2012.

The HEU agreement governing the sale of decommissioned Russian warheads expired the end of 2013 -20 million lb’s of annual supply removed from the market.

The last time excess uranium supply was this low (8% as a percentage of demand) was just before Fukushima when the spot price was US$70/lb U3O8.

Considering it takes over 11 years to find, develop, permit and build a mine we better get busy.





Uranium mine production, also known as primary supply, met 86% of nuclear power generation needs in 2012. While this is up from 65% in 2005, the absolute gap has been rising – from 7,480t uranium in 2005 to 10,470t in 2012.

In 2012, eight companies marketed 88% of the world's uranium mine production and a net combined total of nearly 99% of world uranium consumption was being imported into user countries.

Governments play a huge role in regards to uranium supply:

The Kazakhstan government controls60% of domestic production throughKazatomprom.

  • JSC Atomredmetzoloto (ARMZ) and Uranium One are controlled by Russia.
  • Navoi Mining and Metallurgical Combinat (Navoi) is controlled byUzbekistan.
  • The French government holds a 10% stake in AREVA.




Some of the new mines counted on to reach substantial production are:

  • Four Mile, Australia
  • Cigar lake, Canada
  • Talvivaara, Finland
  • Imouraren, Niger
  • Husab, Namibia


Some key deferrals and shutdownsinclude:

  • BHP Billiton Ltd.’s (BHP) Olympic Dam expansion in Australia has been postponed indefinitely.

  • Uranium One’s halted its Willow Creek mine expansion. Uranium One also mothballed its Honeymoon project in South Australia due to low uranium prices and high operating costs. The company’s Mkuju River project’s commissioning date of 2017 might be pushed back as the company needs to optimize the feasibility of the mine.

  • Postponement of development at Rosatom Mine #6 (Priargunsky) and shutdown of Mine #2

  • Capacity reduction at JSC Atomredmetzoloto’s Khiagda mine.

  • Delayed Imouranen startup to mid-2016.

  • Cameco’s Kintyre project in Australia is noteconomically viableat currenturanium prices.

  • Production from Energy Resources of Australia Ltd. Ranger 3


Deeps underground mine was anticipated to begin in 2017. Two recent leach tank spills at the company’s existing Rössing (Namibia) and Ranger (Australia) open-pit mines has resulted in the Australian government suspending all mining activity. The Australian government is currently conducting an audit to assess the impact.



  • Talvivaara Mining announced in the fall of 2013 that a weakened liquidity position was forcing the company to explore various funding options. Production at the companies Sotkamo nickel/uranium mine may be halted indefinitely.


"Cigar Lake is among the most technically challenging mining projects in the world…"
Tim Gitzel, Cameco's president and CEO
KazAtomProm’s CEO announced Kazakhstan’s uranium output in 2014 was going to be similar to 2013 at 21,000 tU. This might signal Kazakhstan, the world’s number one uranium producer, is reaching peak uranium production levels of 50 Mlb/y.


Expect 2014 to be a rebound year for uranium spot prices for many reasons:

Japan – The Fukushima disaster in March 2011 destroyed four of Japan’s 54 nuclear power reactors – 16 of the remaining 50 have already applied to restart operations. With six of the 16 applications being prioritized for government review there could be as many as 6 Japanese reactors online by the end of 2014.

Japan has enough uranium (an estimated 100 million pounds) to last up to 10 years – that’s the overhang that’s driven down spot prices and the reason utilities have been holding off buying long term. But if Japan’s utilities are restarting their reactors it means that the threat of them dumping their inventory stockpile has been removed from the market. This could jump start buying as global utilities recognize the growing risk to future supply availability.

And of course it means Japan itself would be returning to a nuclear reactor demand of >10 Mlbs/year in less than half a decade as they would need to secure long term uranium deals well before their stockpiles ran out.


UUR – Cumulative uncovered uranium requirements (UUR). UUR represents what utilities have to buy to meet their needs in future years, while maintaining strategic inventory levels. Utilities contracted for 160 Mlbs (average) of uranium per year over the last decade yet utilities only contracted for 20 Mlbs in 2013.

According to UxC, in 2003, the 12-year forward uncovered requirements were 130 million lb U3O8. Today, the 12-year forward uncovered requirements are just short of 200 million lb.


UPC – Uranium Participation Corp. TSX – U, the world’s only physical uranium fund is raising $50 million, most of the $50m will be used to buy uranium.

The effect of a massive uranium purchase by UPC would be threefold:


  1. Reduction in current excess supply
  2. Upward pressure on the uranium price
  3. Another spark to ignite utility buying


A one million pound UPC uranium purchase would represent 2.3% of total 2013 spot market volume.

Shale gas - The key to the U.S. natural gas boom is the use of new technology. Hydraulic fracturing, fracking, and horizontal drilling have tapped huge resources previously thought unrecoverable.

However the decline rate of shale gas wells is very steep. A year after coming on-stream production can drop to 20-40 percent of the original level.

Here’s James Howard Kunstler, author of "The Long Emergency" and his take on the situation;

“In order to keep production up, the number of wells will have to continue increasing at a faster rate than previously. This is referred to as "the Red Queen syndrome" which alludes to the character in Alice in Wonderland who famously declared that she had to run faster and faster just to stay where she is.”



Here’s something else, it’s a link to an Energy Report interview with energy expert Bill Powers.

The shale gas energy boom is not sustainable, will be shorter lived than most anticipate and its global potential is vastly overstated.

Consider also

Germany – the loss of 17 reactors will occur at approximately the same time as India’s rapid growth in nuclear energy – by 2030 India should have seven more reactors online than Germany will have taken offline.

AREVA has signed a €1.25 billion deal to build a new Angra 3 reactor in Brazil by 2016.

Canada and the European Union (EU) have reached a nuclear technology free-trade agreement.

China is going to help Pakistan build a US$9.6 billion nuclear power complex in Karachi.

The Russian federal government has approved plans (construction has already begun on several), to build 21 new reactors in nine different power stations by 2030.

China is currently building 29 reactors, India 6, Russia 10 and South Korea 5. The number of proposed nuclear reactors has been declining since 2010 but the number of facilities under construction, and planned, has increased every year. Projects are getting built and becoming operational.

BP projects that global energy consumption will rise by 41% by 2035, with 95% of that growth coming from rapidly growing emerging economies.

The United Kingdom has offered EDF Energy a power price guarantee for 35 years for a plant that the French utility plans to build in southwest England.

In the U.S. the Watts Bar Unit 2 nuclear plant in Tennessee remains on budget and schedule, commissioning is expected in late 2015.
Also in the U.S. construction of the Southern Company Unit 3 and Unit 4 reactors in Georgia is underway. These units are expected to be completed by late 2017 and 2018, respectively.


Opportunities

On May 31[SUP]st[/SUP], 2013 I published Civil Nuclear Energy Renaissance Restart’ in which I highlighted several uranium companies I liked.

Cameco: closed @ CDN $22.54, May 31[SUP]st[/SUP] 2013.
Uranium One: May 31[SUP]st[/SUP] 2013 closed @ $2.77, last trade $2.85 defunct (taken private)
Uranerz: May 31[SUP]st[/SUP] 2013 closed @ CDN $1.33.
Uranium One has been taken private, Cameco and Uranerz are still on my list and TSX-U is a new addition.
Cameco Corp. TSX: CCO, is the largest publicly traded uranium company and the world’s third-largest uranium producer.
CamecoHighlights:

  • Vertically integrated
  • Engaged in fuel conversion services and nuclear power generation
  • Top-producer status
  • High-grade deposits
  • Low cash costs
  • Organic growth in stable jurisdictions
  • Healthy balance sheet
Cameco Corp. is the bellwether uranium mining company. The company is planning to increase its U.S. production in the Powder River Basin, Wyoming.
Uranium Participation Corp. TSX – U, UPCis a Canadian investment fund that purchases and holds both uranium oxide concentrate (U3O8) and uranium hexafluoride (UF6). The fund’s primary objective is to achieve capital appreciation through the value of its uranium holdings.

UPC would seem to offer investors all the upside of a potential uranium market rebound yet isn’t saddled with the exploration and operational risks other equities in the sector have.


Uranerz Energy Corp. NYSE – MKY,TSX.V – URZ, Uranerz Energy Corp. (NYSE: MKT, TSX: URZ) is a U.S. mining company operating in Wyoming’s Powder River Basin where it controls a large strategic land position. URZ is expected to be in production (annual recovery targeted for 600,000 to 800,000 pounds after ramp-up) in early 2014.

Uranerz has a processing deal with Cameco and long term sales contracts for a portion of their production with Exelon (operator of the largest nuclear fleet in the U.S.) and an undisclosed U.S. utility. The Company’s Nichols Ranch ISR uranium project, in Wyoming’s Powder River Basin, is licensed for a capacity of two million pounds per year of uranium yellowcake.


Conclusion
There’s a significant uncovered long term uranium requirement. With so many projects being deferred or cancelled outright, with existing mines being shutdown, with Japan restarting and with continued demand growth from other regions of the world it’s going to become increasingly difficult for utilities to meet uncovered uranium needs.

Facts are:

  • Globally mined uranium is far from abundant.
  • It can take 11 or more years to develop, permit and build a mine.
  • Uranium demand could more than double over the next 16 years.
  • The here today (but unrecognized by most) uranium supply pinch is not going to go away for a very long time.


Are, 1. the truth that nuclear energy is our only option for base load power, 2. the here today uranium supply pinch, and 3. the aheadoftheherd.com investment opportunities presented in this report, all on your radar screen?


Richard lives with his family on a 160 acre ranch in northern British Columbia. He invests in the resource and biotechnology/pharmaceutical sectors and is the owner of Aheadoftheherd.com. His articles have been published on over 400 websites.

http://www.mining.com/web/climate-change-polar-vortexs-and-nuclear-energy/
 

SAGI

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Very insightful posts above. Also take into consideration the drop in value of both the Canadian dollar and the Australian dollar both making stocks there comparatively cheaper when buying from a US dollar position and other stronger currencies.

Thanks Searcher.

SAGI
 

searcher

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Energizing Investments and the Future of Uranium

Ryan Somers, SAP



Nuclear energy suffers from an undeserved stigma of dirt, death, and destruction. But the reality is nuclear power is a clean, reliable, affordable, baseload energy source. And contrary to pop culture assumptions, there aren’t any neon-colored uranium miners glowing, fish aren’t swimming around with three eyes like shown in The Simpsons, and a “Chernobyl-like” accident couldn’t have occurred outside of the then Soviet Union because this type of reactor was never built or operated in the United States. Major world powers are investing in nuclear energy and so should you. But first, more myth busting:

1. Dirt? Nuclear energy is bad for the environment >>Myth

Truth: Nuclear reactors emit no greenhouse gasses during operation. Over full lifetimes, results are comparable to emissions from other renewable forms of energy such as wind and solar. Also, nuclear energy requires less land use than most other forms of energy.


2. Death? Americans get most of their yearly radiation dose from nuclear power plants >> Myth

Truth: We are surrounded by naturally occurring radiation. Only 0.005% of the average American’s yearly radiation comes from nuclear power: 100 times less than we get from coal, 200 times less than a cross country flight and about the same as eating one banana per year. Speaking of bananas, did you know the Fukushima radiation leak is equal to 76 million bananas, not quite as scary as people think?

3. Destruction? A nuclear reactor can explode like a nuclear bomb >> Myth

Truth: It is impossible for a reactor to explode like a nuclear weapon; these weapons contain very special materials in very particular configurations, neither of which are present in a nuclear reactor.

Reproduced from the American Nuclear Society, for more myth busting, click here

As the world shrinks and emerging markets continue to grow, the need for electricity has never been greater. Since 1980, global electricity consumption has tripled and is predicted to increase by 70% over the next two decades. Cameco (CCJ) (one of the world’s largest uranium producers) plans to ramp up production by 60% from 21.9 million pounds produced in 2012 to 36 million pounds annually by 2018 based on several indicators:




  • 62 new plants are in construction (50 of which are in Asia) and 150 more are in the planning phase. Even oil-rich nations like Saudi Arabia are investing in nuclear power



  • Japan is planning to restart 50 idle nuclear plants that have been shut down since Fukushima, as importing 84% of its energy has proven too costly both economically and environmentally



  • The Megatons to Megawatts agreement between the U.S. and Russia has expired. This previous agreement translated into roughly 25% of U.S uranium needs and 10% of all electricity produced in the U.S. through the deconstruction of Russian warheads, recycled into fuel (over 20,000 warheads were eliminated through this treaty)



Even though the price of Uranium is roughly half of what it was prior to the Fukushima disaster, Cameco has remained profitable at producing and purchasing uranium at low costs. Part of this achievement is possible through its utilization of SAP software, effectively eliminating silos and optimizing interdepartmental communication. Moving forward, Cameco will utilize SuccessFactors to dig deeper into information such as employee turnover. By reducing these costly challenges and empowering employees through social and mobile interaction, it’s no wonder why Cameco has and will continue to be a dominant nuclear energy company producing uranium fuel, generating clean electricity and maximizing employee contributions.

Watch the Video HERE

Connect with me via Twitter & LinkedIn

This blog was originally featured on Business Trends

http://www.forbes.com/sites/sap/201...and-the-future-of-uranium/?ss=business:energy
 

searcher

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Goldman Sachs selling Iran’s one-time uranium supplier

Cecilia Jamasmie | February 12, 2014





US bank Goldman Sachs (NYSE:GS) and Deutsche Bank (NYSE:DB) are attempting to get out of trading supplies of raw uranium, known as yellowcake, a business few knew they were in.

According to Reuters, these financial institutions have stockpiled more nuclear fuel ingredient than the total amount held by Iran, and enough to run China's nuclear plants for a year.

Both global investment banks entered the uranium market in 2009, when tightening supplies threatened to send prices soaring. The plan was to handle almost a third of all uranium trades in the spot market. Instead, they are adding the division to the list of commodities units up for sale.

The move comes as other US banks, including JPMorgan Chase (NYSE:JPM) and Morgan Stanley, are in the midst of waving their physical commodity trading good-bye.

Pushed by increased government scrutiny, squeezed trading margins and forecasts for tepid demand in certain markets, global banks are signalling the end of an era in which they rushed to take advantage of the commodity prices boom.

Deutsche Bank, Europe's second largest bank, announced it exit from commodities last December. Since then it is said to have been in talks with potential buyers of its uranium business.

Fukushima effect

The expected sales were also triggered by decreasing uranium prices, currently at their lowest since 2005. Spot prices of U3O8 (triuranium octoxide), a material use for uranium enrichment, have fluctuated between $34-$35 a pound since September, over 50% less than the price prior to the Fukushima disaster in Japan in 2011.

Ties to Iran

Goldman's connection to Iran date back to the 1970’s, when Nuclear Fuels Corporation of South Africa or NUFCOR (later the bank uranium unit) agreed to supply Iran with 2,400 metric tonnes of yellowcake, Reuters reports.

A second deal attempt failed in 1984, and all uranium that had not been sent to Iran was sold to a New York trading company and a German electricity firm. The money was returned to Tehran.

In the 1990’s Iran told the International Atomic Energy Agency of its uranium purchases (IAEA), which claims Iran bought it from South Africa, never revealing the company behind the sale.

Image by Gil C

http://www.mining.com/goldman-sachs-selling-irans-one-time-uranium-supplier-42853/
 

SAGI

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COFFEE WITH CARROT HEAD!

TAKE THAT SHOT! ARCHERY AND TRADING.


For the last several weeks I have chosen to remain quiet, allowing other participants on this thread to quietly contribute. It is likely that the Uranium thread is probably the quietest thread. It has probably the fewest readers in a gold dominated forum, and yet it persists and continues to survive. Once in a while the GIM readers will visit this thread, (Perhaps to see if I had rolled over and died LOL) I assure you I have been dying for a long time, nay the spark refuses to give up and with a twinkle in my eye and a grin on my face I continue to ramble on. In the last few weeks I gave a BUY signal and within a short time negated it by asking everyone to place solid stop loss points as I began to see another downturn in the Uranium stocks. I was not sure if the stocks in our list would continue to go down or simply meander a little lower before rising so there was no reason to provide a SELL signal. If you have placed stop losses as indicated you are probably still holding those positions. Please continue to hold those positions if you can.

There have been several very informative posts in the last few weeks from various contributors. I am glad that more interest is being shown in the thread.

Recently I did a mental analysis of why a lot of investors/traders go wrong and why despite being right still take losses. The problem is two fold; a) knowing you are right but second guessing one’s self and backing out and loosing the move or b) being wrong and holding on in the hope that it will move back in the right direction. The solution I found was simple but elegant and it is not my discovery rather I have simply adopted it from countless other reports of the same issues.

We need three things before we ever put a penny down.
1.) A visualization of where we need to be.
2.) A Plan of how to get there and when to get out
3.) The courage to follow this path regardless of the result.

When I shot at the Archery world championships, I met many top archers in compound bow including Jeff Hopkins, Levi Morgan and Tim Gillingham. Tim and I became fast friends and continue to remain in touch. However all three top shooters in the world of archery came up with the same technique that I learnt to get to become a good shooter. Tim Gillingham become my mentor and we spent a lot of time at the 2007 world championships together. He said;

“In order to achieve a consistent high score you must follow a set of rules. These rules should not be deviated from at any cost no matter how bad the previous shot went. Visualise the whole movement, from where you stand, drawing the bow, bringing it onto the target and taking that perfect shot every single time. Follow the rules of feet anchored, Hand in exactly the same position, draw to the same position and a smooth release while continuing to keep your eye on the target despite your pin being somewhere else when the shot goes off.”

Those words ring in my ears all the time. I was a great shot and would have probably continued to be invited to shoot at the world champions ships had Glucoma not struck me and continue to suffer from a deteriorating eye sight. It makes it difficult for me to shoot consistently now though not impossible as the top recurve Olympic and world record holder is partially blind. In fact he can never focus on the target its a blur to him and yet he is the top shooter in the world.

These same rules apply in trading.
We must visualize the trade, getting the exact right place where we are comfortable to put money on the table. Visualise the graph where you would feel that if you put your money at that position that it will multiply, now visualize that it is multiplying and then visualize where you will take the money off the table. Visualize also where fi it went wrong where would you be comfortable getting off the table with a small loss.

Once having done write down the details. That is your second step. You are now creating a plan of where you will get in, at what price, and when you will get out with profit and at what price. Add the stop loss position.

Now the third step is to take action. Wait for the price you wrote down, wait for it to do everything you wrote down and follow your own set of rules for that trade. In stocks this may be longer term but do not deviate from the rules set out once you have taken a position.

Such a system does not simply work over one trade but it works on 50% or maybe 60% of 10 or 20 trades the rest being lost to stop losses. However overall one can show a consistent profit if one has managed their losses well. The profits will show over the longer term.

At the world championships in Alabama The 3D targets had several different positions for targeting. The main one was made up of a larger circle just below the shoulder and above the right upper joint of the leg where it met the body. Within this Main circle was a smaller circle almost in the center worth ten points, to the right in the larger circle of 8 on the upper right edge was another circle which was worth 12 points and finally there was a circle that was outside all of these usually in a narrow region of the body which was worth 14 points. Normal shooters went for the inner circle and tried to achieve a consistent ten over the twenty four targets one was allowed to shoot. Sounds easy but I assure you its not. First of all light changes and you are shooting in forest situations as well as tunnel situations where you have to gauge the distance of the target from you in order to set your sights. You are not allowed any instruments except for a strength 8 binoculars. Have look at a few videos on U tube if you are interested to understand the dynamics of shooting at such competitions. Most shooters went for the inner circle but when it came to the finals the competition got tougher and shooters were forced to go for the 14 shot to get over their competitors, however the more consistent shooters went for twelve shot which if missed would place them outside for at least a 5 or an 8 on the inside, but to miss the 14 could lead to a zero.

Trading is no different. If you keep going for a 14 you may end up with a zero. However if you have the process of visualization down and the system it is possible to win with steady middle of the target shots rather than extreme risk shots. In my opinion its better to get out with something rather than nothing. Secondly let all things fall into place before you take that shot. This has to happen every single time so if everything is not in place, refrain from taking the shot. There should not be any deviation from your system. Trading and shooting are really no different.

Uranium stocks are showing a tendency to begin moving up. Several things must fall into place before we see a proper move upwards, the move currently is relatively shallow but at the same time we see these same stocks showing a reluctance to drop further down so they are not making lower lows for the present. If they do make a lower than their last proper bottom we have to assume that the down trend ahs not completed. Support areas were indicated in a previous post where the stop loss prices were indicated. I see no reason to add more money at this point in time rather spend the time developing your system.

Most newbies will be trying to figure out how to replicate successful traders. Let me tell you a little secret; There is no one consistent method that will be successful, and what works for one may not work for another. The reason for this is simple; Your mind works differently to others, therefore you have to develop a system that you are comfortable with. The above mentioned are loose guidelines and you must modify and adopt them to suit yourself. You have different capacities, financially, mentally, physically and spiritually. Modify and adopt.

Back to the issue of trading the visualization can be done over an entire business using visual boards decide what you want place it on the visual board and remember that visual all the time. You not only need to visualize it but actually feel it. The more real the visual it is the better your chances get, provided you really believe in it. My father once said;

“If you can imagine it, it is possible, you just need to figure out how to get there.”

Most people do not have a plan for life. The visual works there too. One needs a plan for life too. Most individuals simply act and react to life and meander through it. The few who do have a plan, a direction and want it badly enough, succeed in it. Success is different for different folks, sometimes its physical, sometimes financial, and sometimes spiritual. The definition of success;

“Success is the progressive realization of a worthy ideal.”

The opposite of success is not ‘failure’, it is conformity.

We conform to the failures in our life. We accept them as the norm. We continue to accept them and continue to “boil the frog”.

Failures are invaluable if you use them to teach you something and just like life and death one cannot have success without failures.

The simple fear of failure results in us not taking the risk of success. The outcome is on average 50-50 so why do we place more emphasis on the risk of failure to the risk of success. The one reason is that we fear the inability to get up and dust ourselves and restart.

Here is a conundrum every thing we pay for is recoverable but everything we get for free is not. Life is for free but we cannot get it back if we loose it. Money is recoverable. Friends are recoverable but life, father, mother, brother are not recoverable. Once lost they are gone. Everything we create we can recover therefore we should not fear loosing. That does not mean you go out there and start gambling I assure you it will be a painful recovery.

The uranium sector continues to move with stealth. A recent move downwards is not a bad thing if it holds above previous lows and beings to create support from there. The problem for investors is two fold. Do they invest on the basis of cost benefit analysis or do they go with the ones that are more popular despite not having any realistic results. A deposit, ‘As a friend of mine is so fond of saying’; is a hole in the ground. A few holes are dug and someone does some mystic magic and comes up with an estimated figure of what lies underneath. A deposit simply does not make up all the math. There are a dozen things that can go wrong, unless you are scooping up the stuff straight off the surface. A-cap resources in Botswana has a deposit that is near surface, Cameco has super rich deposits that are very deep below the surface. The two have cost benefit analysis that are around 30 dollars and 20 dollars per tonne of rock in terms of costs. It does not end there. Problems arise such as the ones in Cigar lake and add to the cost. 400 million pounds of Uranium with some 400 pounds per tonne is a hell of a hole. In respect A-cap come out with a couple of pounds per tonne of rock but the digging required is not as hard. Cameco requires to freeze parts of the tunnel on a continuous basis as they go deeper into their hole and it warms up. Additionally specialized protection needs to be wrong due to the high concentration of the Uranium there. Weather affects the production too. However the benefit is far greater because the deposit is so rich and it makes it worthwhile investing colossal sums of money to get it out. The experience also attracts the investor to put money in the company. The company has a great deal of experience in mining such deposits. This remains a strong factor in them surviving. Greenland minerals has multi mineral deposit in Greenland. They are relatively deep but they also have the benefit of a different kind of mining in mind. Using a more gentler leaching process http://www.ggg.gl/docs/ASX-announcements/Refinery-Update-ContinuousLeachTestwork.pdf This enables them to keep costs down. Despite all their work so far they still have a long way to go before they operate as a mine and even longer to show profit. However as the phrase goes “Fortune favors the brave”

We continue to watch the uranium sector and I continue to notice that the SAGI index in continuing to climb. The index is made up of a combination of uranium, rare earth, alternative energy and gold and silver plays all of which are made up of penny stocks. They provide an indication of the direction and the turn around of the combination of stocks. Lately we have observed that they are turning around slowly. A move form the negative to the positive will be a good indication of when to move into the sectors. So far we have seen a positive move in uranium stocks but this is not a massive up turn and most are barely lifting off the runway.

Gold has recently made a positive move upwards, though I continue to analyze the price movement, I am still of the opinion that we may see spot gold drop down quickly. I continue to be positive on the US equity markets but here we have a contradiction where both gold and equities are moving up, however industrial metals are not. This is unusual as the two should be in sync together. If industrial metals do not move up soon it tells us that this might be simply an anticipatory move on the part of investors and simply speculation. Speculation can be a strong drive and can create momentum but it tends to be short term and in bursts. A study of the prices of the industrial metals tells us if there is real demand for expansion in the physical world. If this is not the case we need to be careful. Equity and gold moving up in sync is unusual too. Commodities are usually moving in opposite direction to equities and on a graph we would see the lines moving against each other. At present this is not the case. I cannot anticipate that gold will drop but the technical charts indicate that gold is over reaching at present and there is a possibility in the near future for it to drop on shorts increasing. My prediction was that we could see a big drop in March and another possibly in June. Time will tell if I am right. I don’t expect to be as I have in the past been usually wrong on most of my calls. I would be buying gold and gold stocks around the 1150 mark and possibly lower, if it continues to move up we might see it hit as high as 1425 which is where we saw a line of confluence occur in the past. Past that we will see more bulls entering the market and the possibility of a good rally taking us back past the 1600 mark.

It’s a windy weekend in Britain. And we have been hit by a ridiculous number of storms, to the extent that we never seen such a winter in over 200 years perhaps even more. I leave you now and wrap myself up in a good blanket and dream of Africa and the sun there while we freeze in the wet and wild winds of England.

Have a great weekend.

SAGI:36_2_36::grin10::cool1::beerglass:
 

fat panther

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02/20/2014

(Reuters) - Japan will incorporate nuclear power in its mid-term energy policy, citing it as an "important base load" energy source, and aims to approve the plan at a cabinet meeting in March, a source close to the matter told Reuters.

The Japanese public remains divided over nuclear power nearly three years after a devastating earthquake and tsunami in March 2011 set off triple nuclear meltdowns at the Fukushima Daiichi plant, some 220 km (130 miles) north of Tokyo.

The plant's operator, Tokyo Electric Power Co, has been plagued by a series of mishaps including radioactive water leaks and power outages. Tepco said on Thursday that it found 100 metric tons of contaminated water had leaked out of a storage tank at the Fukushima site.

It still remains unclear when any of Japan's 48 nuclear reactors can be restarted as it faces stringent checks by an independent regulator.

The government's decision is in line with recommendations put forward by a government panel last year, which wrote that securing safety was paramount in utilizing atomic power.

(Reporting by Kentaro Hamada, Writing by Mari Saito; Editing by Dominic Lau)
 

searcher

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FWIW:
Uranium Supply Disruptions Spell Opportunity for Investors: David Talbot

TICKERS: DML; DNN, EFR; EFRFF; UUUU, FCU, NXE, TRK, UEX, URE; URG, URZ, U

Source: Tom Armistead of The Energy Report (2/20/14)



A supply crisis is looming in the uranium industry, and today's uranium price, stagnant at an eight-year low, will shoot up quickly when restarts of Japanese nuclear power plants bring back demand with a vengeance, David Talbot tells The Energy Report. Talbot, a geologist and senior mining analyst at Dundee Capital Markets, is excited about the potential of Canada's Athabasca Basin, the world's most prolific uranium source. But beyond the pounds in the ground, he sees money to be made in undervalued companies.


The Energy Report: David, welcome. Let's start with the big picture: What is the general outlook for uranium in 2014?


David Talbot: Thank you, Tom. The long-term outlook on the uranium market remains the same at US$65/pound ($65/lb) U3O8. I think a new reality in the near term has set in. The uranium price has dropped significantly and now appears stable at levels not seen for almost eight years. We believe much of this has to do with the lagging Japanese restarts, cash-strapped sellers impacting the market and probably most important, near-term demand is lacking. We do expect uranium prices to rise, and relatively quickly when they do, but for right now, uranium prices will remain leveraged to the news of the Japanese reactor restarts and a return to term contracting by utilities.

This thesis underpins our $42/lb price estimate for the year, with prices to about $48/lb by Q4/14. When restarts might occur remains the million-dollar question, perhaps starting mid-2014, but the indicators out of Japan are that the government is committed to bringing its nuclear fleet back online now as the 17th and 18th reactors have applied for their restarts. We've had ongoing reviews. They were expected to take about three to six months, and now we're in month eight. So when they start isn't quite certain, but they are moving in the right direction. Their return should actually coincide with the return in contracting, almost completely absent last year as massive uranium requirements loom. We're seeing about 180 million pounds (180 Mlb) due, expected by the 2016–2018 period.


TER: What are the major influences in the uranium market today?

DT: Supply remains a wild card and probably the most important factor, hence the focus of our recent comprehensive sector report. Mines are currently being taken offline, deferred or cancelled altogether. But long-term fundamentals underpin our belief that a uranium supply deficit starting in 2016 will likely increase by 2020, at which time we think we'll see a deficit of about 16 Mlb. So we remain adamant that uranium supply is threatened by current uranium prices, regardless of the difficulties of the mining industry and challenges in permitting. This continues to set the stage for the supply crisis, particularly in light of dwindling secondary supplies as the Highly-Enriched Uranium (HEU) Purchase Agreement has come to a close, taking 24 Mlb/year with it.

The other part of the story is timing. We anticipate Japanese restarts to be the catalyst to kick-start uranium buying and contracting, but the lack of deals in 2013 resulted in the elevated uranium requirements that utilities have mentioned. This means that once the pendulum shifts back, it will shift quickly, and prices will probably rise at quite a torrid pace.


TER: Do you expect that 16-Mlb deficit in 2020 to draw more explorers and producers to the industry, or just to create more opportunity for the current players?

DT: Once the 16-Mlb deficit comes closer, we would expect development for some projects to perhaps expedite on the back of stronger uranium prices. But most of the new supply we see over the next few years is from existing producers, mainly expansion of existing projects, Ranger 3 Deeps, for example, or Cigar Lake. We do model some marginal players coming on-line, like Toro Resources Corp.'s (TRK:TSX.V) Wiluna project, or perhaps with some of Energy Fuels Inc.'s (EFR:TSX; EFRFF:OTCQX; UUUU:NYSE.MKT) conventional assets in the U.S. But that's a relatively small amount of production and certainly not enough to close the gap. We do think that uranium prices are going to be what's required to incentivize investors. Certainly, there will be a new set of explorers set up as exploration funding comes in. Just look at the explosion of junior exploration companies around the Patterson Lake South discovery. So should uranium prices rise, we would expect investment in the sector and exploration spending to increase.


TER: What was the mood at the NEI Nuclear Fuel Supply Forum in Washington, D.C., in January?

DT: Remember that the Nuclear Energy Institute is an American association that promotes nuclear power to Congress, the White House, state policy forums and the general public. So its message is typically well scripted and relatively even-keeled, and delivered nonpromotionally. I think that feelings were mixed. There were a few uranium-sector participants. In late January, the sector was flying high, so sentiment was generally positive. This was also after the Uranium Participation Corp. (U:TSX) financing, which more than suggests that investors will be coming into the sector shortly as Uranium Participation is mandated to spend about 85% of its raise on purchasing uranium. So at that time, the stocks were doing quite well, and the fundamentals of supply and demand are generally unquestioned by that group of people.

Richard Myers discussed the U.S. nuclear program. He's vice president of policy development at NEI. His message was similar to the one he provided last year at the World Nuclear Association Symposium in London. He started by saying U.S. nuclear power plants are operating well at about 90% of their capacity factor.

Right now in the U.S., they are currently shutting five reactors. These are typically older, smaller, single units that are mostly at risk but, also, larger, multi-unit sites are struggling under current regulations. Essentially, electricity prices are being suppressed by state mandates and federal subsidies. So price signals right now are inadequate to support existing power plants and investment in new capacity. He suggested that all electricity should not be treated the same. Nuclear has some very important attributes that are not being monetized. It's baseload; it provides grid stability, price stability, clean-air compliance, technical and fuel diversity and a huge tax base. So failure to address the importance of nuclear as baseload electricity will compromise reliability, introduce price volatility and frustrate efforts to decrease carbon emissions. This, of course, could have a negative impact on the U.S. uranium requirements, currently in the 45–50-Mlb range.


TER: Dundee Capital Markets was expecting 87 Mlb new production from 22 uranium operations between 2007 and 2013, but only 17.8 Mlb materialized. What happened there?

DT: I think this is the trend in the industry. You'll see these plans to develop uranium projects and, ultimately, a fraction of that effort ever materializes. Many of those mines that we expected to come on-line in 2007 never started. In one or two instances, there were technical issues. The timing of that report also coincided with the global financial crisis in 2008, so that was certainly one of the main factors. Capital dried up. But in general, development is becoming much more expensive, with timelines for projects ranging up to 15 years or more between discovery and production. That's because of several challenges that face the uranium space. You have increasing environmental and regulatory constraints. Public perception has darkened post-Fukushima. Significant community consultation is now required, and stringent radiological and groundwater controls are being put in place. Detailed tailings management plans are required, and comprehensive decommissioning strategies with upfront financial commitments are now commonplace.


TER: You mentioned the high costs of development. What role does the Canadian Non-Resident Ownership Policy play in that?

DT: That policy states that a foreign company cannot own 50% of a uranium project. This hasn't concerned me too much in the past. It is just a policy. We have seen some companies get around that policy, not necessarily grandfathered but just moving toward the expectation that that policy will not be there when they need to go and get their licenses. For example, you have AREVA (AREVA:EPA) moving forward its Kiggavik development project in Nunavut Territory. You have Paladin Energy Ltd. (PDN:TSX; PDN:ASX) moving forward its big project in Labrador called Michelin, formerly an asset of Aurora Energy Resources Inc. More recently, we've seen Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK) come in and take out Hathor Exploration Ltd. for its Roughrider deposit. So there are foreign companies that are acting in Canada. They're acting as if this policy will be overturned and, certainly, the Saskatchewan government would like to have it overturned.


TER: Is the uranium market heading for a wave of mergers and acquisitions (M&A) to achieve efficiencies of scale and maybe increase production capability in a low-price market?

DT: We do expect further consolidation. Financing is more difficult than ever. Project timelines are lengthy and costly. With some companies unable to secure supplies to advance projects, we expect further delays and/or corporate insolvencies. What often happens is the predator comes in and takes out its prey at pennies on the dollar relative to its underlying net asset value (NAV).

Many certainly look at Cameco (CCO:TSX; CCJ:NYSE) as the top predator. With about 1 billion pounds (1 Blb) in resources and reserves, it says it doesn't need more pounds in the ground, but bolting on production makes a lot of sense to us. Cameco has long said it seeks more production growth in the U.S., and while some of that's happening through organic growth, newer companies like Uranerz Energy Corp. (URZ:TSX; URZ:NYSE.MKT) and Ur-Energy Inc. (URE:TSX; URG:NYSE.MKT) look exciting to us. You also can't count out Denison Mines Corp.'s (DML:TSX; DNN:NYSE.MKT) Phoenix project in the Athabasca Basin. Cameco is a partner there, but that's the world's third highest-grade project at 16% U3O8. There are about 60 Mlb there right now. Plus, Denison has interest in the McClean Lake mill, and I know Cameco would probably be interested in having a feed at the mill that is processing its own Cigar Lake ore.


TER: Energy Fuels is trading around CA$9.50 now, but your target is CA$17. Why is this company so undervalued?

DT: I think part of it has to do with the general downdraft in equities, but Energy Fuels, in particular, did have a few events leading into 2014 that put some pressure on the stock. That included a selloff after a four-month hold on its June 2013 private placement. Strathmore shareholders were selling post-deal, post-acquisition of Strathmore. There was also pressure after its 50:1 rollback, as expected. Another part of this could be just the general unfamiliarity with this name. This is a company that has a number of small-scale operations with different incentive price levels, all feeding into the White Mesa mill. So production is often not year-round, but happens in runs or batches. This combines with alternate feed material runs.


TER: What are Energy Fuels' strengths and its weaknesses?

DT: I think Energy Fuels has several strengths that make it one of our top picks. It is one of our favorite stocks in a low uranium price environment, as the company is effectively 100% hedged at around $60/lb uranium. But we also like it for its significant leverage to rising uranium prices, given its ability to easily turn on its brownfield projects at minimal cost. Primary standby mines—Pandora, Beaver, Daneros—all have potential to produce between 200–500 thousand pounds (200–500 Klb)/year. Canyon could add another 500 Klb/year once it's developed. So its White Mesa mill has a license capacity of 2,000 tons per day and can produce about 8 Mlb/year. Costs have also come down about 18% quarter over quarter to $32/lb.

But there are some risks, of course, with small, higher-cost conventional mines. The production profile hinges on milling and trucking costs. So with about 50% of our valuation dedicated to these projects and then 50% delegated to greenfield projects, development risks must also be taken into account. Those include permitting, financing, economics, timelines and so on.


TER: What is the significance of the Patterson Lake South discovery for Fission Uranium Corp. (FCU:TSX.V)?

DT: We believe the Patterson Lake South discovery is very significant, probably the largest since Hathor's Roughrider discovery, and we all know what happened with that one. It sold for $680 million ($680 M) to Rio Tinto. At that time, it wasn't much bigger than where we think Patterson Lake South is now. So we do have a Buy on Fission as a result of its Patterson Lake South project. It's shallow, high grade, thick; it has all the hallmarks of a great project. Not only that, but it's also located in the Athabasca Basin, which hosts a supportive government, excellent infrastructure, capacity at existing mills and a solid permitting framework.

At Patterson Lake South right now, all six zones lie at or near the surface, and they are only drill limited at this point; they're not cut off. We anticipate that several of these zones will probably tie together, creating a much larger, single deposit. It's still in the early stages of delineation. Aggressive drilling is underway in preparation for an initial resource. We speculate we might see that early next year. Right now, we estimate about 43 Mlb grading 2% uranium. The grade goes up significantly if we use a higher cutoff grade, but the pounds in the ground aren't impacted that much. So right now, it's looking like a great, high-grade uranium deposit.


TER: Does that make Fission Uranium a likely takeout target?

DT: We've always felt that Fission is a potential takeover target. Given its grades and shallow depth, Patterson Lake South has potential to become an economic deposit, capable of supporting not only construction of a mill. But, also, perhaps even more attractive is that this near-surface deposit may require relatively smaller upfront capital and could provide feed to an existing mill and be run at irregular intervals, essentially delivering high-value material over great distances when it's necessary. So we believe that Patterson Lake South and Fission, for that matter, make sense as a target for anybody that wants to set up shop in what is the underexplored western side of the Athabasca Basin.


TER: You changed your rating on UEX Corp. (UEX:TSX) very quickly. Why?

DT: We did an about-face on UEX not long after reducing our target and recommending it as a Neutral due to unexpected news of a slowdown and competition from fresh discoveries, like Patterson Lake South. But we now rate UEX as a Buy with an $8 target price. While we didn't change our discounted cash flow model, the new CEO, Roger Lemaitre, brings depth to this company that it hasn't seen before. With his vast industry experience as Cameco's exploration director and the fact that UEX has almost $9M in cash, I think he's going to turn the company's attention to new discoveries and potential M&A activity. His familiarity with Cameco is certainly an asset. But I think we still need to see some execution here by UEX to leverage its attributable 85 Mlb in resource plus its past exploration success into something new and accretive for shareholders. Meanwhile, Shea Creek is open in multiple directions. It does have a current resource of about 96 Mlb. As UEX decides to take its direction, I think it will remain focused on the Athabasca Basin. I think it will likely seek synergistic projects.


TER: Are you excited about any other uranium companies?

DT: There are two others. Ur-Energy—we have a Buy on this one. It has a $2.20 target price. Ur-Energy is our top pick in the sector right now. This is a U.S.-based, Wyoming-based, in-situ recovery producer. It officially entered production last year. Early indications are the well fields are performing exceptionally well. It produced 135 Klb last year. We expect about 1 Mlb this year, 1.2 Mlb next. Flow rates and front end are operating above expectations. The back end elution and precipitation circuits are performing as designed. Notably, head grades have been significantly above expectation, leading to less header houses and volumes that are required, pointing to lower costs. Right now, the company sells about 40% of its production forward at about $60/lb between 2014 and 2016, so it makes Ur-Energy less sensitive to spot price fluctuations than some of its peers. It's actually getting prices much, much higher than spot. It was in the $63/lb range for last quarter. Shirley Basin is another project it just purchased. That could be up next. It could come online by 2017, ramping up to 1 Mlb/year within a couple years there. Ur-Energy trades at a discount to its producer peers.

Another company here: We recently initiated full coverage on NexGen Energy Ltd. (NXE:TSX.V). We're recommending it as a Buy, no target price. The company has two high-quality assets in the right locations. Rook I is adjacent to Fission Uranium's Patterson Lake South discovery. NexGen could potentially have the best claims in the area aside from Fission itself. The second project is the Radio property. That's located on the Roughrider Midwest trend on the eastern side of the Athabasca Basin. That project is within 10 kilometers of 150 Mlb of uranium resources. First drilling at Rook I tested three conductors that lie directly east of Fission's Patterson Lake South discovery in the Athabasca. With 12 holes, it hit the right graphitic basement rocks, shallow structures and modest alteration, and elevated uranium mineralization was confirmed in three holes and somewhat significant in one of those. Follow-up drilling has made a potential uranium discovery (pending assays) that is not only a game-changer for NexGen, but for the western side of the Athabasca Basin. What's more impressive is that it was the first hole drilled into Target C, now called Arrow, that hit.

Further drilling is required and NexGen has suggested that it will commit more resources to follow up. The Radio project is essentially on hold with earn-in commitments delayed, allowing the company to focus on the Rook project. NexGen has experienced management and quite a deep technical team, including ex-Hathor and Rio Tinto geologists who really know the region.


TER: Do you have any parting thoughts to share on the uranium market generally?

DT: I think it all hinges on supply. Demand is relatively consistent. It's predictable, Japan restarts notwithstanding. But I believe it's the strengthening fundamentals based on supply that really drive this. Mines are closing. We've seen Zarechnoye close, La Sal, Beaver, Pandora, Daneros. Projects are being deferred, big projects including Olympic Dam, Trekkopje, Imouraren, Cameco's Double U, plus no more Kazakhstan production. The HEU agreement is gone, and we're getting unexpected disruptions, such as Ranger, Rossing, Cigar Lake and assets in Niger. So I think investors should focus on that. When uranium prices come back, I think they're going to come back quite quickly, not because Japan is going to come back seeking supply but because the other 90% of the world hasn't been buying like it should.


TER: Thanks for sharing your thoughts.

http://www.theenergyreport.com/pub/...caoK+(The+Energy+Report+-+Exclusive+Articles)
 

SAGI

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Denison Mines +5.2% as Bloomberg sees a possible takeover target
Feb 24 2014, 11:42 ET
Uranium takeovers are on the verge of a comeback that could put companies such as Denison Mines (DNN +5.2%), Ur-Energy (URG +4.9%) and Fission Uranium (FCUUF) in play, according to a Bloomberg report.Uranium prices are forecast to rise more than 40% by year's end as Japanese power plants restart nuclear reactors that have been shut down since the March 2011 Fukushima disaster, and analysts say the rebound in uranium demand may fuel takeovers as buyers try to get ahead of rising prices.DNN would make an attractive target for someone looking to gain access to Canada’s Athabasca Basin, home to the world’s richest high-grade uranium; a Raymond James analyst thinks Rio Tinto may be particularly interested.Cantor Fitgerald thinks DNN and Fission could be targets of Cameco (CCJ +0.8%), which has been building up cash and last month sold a stake in a power plant for C$450M.Also: URRE +5.5%, URZ +4.6%, UEC +0.9%, USU +0.4%.ETFs: NLR, NUCL.
 

fat panther

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I like it, but who said

as Japanese power plants restart nuclear reactors that have been shut down since the March 2011 Fukushima disaster

I'm too old for this s**t LOL
 

SAGI

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Denison Announces High Grade Uranium Intersections at the Phoenix Deposit
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TORONTO, ONTARIO--(Marketwired - Feb. 26, 2014) - Denison Mines Corp. (TSX:DML)(NYSE MKT:DNN) ("Denison" or the "Company") is pleased to provide an update on uranium exploration activities at several properties in the Athabasca Basin in northern Saskatchewan. Highlights of the program include high grade intersections at Zone A of the Phoenix deposit, including 29.6% eU3O8 over 6.5 metres in WR-548. Phoenix is located on the Wheeler River property which lies between the McArthur River Mine and Key Lake mill complex in the Athabasca Basin in northern Saskatchewan. Denison is the operator and holds a 60% interest in the project. Cameco Corporation holds a 30% interest and JCU (Canada) Exploration Company, Limited holds the remaining 10% interest.

Wheeler River

To date, 13 of a planned 28 drill holes have been completed in the Wheeler River winter exploration drilling program. Two drills are being utilized; one has been at Phoenix Zone A, and the other has been at an exploration target area known as the K Zone. Targets at the Phoenix deposit are extensions of higher grade portions of Zone A that were previously modelled as lower grade (the lower grade shell). Four of eight drill holes completed at Phoenix Zone A (WR-539, WR-545, WR-548 and WR-550) have successfully intersected high grade mineralization, expanding the higher grade mineralization shell. The other four holes intersected lower grade uranium mineralization. Table 1 lists the Phoenix Zone A intersections returned to date. As the drill holes are vertical and the mineralization is roughly horizontal, the intersection lengths are equal to the true thickness. Figure 1 shows the drill hole locations.

Table 1 - Phoenix A Deposit Higher Grade Extension Drilling Results

Hole-ID From
(m) To
(m) Length
(m) eU3O8(1)
(%)
WR-548(2) 407.9 414.4 6.50 29.61
WR-550(2) 407.3 412.0 4.70 18.37
WR-545(2) 403.3 406.4 3.10 16.98
WR-539(2) 401.6 405.1 3.50 11.63
WR-546(2) 406.3 407.4 1.10 7.91
WR-538(3) 392.4 397.5 5.10 2.14
and 403.8 407.1 3.30 0.87
and 408.2 409.6 1.40 1.36
and 426.4 428.5 2.10 0.11
WR-541(3) 397.6 408.2 10.60 0.22
WR-543(3) 411.4 412.9 1.50 0.14
Notes: (1) eU3O8 is radiometric equivalent uranium from a total gamma down-hole probe
(2) Composited above a cutoff grade of 1.0% eU3O8
(3) Composited above a cutoff grade of 0.05% eU3O8
Drilling at the south and central portions of the K Zone is now complete. Denison is encouraged with the results even though no significant mineralization has been intersected. The drilling did intersect significant sandstone and basement alteration in three of seven wide spaced drill holes, which will likely warrant follow-up drilling.

Other target areas remaining for the Winter 2014 program at Wheeler River include the 489 zone, Phoenix North, K North, and two high priority DC-resistivity low anomalies.

Hatchet Lake

A 2,030 metre, 10 hole program of diamond drilling was completed at Hatchet Lake. No significant mineralization was intersected, although some zones of weakly elevated radioactivity were observed near the unconformity in the drill core. Denison will evaluate the pending geochemistry data before planning the next exploration programs at Hatchet Lake.

Moore Lake

At Moore Lake, a 4,100 metre, 10 hole diamond drilling program is now complete. No significant mineralization was intersected during the program. A program of geophysics (electromagnetic and DC-resistivity surveying) will also be completed this winter to aid in the selection of drill targets for future exploration programs.

Park Creek

Diamond drilling at Park Creek has begun. Four of eight planned drill holes (~2,400 metres) have been completed. All holes are targeting the regional scale Bird Lake fault zone. All four holes have intersected major fault structures near the unconformity, but no significant mineralization has been observed. The program is expected to wrap up in early March.

Bell Lake

At Bell Lake, one of nine planned drill holes (~5,000 metres) has been completed. The first hole targeted new electromagnetic conductor targets at the Bell North grid. Weakly elevated radioactivity was observed at the unconformity associated with faulted graphitic pelitic gneiss. Drilling will continue through the middle of March.

Waterbury Lake

A 2,700 metre, eight hole drilling program will begin at Waterbury Lake in early March. Targets are geophysical anomalies and extensions of previous mineralized intersections within the Discovery Bay corridor along strike of the J Zone uranium deposit.

Qualified Person

The disclosure of a scientific or technical nature contained in this news release was prepared by Steve Blower P.Geo., Denison's Vice President, Exploration, who is a Qualified Person in accordance with the requirements of NI 43-101. For a description of the quality assurance program and quality control measures applied by Denison, please see Denison's Annual Information Form dated March 13, 2013 filed under the Company's profile on SEDAR at www.sedar.com.

About Denison

Denison is a uranium exploration and development company with interests in exploration and development projects in Canada, Zambia, Namibia, Mali, and Mongolia. Including the high grade Phoenix deposits, located on its 60% owned Wheeler project, Denison's exploration project portfolio includes 43 projects and totals approximately 584,000 hectares in the Eastern Athabasca Basin region of Saskatchewan. Denison's interests in Saskatchewan also include a 22.5% ownership interest in the McClean Lake joint venture, which includes several uranium deposits and the McClean Lake uranium mill, one of the world's largest uranium processing facilities, plus a 25.17% interest in the Midwest deposit and a 60% interest in the J-Zone deposit on the Waterbury property. Both the Midwest and J-Zone deposits are located within 20 kilometres of the McClean Lake mill. Internationally, Denison owns 100% of the conventional heap leach Mutanga project in Zambia and the conventional uranium, silver and copper Falea project in Mali, an approximate 90% interest in the Dome project in Namibia, and an 85% interest in the in-situ recovery projects held by the Gurvan Saihan joint venture ("GSJV") in Mongolia.

Denison is engaged in mine decommissioning and environmental services through its DES division and is the manager of UPC, a publicly traded company which invests in uranium oxide and uranium hexafluoride.
 

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UPDATE: We have had a very good day today with the SAGI INDEX adding another 5.98% today. This was partially due to a big jump in Uranium stocks including DNN, CCO, BYU.V, PDN.TO,MGA.TO, LAM.TO all jumped so this is a movement right across the field.

Other stocks that jumped were fuel cell stocks BLDP and FCEL both of which gained.

The percentage gains were between 2.5% to 33%

Serious penny stocks such as DIT.V yes even little Ditem resources jumped 50%

It is time to focus on the mentioned stocks in the past.

Greenland minerals gained about 15%

WORD OF WARNING: the US indices LOST most of their gains tonight and this is something to factor in.

Be careful if you do see your stocks gaining huge percentages in the next one or two days but then give up all those gains its time to take some short term profit and wait for a better entry.

Many of the stocks can be toxic so if they are giving good gains its time to pass the parcel. Stronger stocks such as Cameco will retain value better than many of the penny stocks. A more detailed report will be written out...hopefully over the weekend.

Gold has hit resistance at 1345, my analysis (not very good - I confess) was that resistance will be around 1347.00 it did not attain that and instead we have a twin Pin bar indicating a bearish reversal showing on the weekly chart. This has occurred twice in the recent past and on both occasions gold has declined to a support of just below 1200. Something to consider. In short we could see gold decline from here if the week ends below 1320. The decline may take as long as 10 to 12 weeks or it could be as short as the month of March.

Happy trading.

SAGI
 

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COFFEE WITH CARROT HEAD!
URANIUM STOCKS RALLY, GOLD CAN MOVE DOWN FROM HERE.


Good Morning! I need that coffee and perhaps a toast or two, perhaps the whisky kind but alas its too early in the morning and well wishers say whiskies not good for you. If only they knew what a single malt was I think they would change their mind.

Time to begin and we have had some good news this week in regards to Uranium. Additionally I wanted to put my thoughts in regards to the US indices and Gold too. Well we might as well add the issue of the dollar to the ingredients just so that we have a little spice.

Uranium stocks took off and reminded me of the good times but than again they also reminded of the times when they looked infallible and yet they did. Not once but several times in the last seven years. Uranium is unique among all minerals in that it provides us with an energy which in reality does not require burning, rather little things called atoms get excited and begin to heat up all on their own. No that’s not unique in the market, what is more important is the fact that their supply is controlled. More controlled than perhaps any other substance with the exception of its relatives. This control provides less volatility in the price and needless to say, humans needed to speculate on this too. However it also provides us with a unique outlook to fundamentals that make it an exception among commodities. The demand appears to us even before it appears on the horizon. We appear to see it from so far away that we could fall asleep, wake up and walk up a cliff, perhaps go to sleep again before a uranium Tsunami would hit us. The problem is that in order to ride this wave we have to get it at the beginning, but like a Tsunami we get the tide going away and when it does it may take hours before it comes back in such force as to devastate the land around us, and like this, Uranium’s tide went away for several years, but it appears to be on the verge of coming back and if it does return we might see a uranium Tsunami. Unfortunately we are not fortune tellers, rather we have simply our amateurish self taught skills to help us and technical analysis that allows us to make some reasonable predictions.

Right now we can see indications that Uranium stocks have a good chance of recovery from the Fukushima lows to at least attain previous highs of 2011. If all goes well we can possibly see these prices moving higher if demand does out run the current supply which has reduced with a number of closures as well as the stopping of the mega watts program. As to how much of an impact this will make is impossible to predict. A number of countries will have reasonable stocks to allow for short term reduction in buying, however in the longer term they will be forced back into the market. The market is unique in that main deals between buyers and supplier is contractual based on a fixed price. This is a double edged sword. For the bigger players this is more suitable but for smaller miners they will be forced to go to the spot market. There is always the risk of not being able to sell one product and despite the sell by date for uranium being ultra long the company will be out on a financial limb depending on how deep its pockets are. Bigger players will be steadier. The price fluctuations on a weekly basis will have little effect on contracts already in place. Like the miners there are limited buyers in the market and all the players know each other. Prices will be agreed upon based on spot prices plus a premium.

Based on the above there are some good potentials at fairly low prices and its worth taking a bargain, but be aware like bargain vegetables they often have short shelf lifes sometimes there are exceptions, its up to the buyer to be discerning.

Paladin (PDN.TO , PALAF –US) is a company that despite being a producer has taken a major beating after it had to sell part of its Uranium mine in Namibia, it also had to put its operations in Malawi on maintenance due to the low prices. This is an issue with low concentration mines that they are dependent on higher prices, but the fact that paladin has survived thus far there is a good possibility of seeing prices moving higher from here. Low on the radar is their partnership with another company called Deep yellow resources which ahs defined a good deposit in Namibia. They also bought out the Michlin Deposit form another explorer and this has apprx 100 million pounds of uranium. They also have interest in Australia. Their total resources is in the region of 300 million pounds. Recommendation BUY- 0.45-0.55 Stop Loss at 0.40 No Limit.

Dennison Mines (DML.TO, DNN-US) is an exploration company with several hats. It has a share in the mill that cigar lake ore will go to, it has a good high concentration deposit and through mergers and acquisitions has taken out a number of smaller companies with land in the same area. It is in partnership with Cameco and Areva. They have several ventures together and so its here to stay. Their main concentration is on their wheeler river property in partnership with Cameco. That should give some confidence and it is emerging that Dennsion is working almost like the acquisitions partner for Cameco. No other company has as much information of uranium in Saskatchewan than Cameco. Its very possible that the Dennison is fronting Cameco. Recently they acquired Rockgate Capital with a deposit in Mali. My feeling is that Areva recommended rockgate for future potential and feel Dennison is more capable of developing the asset than Rockgate. Other takeovers include JNR with its huge landholdings in Canada. For all company acquisitions its worth paying a visit to their website. Its here to stay and has a very good potential. Dennison is part of the Lundin group of companies. REC: BUY- 1.25 -1.75 Stop loss at 20% below price bought. No limit.

Cameco (CCO.TO CCJ –US) The big boy of Uranium is slowly moving up and rightly so. Its gained over the last six months some 25% in value, but remember this is profit making, low cost factoring know everything uranium company. The company has about a billion pounds of Uranium and growing. They are in partnership over several projects in several countries with assets in Canada, Australia and still expanding. Their main attention is in Canada and are also producing power in Canada. Their growth factor due to size is limited and expect the shares to initially rise to 40 dollars with a previous high around 60 dollars. REC: BUY Below 23.00-19.00 stop loss at 14.50 No limit.

A-cap Resources (ACB.AX APCDF- OTC US) as every knows is one of my favourites but it is loosing position fast unless it begins to make progress on its deposit in Botswana. It’s a low grade shallow deposit and that is why I like it. Costs to mine will be comparatively lower. Additionally they have a coal deposit which may reduce their costs. Time will tell if this explorer will turn from explorer to producer. At $0.04-0.05 there is very little for downside. Potential is massive if they turn producer and expect prices to go as high as 5 to 7 dollars in the event they do turn producer and the price of uranium shoots up that’s one two many ifs but its worth taking the risk on this little stock now. REC BUY Below $0.05-0.07 Stop loss- 0.02 No limit on profit.

Fission energy Corp (FCU.V FCUUF -US OTC) the company that has the other half of the Hathor deposit which was bought over by Rio Tinto. In recent times Fission has been working hard defining their deposit and have come up with some pretty high concentration numbers with their partner. Fission is originally a spin off of Canadian assets by Strathmore which itself was bought out by Energy fuels. (more on that later) Fission is ripe for takeover soon if they do not define their assets quickly and get onto the production rung. REC HOLD or BUY Just after bullish pin bar reversal on weakness. A bearish Pin bar reversal may be imminant.

Energy Fuels (EFR.TO UUUU-US-OTC) An interesting company which appears to have consolidated its shares. Its owned 66% by Dennison. EFR in turn owns all of the US assets of Dennsion and the original EFR assets including the only uranium mill in the US. Additionally it now owns all the assets of Strathmore in the US. http://www.strathmoreminerals.com/new/ResourceTable.asp is the asset list of Strathmore. That’s a good number of assets. Its complicated but effectively they are on the same path as Dennison acquiring assets for a long term program. Despite all of this EFR has high cost uranium. Their mill is dependent on ore while a lot of the current mining in the US is ISL. This means that they are highly leveraged towards a much higher price in uranium to give a decent return. At present most of their deposits are on maintenance and require to go to spot markets to fulfill contracts that they do have. They do have roughly 130 million pounds of Uranium after acquiring Strathmore’s deposits in New Mexico and the one near Wyoming . REC- NON. One of the biggest uranium companies in the US but is it worthwhile?

Greenland minerals (GGG.AX GDLNF US-OTC) This could be Secretariat (The most successful race horse) all over again. They have a very good deposit in Greenland which is multi mineral. Heavy rare earths, Uranium and Nickel. If they can keep the cost of mining below 30 dollars per tonne they could be seeing a good return on their investment. It’s a big deposit with uranium estimates at 500 million pounds and equates to Cigar lake, with one exception that it is nowhere near the concentration of Cigar lake, the plus side is that thay do not have to mine the deposit using conventional methods. The Hear rare earth deposit is also considered one of the largest in the world. Rare earths was the flavour of the month the year Fukushima occurred and this was courtesy of James Dines. Some of the above were once on his list. He was in cahoots with Ivantosh of Mega Uranium and Pinetree capital and touted both very heavily making thousands of his readers loose a great deal of capital holding it even when the price dropped by 50% and finally down to 90%.. Still nothing wrong with rare earths and Uranium combo, both are required. It’s a long marathon for both so its not going to be over for a very long time. It will take at least five years possibly 10 years for Greenland to define fully and get permission as well as put up a mine. A lot of things can go wrong from here and the price reflects that.
REC :BUY GGG.AX below 18 cents, Stop loss 12 cents.

Alternative energy stocks FCEL and BLDP have rallied a lot in the last two to three weeks. I am now waiting for them to show a drop. If they do I will take profits on these two. At present neither has any profits and I have been holding them for several years. Please do not buy these. They are at multi year highs and there is a good possibility for them to drop back to normal average prices. Have a good look at their multi year charts.

GOLD has been consolidating for the last week having placed a high of around 1345. Technically we have to look at the weekly chart in order to see two bearish reversal pin bars occurring. This has happened twice recently and on both occasions gold has subsequently dropped down to the support are of 1185. Since these pin bars have occurred again with the last week closing we have to wait to see if it drops below 1315 and if it does not bounce back up from here it may be time to short gold for the short term. We could see gold retesting 1185 in several weeks or it may take as long as the previous time which was more than 12 weeks. Below is the 4 hr chart of gold which shows resilience around the 20th.









I tried to short it several times this week but on most occasions I was stepped out due to the volatility and I wasn’t willing to take a chance on longer stop losses. It simply was not worthwhile. I will now wait for an entry based on support near 1314 or lower if we do have some bounce and pin bar reversal occurring on price action. Note the slow moving averages continue to hold a bullish indication but since these are slow and not the faster exponential moving averages they will take time to indicate a bearish trend despite the price action showing differently.

My opinion is that prices may continue to drop on two occasions further before we have a longer term bounce back. The point of using the weekly chart is that it has a lot more price action information factored in than do the daily or hourly charts. There is a good possibility of prices reversing down from here and if gold can break past the 1185 resistance we may see the retest of 1100 and below that we may even see 950. (All prices in US dollar per ounce) Prices used are spot prices. Futures price may vary. I cannot foresee gold falling below this and considering the weekly charts we may begin to see a rise from here after a little consolidation and resistance to major support in this area. A push from here will see reversal resistance of the same figures but going up. These lines of support can turn into lines of resistance and hence called lines of confluence where resistance and support meet. We can then have a retest of the 1900 area in as short a time as one year possibly two years and a break past that we can see it moving past 2000.

Look for bargain stocks with cheap gold deposits that will hold value in the longer run. Some ma be explorers. My recommendations are SLW.TO, SAND, GPR.TO and SBB.TO among others.

While this is occurring we must also consider the fact that gold/commodities and equities charts tend to move in opposite direction if we consider statistical charts. The trends are based around periods of 32 years where 16 years are in one direction followed by a reversal of 16 years. This has loosely worked consistently well for roughly 100 years. Gold bottomed out around 2000-2001, it may attain a high with corrections of nearly 50% to attain highs of over 2000 by year 16 where upon in an ideal situation we would see a reversal. In retrospect the equities markets specifically the dow, S&P and Russel will have topped out somewhere in the next decade. To simplify the issue gold begins to bottom out in 2001 and continue up till 2008 where it and the equites indices are hit by the mortgage crisis. Both gold and the indices bottom out in 2009 and appear to begin moving up both are now moving in tandem. One of the reasons for this may be because of the extremely low interest rates held for a far longer period than usual. If we separate gold form commodities we do have the issue of commodities moving down in terms of zinc copper and nickel. Industrial metals have continued to move down as stock markets moved up. I mentioned this earlier. This all gets rather confusing however if we look at an abstract format and separate the two removing correlation we can see why gold would move up. When markets drop investors run for bonds and gold, when markets move up and a bull is fairly recognized and obvious we begin to see a drop in the price of gold and bonds. Bonds in turn show better returns as prices become more effective to the underlying interest return. Gold will often jump as corrections occur in the indices. As a conclusion for the time being I suggest that a correlation is diversifying beween commodities and equities. Time will tell if the relationship will return. (All bloody rather confusing. Confound it!) Conclusion at present I am finding it difficult to see a correlation between commodities and indices.

The dollar has weakend extensively against the basket of major currencies. On the daily and weekly chart we have an upward trend with currencies such as the Great British pound as at two yearly highs. They are resisting moving down so we need to consider the possibility that they will extend their rally. The Euro also has extended its move upwards as the US stock market continues to make new all time highs. The reverse of all this is if we see a sudden downtrend or major correction in the market occurring the retail sector in the forex markets which are individual people such as you and I will push for a serious Sell pressure on the pound and the euro. The COT shows that the retial sector has a massive sell on the currencies against the dollar while institutions are holding big buys. This disparity cannot continue for long periods and a correction is imminent. Other factors that may lead to an increase in value of the US dollar is any indication or hint of a interest rate rise. With this speculation can begin again. It is not probable as the FED continues to push for market increases and the tapper is having a very small effect on the markets providing a possibility of more tapering by the end of the year.

I wish all readers a good weekend and hopefully the Uranium sector will continue to rally.

SAGI:cool1::beerglass:
 

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Sorry decided to highlite the pin bars which were not done on previous chart but they are in Blue. However note that on both revious occasion the twins appeared above 1425. On this occasion its appeared around 1350.

SAGI
 

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fat panther

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Greg Guenthner coming to you from Baltimore, MD...

Greg Guenthner
Greg Guenthner Three years ago the "Nuclear Renaissance" was getting underway.

The price of yellowcake uranium was on the rise, our resource maven Matt Insley reminds us, and uranium miners were seeing their best run-up since 2007.

Of course, this was before the Japanese tsunami struck in 2011, creating a nuclear disaster that threw the industry into a tailspin. As the Fukushima disaster unfolded, the crippled Tokyo Electric Power Co. nuclear power plant led to Japan suspending its fleet of reactors.

And the nuclear panic didn't stop there...

"Uranium prices tumbled and miners quickly turned from renaissance plays into retrenchment plays," Matt explains. "Japan shuttered its entire fleet of nuclear power plants and the outlook for the yellowcake was uncertain. Heck, even Germany came out with an announcement that it too would be shutting down its entire nuclear power plant fleet."

Of course, there was fallout.

Uranium prices have slumped 47 percent since the March 2011 earthquake and tsunami, Bloomberg reports. In fact, most investors left many uranium investments for dead. But right now, we're seeing some serious signs of life in this sector...



"Flash forward three years and the uranium industry is dusting itself off," Matt continues. "Japan recently announced it would begin powering up its nuclear power plants. This is music to the ears of miners and could be a return to grace for a nuclear renaissance."

The charts don't lie. Uranium-related plays are quickly becoming some of the best performing investments of the year. You can see from the above chart that the Global X Uranium ETF (NYSE:URA) is dominating the S&P 500 so far this year, rising more than 21%...
 

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AT A GLANCE


http://stockcharts.com/h-sc/ui?c=DNN,uu[h,a]daclyyay[pb50!b200!f][vc60][iue12,26,9!lc20] DNN chart continuation PIN BAR has occurred: RECommendation: Good place for entry watch for any drop to BUY

http://stockcharts.com/h-sc/ui?s=FCUUF Fission Uranium corp Moving hard on news wait for correction to enter if possible: If bought HOLD.

http://stockcharts.com/h-sc/ui?s=CCJ Cameco correcting waiting for continuation Pin bar. BUY on bottoming out of current downside.

http://stockcharts.com/h-sc/ui?s=PALAF Paladin energy following the leader may come down to 0.50 HOLD current, Possible BUY below 0.50.
http://stockcharts.com/h-sc/ui?s=GDLNF Greenland Minerals BUY Below 0.1850 or on break out above 0.25

http://stockcharts.com/h-sc/ui?s=MWSNF Mawson resources BUY BELOW 0.46 on continuation PIN BAR occurrence.

http://stockcharts.com/h-sc/ui?s=GMO General MOLY- an integral metal for pipe lines for gas and oil as well as Core for Nuclear power reactors. HOLD if you bought this- It has not been on the list for a long time but it may show signs of coming to life. GMO has been having financing problems for its MT Hope project. Keep an eye on this one.

If you need clarification on any of the postings please post questions.

Thanks
SAGI
 

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Gold Most Bullish Since 2012 as Goldman Sees Slump: Commodities
By Elizabeth Campbell, Megan Durisin and Debarati Roy Mar 10, 2014 3:17 AM GMT 18 Comments Email Print

Gold is getting more attractive to hedge-fund managers even as Goldman Sachs Group Inc. says the metal’s surprising rally this year will soon fizzle.

Hedge funds and other speculators expanded bets on higher prices for a fourth week in New York futures and are now the most bullish since December 2012, government data show. While gold is off to its best start in six years after topping $1,350 an ounce, Goldman’s Jeffrey Currie says chances are increasing that prices will slump to $1,000 for the first time since 2009.

This year’s 11 percent rally came amid signs of weakening U.S. economic growth and Russia’s incursion into Ukraine. Investors who shunned the metal in 2013 are once more buying the biggest exchange-traded product backed by gold, with holdings poised for the first quarterly gain in a year. Hedge funds also are adding to bullish wagers on sugar, corn and coffee, driving combined wagers on a commodity rally to a record.

“The gains have been impressive,” said Chad Morganlander, a fund manager with Stifel Nicolaus & Co Inc. in New Jersey, which oversees about $150 billion of assets. “There’s been a perfect storm of geopolitical uncertainty as well as growth scares here in the U.S.”

Weekly Gains

Gold futures in New York climbed 1.3 percent last week, the eighth advance this year. The Standard & Poor’s GSCI Spot Index of 24 raw materials rose 0.6 percent, while the MSCI All-Country World index of equities increased 0.3 percent. The Bloomberg Dollar Index, a gauge against 10 major trading partners, slipped less than 0.1 percent and the Bloomberg Treasury Bond Index dropped 0.7 percent.

The net-long position in gold climbed 3.8 percent to 118,241 futures and options in the week ended March 4, U.S. Commodity Futures Trading Commission data show. Short holdings declined 15 percent to 26,321, the lowest since October. Net-bullish holdings across 18 U.S.-traded commodities rose 9.7 percent to 1.59 million contracts, the most since the data begins in June 2006.

U.S. service industries, which range from health care to finance and make up almost 90 percent of the economy, grew last month at the slowest pace in four years, data from the Institute for Supply Management showed March 5. Holdings through gold ETPs rose in February for the first time since 2012. Assets in the SPDR (GLD) Gold Trust, the biggest such fund, are up 0.9 percent in 2014 after a 41 percent plunge last year that wiped $41.8 billion in value.

Billionaire Paulson

Billionaire hedge-fund manager John Paulson, who holds the biggest stake in SPDR, posted gains in his firm’s main strategies in February partly as bets on gold paid off.

Russia said it may cut off Ukraine’s gas supplies, and the U.S. has threatened more sanctions after authorizing financial restrictions last week. The escalating tension also drove up prices for energy and grains amid concern that supplies would be disrupted.

The turmoil in Ukraine doesn’t change Goldman’s bearish view on gold, and the recent weakness in the U.S. economy is probably weather driven, not “real deterioration,” said Currie, the bank’s head of commodities research. Lower mining costs mean it’s more probable than it was six months ago that prices will drop below $1,000, he said in an interview.

February Payrolls

American employers added more workers than projected in February, indicating the U.S. economy is starting to shake off the effects of the severe winter weather, government data showed March 7. The China Gold Association says demand in the nation is poised to drop to 250 metric tons this quarter, down 17 percent from a year earlier.

“Some kind of middle-ground solution in Ukraine is probably the case at some point,” said Rob Haworth, a Seattle-based senior investment strategist at U.S. Bank Wealth Management, which oversees $115 billion. “For the two big commodities, oil and gold, we’ve probably seen relative highs for the next month. Once this geopolitical risk premium ebbs, I don’t see a lot of fundamental speculative support to push gold a lot higher.”

Bullish bets on crude oil rose 2.2 percent to 346,469 contracts as of March 4, the most ever in records going back to June 2006, government data show. West Texas Intermediate reached $105.22 a barrel in New York March 3, the highest since September. Russia is the biggest energy exporter.

Frigid Weather

Frigid weather in the U.S. boosted demand for heating fuel, while supplies of natural gas and coal will decline to six-year lows by the end of this month, government data show.

Speculators switched from a net-long position in copper to a net-short holding of 2,567 contracts. On March 7, futures tumbled 4.2 percent in New York, the biggest drop since December 2011. China’s first onshore bond-market default raised concern that demand will ebb in the top metals consumer.

While Goldman and Citigroup Inc. expected raw materials to drop this year, extreme weather drove rallies in everything from coffee to soybeans. Seventeen of the 24 commodities in the GSCI index climbed in 2014, and seven of them have posted gains of 10 percent or more.

A measure of speculative positions across 11 agricultural products rose 22 percent to 855,764 contracts, the CFTC data show. That’s the highest since September 2012.

Speculators almost tripled their net-long position in sugar to 64,740, the highest since December. Futures climbed for six straight weeks, the longest rally since 2011, amid drought in Brazil, the biggest grower and exporter.

Brazil Drought

The prolonged dry spell and excessive heat have also erased prospects for a record coffee crop in Brazil, the top producer. Prices for arabica beans, the variety favored by Seattle-based Starbucks Corp. (SBUX), surged 78 percent since December. Investors increased their net-long position to the highest since May 2011.

Bullish bets on corn swelled 81 percent to 158,122 contracts, the most in almost a year. Futures reached a six-month high in Chicago last week. On average, U.S. export sales in the past four weeks have gained fivefold from a year earlier. Urkaine’s escalating turmoil is signaling that grain buyers may be forced to purchase more American supplies, according to the U.S. Grains Council.

Investors’ hog holdings rose 6.3 percent to 69,642 contracts, the highest since November. Futures surged 32 percent this year, reaching a record March 5. A deadly hog virus continues to spread through the U.S., killing piglets and limiting the outlook for pork supplies.

“You had factors influencing commodities that weren’t expected, the weather with the energies and the grains, and then geopolitical risk with the gold and the grains,” Donald Selkin, who helps manage about $3 billion as chief market strategist at National Securities Corp. in New York, said in a telephone interview. “Weather has been so crazy this year. The question is, can prices keep going up?”

To contact the reporters on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net; Megan Durisin in Chicago at mdurisin1@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net
 

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March 15, 2014
Cameco Hits 'Start' at Cigar Lake
Publisher: U3O8.biz
Author: Vivien Diniz

It's all systems go at Cigar Lake, according to Cameco (TSX:CCO,NYSE:CCJ).

Following years of setbacks, including mine plan re-engineering, Cameco has finally flipped the switch and pressed the green button on its 50-percent-owned Cigar Lake. The Northern Saskatchewan mine is in full operation, with first ore expected to be processed at the McClean Lake mill by the end of Q2 2014.

Cigar Lake is expected to be one of the largest uranium mines in the world, with peak production of 18 million pounds per year by 2018. For 2014, the McClean Lake mill is expected to produce between 2 and 3 million pounds of uranium. Based on its anticipated full production figures, Cigar Lake is expected to account for 9 percent of global mine supply.

In a research note from Raymond James, David Sadowski states that the "tart-up of Cigar and further progress towards initial Japanese restarts are key de-risking events for the company and the sector, respectively. In our opinion, Cameco is well-suited to take advantage of improving sentiment in the space on its 'go-to' status as the largest, most liquid uranium vehicle; growing low cost mines in low risk jurisdictions, and a healthy balance sheet and contract book."

Cantor Fitzgerald sees the start up of Cigar Lake as positive not only for Cameco, but also for Denison Mines (TSX:DML,NYSE:DNN). With 22.5-percent ownership of the McClean mill, Denison will profit from the mill's revenues.

Indeed, it appears that overall, the start up of Cigar Lake has spread positive sentiment throughout the uranium sector. Add to that China National Nuclear's news that China is on track to exceed its 2020 nuclear energy target of 15 percent, and it's clear the uranium market is rife with gains. As a result, shares of several uranium producers and exploration companies got a boost during intraday trading today.

For its part, Cameco hit its highest trading level since May 2011, reaching $28.57 before settling back down at $27.63. Other gainers for the day include the United States' only conventional uranium mill operator, Energy Fuels (TSX:EFR,NYSE:UUU), which got an 8.6-percent bump, rising to $11.36; it later closed at $10.90. Athabasca Nuclear (TSXV:ASC) also gained, trading 3.57 percent higher and closing at $0.145. Kivalliq Energy (TSXV:KIV) closed up 2.17 percent at $0.235. Meanwhile, Uranium Participation (TSX:U), which is seen as an indicator of the uranium market, closed with no change for the day.

With Cigar Lake started, China needing more uranium and Japan's reactor restarts on the horizon, confidence in the uranium market seems to be piling up. It is a matter of when, not if, uranium prices will move accordingly. For now, uranium consultant UxC states that prices are still hovering at $35 per pound of U3O8.
 

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Russian Sanctions May Create Serious Supply Shortages For Platinum and Palladium

March 18, 2014 By The Doc


Any sanctions imposed by the EU and the U.S. on the export of Russian palladium group metals would create a serious supply shortage that may be difficult for industries to replace. This year will show the third consecutive deficit year in global palladium supply, according to a Bloomberg Industries survey of analysts.

Russia provided 44% of global palladium supply and 13.6% of platinum last year, according to Johnson Matthey.



From Goldcore:

Today’s AM fix was USD 1,362.50, EUR 979.37 and GBP 820.49 per ounce.
Yesterday’s AM fix was USD 1,379.00, EUR 992.37 and GBP 829.13 per ounce.
Gold dropped $14.80 or 1.07% yesterday to $1,366.20/oz. Silver fell $0.28 or 1.31% at $21.13/oz.

Yesterday, gold snapped its five session winning streak as speculators took profits as tensions over Ukraine abated somewhat. Gold declined from a six-month high after U.S. industrial production increased more than expected, leading to a reduction in safe haven demand.


Bloomberg Industries

Traders await the outcome of the two-day Federal Open Market Committee’s meeting on Tuesday and Wednesday. Janet Yellen looks set to confirm that tapering will continue as will zero percent interest rates and ultra loose monetary policies.

Gold surged in recent days due to tensions between Russia and the West. The referendum over the weekend paved the way for Russia to annex Crimea. European Union foreign ministers agreed today to freeze assets and impose visa travel bans on 21 Russians and Crimeans.

The net-long position in gold rose 4% to 123,007 futures and options in the week ended March 11, the highest since December 2012, U.S. Commodity Futures Trading Commission (CFTC) data show. Short holdings fell 20% to 21,073, the lowest since October. Last week, exchange-traded products backed by gold climbed 0.7%, the third straight gain.

Silver fell 0.6% to $21.10 an ounce. Platinum fell 0.7 percent to $1,458.40 an ounce. Palladium gained 0.5% to $768.40 an ounce. Russia is the world’s biggest producer and exporter of palladium.

The continued supply side constraints for the platinum group metals (PGMs) should be supportive of prices and indeed could lead to new record nominal highs in the coming years.



Any sanctions imposed by the EU and the U.S. on the export of Russian palladium group metals would create a serious supply shortage that may be difficult for industries to replace. This year will show the third consecutive deficit year in global palladium supply, according to a Bloomberg Industries survey of analysts.

Russia provided 44% of global palladium supply and 13.6% of platinum last year, according to Johnson Matthey.

A pick up in China’s demand for platinum group metals may offset any sanctions imposed on Russia by the U.S. and European Union countries. An increase of 26% sequentially in platinum imports by China in November suggests that domestic supplies are depleting.

Russia has typically provided about 30% of China’s palladium imports and China may need to increase imports from the country as labor disputes in South African mines continue to affect production there.

In 2012, the platinum market was in deficit for the first time in eight years, as labour disruptions in South Africa led to about 600,000 ounces of lost production. These deficits may have grown in 2013, based on consensus, and bulls argue they will continue beyond 2014 as more disruptions and closures loom. Further, auto sales performance has been strong and the start of a new ETF has led a surge of investment demand. Tightness in the PGM markets is bullish for prices and makes a small allocation of platinum and palladium prudent.


http://www.silverdoctors.com/russia...-supply-shortages-for-platinum-and-palladium/



From Sprott Asset Management:

 

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Denison Acquires International Enexco, Adds New Discovery
Thursday March 20, 2014, 3:15pm PDT
By Vivien Diniz - Exclusive to Uranium Investing News




Denison Mines (TSX:DML) is flexing its acquisition muscles once again as it eyes International Enexco’s (TSXV:IEC) Athabasca Basin uranium assets.

The company announced late Wednesday a plan of arrangement to scoop up IEC’s two uranium properties, Mann Lake and Bachmann Lake, further cementing its position as a dominant landholder in Canada’s premier uranium hotspot.
Under the terms of the agreement, Denison will acquire all the issued and outstanding shares of IEC in exchange for 0.26 of a common share of Denison. IEC’s main uranium assets include a 30-percent interest in the Mann Lake exploration project and a 20-percent interest in the Bachmann Lake joint venture.

Mann Lake is located roughly 25 kilometers southwest of the McArthur River mine and, according to the company’s news release, is seated “on trend” between Cameco’s (TSX:CCO,NYSE:CCJ) Read Lake project and Denison’s 60-percent-owned Wheeler River project in the Eastern Athabasca Basin. Mann Lake is a joint venture project owned in majority by operator Cameco (52.5 percent), IEC (30 percent) and Areva (EPA:AREVA) (17 percent). The project has seen some recent drilling activity, with 11,000 meters of diamond drilling initiated in January for just under $3 million. To date, the project’s highlight is an intersection of 2.31-percent eU3O8 over 5.1 meters, including a 0.4-meter interval averaging 10.92-percent eU3O8.

Bachmann Lake, on other hand, is 80-percent owned by Denison and will slip into place as Denison’s highest-priority uranium exploration project on account of its location and the presence of strong conductors, a graphitic basement and sandstone alteration.

International Enexco’s 100-percent-owned Contact copper project will be spun out and sold to Full Metal Minerals (TSXV:FMM) in a separate transaction.

In a Cantor Fitzgerald research note, Rob Chang describes Denison’s latest news as moderately positive, commenting, “[t]he proposed transactions further strengthens the company’s already attractive portfolio and continues to make it the acquisition of choice for anyone looking to make a big push into the Basin, or looking to put a stranglehold on it.”

New discovery

As if an acquisition was not enough, Denison announced today the discovery of new high-grade mineralization that lies on trend with McArthur River. Gryphon, as the discovery has been named, is located 3 kilometers northwest of the Phoenix deposit, and was discovered during testing of the downdip extension of weak mineralization observed in two historic holes. Drill hole 556 produced an excellent result when it cut 4.6 meters grading 9.7-percent eU3O8; it is haloed by lower-grade mineralization.

Gryphon is entirely basement-hosted, and starts 691 meters downhole, which is 200 meters below the unconformity, and is wide open both updip and downdip along strike. The new discovery lies on the highly prospective “K Trend,” which so far has only seen widely spaced holes drilled. Half a dozen have tested around the Gryphon discovery.

Commenting on the discovery, Chang said that assuming a 15-meter-by-15-meter zone of influence, hole 556 on the Gryphon discovery represents somewhere in the area of 580,000 pounds of uranium.

David Sadowski, another Raymond James analyst, said Gryphon represents a “significant discovery that is likely to grow with additional drilling and as a large boost in the high-grade prospectivity of the corridor between Wheeler River and McArthur River.”
 

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Conjuring profits from uranium's resurgence: David Sadowski



The Energy Report | March 27, 2014




It doesn't take a Ouija board to predict a rebound in the price of uranium: Global fuel stocks are insufficient, and unmet demand for uranium is growing. In this interview with The Energy Report, David Sadowski, a mining research analyst at Raymond James, explains the forces that will push the price of uranium, and the companies that are likely to benefit. Being selective, he says, will provide the greatest rewards.




The Energy Report: David, the uranium price remains below the cost of production for many producers and the forecasts for uranium production are flat. Why are you optimistic about the uranium space?


David Sadowski: In the current price environment, supply won't be able to keep up with demand growth. That's really the core to the uranium investment thesis. The cost of uranium production spans a pretty wide range, from the mid- to high-teens per pound for the cheapest in-situ leach mines in Kazakhstan, to $50–60/pound ($50–60/lb) for some of the lower-grade, conventional assets in Africa, Australia and East Asia. So we're looking at about $40 to produce your average pound of uranium. That number is climbing on cost inflation and depletion of the best mines.


The current spot price is under $36/lb, so many operations are underwater right now. That's why we've seen numerous deferrals of projects and even shutdowns of existing mines, the most significant of which was Paladin Energy Ltd.'s (PDN:TSX; PDN:ASX) Kayelekera at the beginning of February. That's on top of operations that are at risk for other reasons. In just the last few months, we've seen four of the world's largest mines owned by Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK) and AREVA SA (AREVA:EPA) shut down on operational and political hiccups. Then you look at where the supposed growth is coming from over the next several years— Cameco Corp.'s (CCO:TSX; CCJ:NYSE) Cigar Lake and China's Husab. Those are technically very challenging, too. All of this is occurring in a world no longer benefitting from a steady 24 million pounds per year (24 Mlb/year) supply of uranium from downblended Russian warheads. In short, the supply side is a basket case.


Yet demand growth keeps chugging along. European Union (EU) and North American growth perhaps isn't what it was a couple of decades ago. Pressure from competing energy sources like liquefied natural gas (LNG) in the U.S. is causing some operators to switch off their older, smaller reactors. But reactor retirements are being more than offset by new reactor construction not only in the U.S. and EU, but much more important, in Asia and in Russia. China, India, Korea and Russia are collectively constructing 70 reactors right now.


TER: Japan and the United Arab Emirates (UAE) just announced a program to cooperate in developing nuclear technology. What's the market significance of that?


DS: There is a push toward nuclear in many of these nations in the Middle East. Not only do they have pretty strong population growth and urbanization, thus electricity growth is strong, but some of those oil-rich nations have cited a preference to sell their petroleum into the international markets rather than domestically. The UAE is a very large potential source of demand growth. It is constructing two nuclear power plants at the moment and is imminently going to break ground on two more. There are an additional 41 new nuclear reactors on the drawing board in the Middle East. So in the context of 434 operable reactors today, that's a very meaningful amount of growth potential.


Demand growth remains resilient, and supply is lagging behind. In just a few years, we think this will lead to a deficit that will quickly grow to crisis levels. That's why we're bullish. Uranium prices have to go higher to incentivize more supply to meet this looming supply gap.


TER: Why hasn't that happened yet?


DS: There are just a few forces working against the price. Since the Fukushima accident in Japan, there has been a supply glut in the marketplace. There has been a decrease in demand, with a lower level of buying by some countries, like Germany, Switzerland and, of course, Japan. Additionally, some extra supply was coming out of the U.S. government. There is an extra amount coming from enrichment underfeeding. If you add all that up, there has been essentially more supply than is required, and that puts downward pressure on prices. It's caused the utilities to take a step back from the market.


TER: So do you think conditions in the market itself will materially improve? What will that look like?


DS: For us, it comes down to when the utilities start getting involved again. While the utilities have been sitting on the sidelines over the last couple of years, high-fiving each other for not buying uranium in a declining price environment, their uncovered requirements in the future have actually risen quite dramatically. At some point, they have to resume long-term contracting to cover all those needs. Japan is a key catalyst.


Japan's reactors were slowly shut down after the Fukushima accident. Right now, none of them are operating. The country's inventories have piled up to probably around 100 Mlb. Many of these utilities have asked their suppliers to delay deliveries of fresh uranium. That material ends up in the marketplace one way or another, so it's having a price-dampening effect. In late February, however, the Japanese government announced its final-draft energy plan. Japan will restart at least some of its reactors to stop spending a ludicrous amount of money on imported fossil fuels. There are other economic and environmental benefits, but it’s the country's trade balance that is really driving the restart push.


It's these restarts that we think will spur global utilities outside Japan to resume buying. The signal will be sent that Japan won't be dumping its inventories, it won't be deferring deliveries anymore and, by the way, there is not enough supply to go around in just a few years so you better start contracting again. That's what we think is going to support prices.


TER: That basic energy plan in Japan is a draft, but there is a lot of public opinion against it. You do think its prospects are good?


DS: Consensus is that the plan is going to be approved by the cabinet by the end of March. The opposition is highly regionalized, and many pockets of the country are actually very pronuclear. Nuclear, obviously, provides a lot of jobs and generates a lot of tax revenue in these regions.


TER: Raymond James has revised its uranium supply-demand balance and anticipates a growing supply deficit beginning in 2017. What is the case for investing in the industry today with a payoff so far in the future?


DS: A shortfall beginning in 2017 doesn't mean prices don't move until 2017. In fact, in a healthy market, they should have moved already. But, again, it comes back to the utilities. They view the nuclear fuel market and their own fuel requirements as a game of risk management.


Today, many utilities are sitting on near-record piles of material, so there's not a great deal of risk to the utilities with respect to supply availability over the next couple of years. However, as these groups start to look out beyond that period to 2017, 2018 and so on, they'll realize that it could become more challenging to get the uranium they need. Given that the utilities typically contract three to four years in advance, we're very close to that window where we expect buying to ramp up again and prices to move upward. Again, critically, we expect Japanese restarts to be an important catalyst in that resumption of buying. We expect first restarts in H2/14 with a half-dozen units online by Christmas. So from an investor's point of view, we're already seeing the benefit of this outlook. That's been driving the uranium equities upward over the past couple of months.


TER: You're forecasting spot uranium prices averaging $42/lb in 2014, but three months into the year, the price is still struggling to break $36. What will drive it over $42? When do you expect that to happen?


DS: We think the move this year is likely to happen toward the end of this year, as Japanese restarts spark a return of normal buying levels by utilities. The uranium price should really start moving in 2015.


TER: What indicators should investors look for in watching the uranium price trend?


DS: One of the best indicators is Uranium Participation Corp. (U:TSX). Since the fund's inception, this stock has been a remarkably accurate predictor of where the uranium spot price is headed. When Uranium Participation's share price is above its net asset value (NAV), the market is baking a higher uranium price into its valuation of the stock because the NAV is calculated at current uranium prices. For even more precision, you can divide the company's enterprise value by its uranium holdings for a rough dollar/pound estimate on what the market is ascribing. So right now, we calculate the fund is implying $40/lb, and that's over $4 above the current spot price. This is by no means a bulletproof measure, but absent a black swan event, history tells us that this could be the destination for the price in the near future.


TER: You have said you see $70/lb as the price that will incentivize new mining. What should investors do while they're waiting for the price to reach that level?


DS: Buy uranium equities. It's that simple. We think prices are going higher, so buy uranium stocks well ahead of the upswing.


TER: Do you have a target time that you expect the price to reach that level?


DS: We're looking for the price to reach $70/lb in 2016. We forecast prices flat forward at $70 from that year onward.


TER: Which mining companies are the best investment prospects in this environment? Which are the weaker ones?


DS: They say a rising tide floats all boats. We think all the uranium stocks are probably going higher, or at least the vast majority of them. But we also believe being selective will provide the greatest rewards. Most investors should be looking at names with quality assets, management teams and capital structures.


Among producers, our preferred companies are focused on relatively high-grade projects with solid balance sheets and fixed-price contracts that can buffer them against near-term spot price weakness. After all, we think the spot price could remain weak for most of the balance of 2014.


On the explorer and developer side, the theme is the same—companies with cash and meaningful upcoming catalysts and, again, in good jurisdictions. But if you can tolerate an increased level of risk, I'd be looking at companies with lower-grade assets in Africa. Those are probably the highest-leveraged names out there.


TER: What other favorites can you suggest?


DS: Our top picks at the moment in the space are Fission Uranium Corp. (FCU:TSX.V) and Denison Mines Corp. (DML:TSX; DNN:NYSE.MKT).


Fission has been a top pick in the space for some time. We have a $2/share target and a Strong Buy rating. We view Patterson Lake South as the world's last known, high-grade, open-pittable uranium asset. It has immense scarcity value. There are not very many projects in the world that can yield a drill intersection of 117 meters (117m) grading 8.5% uranium, as hole 129 did in February. There is only one project in the world where you would find an interval like that starting at 56m below surface, and that's Fission's Patterson Lake South. It's in the best jurisdiction, has a management team that has executed very well and has huge growth potential. We think that property probably hosts over 150 Mlb uranium. We would be very surprised if the company was not taken out at some point in the next two years.


Denison is another story we like a lot. We have a $2/share target and Outperform rating on the stock. Denison has the most dominant land holding of all juniors in the world's most prolific uranium jurisdiction, the Athabasca Basin in Canada, the same region as Fission Uranium's Patterson Lake South. The company will run exploration programs at 20 projects in Canada this year, including an $8 million ($8M) campaign at Wheeler River, the world's third-highest-grading deposit, which continues to grow in size, and with a new understanding of its high-grade potential uncovered last year.



Denison has a stake in the McClean Lake mill, which is also one of its crown jewels. It's the world's most advanced uranium processing facility, and it's located a stone's throw from hundreds of millions of pounds of high-grade Athabasca uranium deposits. It's a big part of the reason why we think Denison will get bought out at some point, particularly given that to permit and construct a new mill in the basin would be a herculean task. Denison has a very strong management team and cash position and, once again, big-time scarcity value. It's one of the only three North American uranium vehicles exceeding a $0.5B market cap. Denison has been and will continue to be a go-to name in the space.


TER: What is another interesting name in your coverage universe?


DS: UEX Corp. (UEX:TSX) owns 49% of the world's second-largest undeveloped, high-grade uranium asset in Shea Creek and 96 Mlb in NI-43-101-compliant resources. It's the biggest deposit with that kind of junior ownership in the Athabasca Basin. It's a strategic asset and the company's main value driver. But with the uranium price where it is, the company is also focusing on shallower assets near what is now the southern boundary of the Athabasca Basin, closer to Fission's Patterson Lake South. We're really interested to see what comes of the Laurie and Mirror projects this year.


We have a $0.60 target price on shares of UEX.


TER: Is any of that influenced by the fact that it has a new CEO?


DS: The target price is not heavily influenced by the recent change in CEO. I think the outgoing CEO, Graham Thody, did an excellent job. I'm very hopeful that Roger Lemaitre will continue that trend. Under the new CEO, I would anticipate that the company may ramp back up the level of work intensity at Shea Creek, to build on the achievements of AREVA and the UEX team as well as Thody. But given Lemaitre 's background, including his experience as head of Cameco's global exploration, I wouldn't be surprised to see UEX extend its view beyond the Athabasca Basin as a potential consolidator in some other jurisdictions that may be lagging behind a bit on valuation.


TER: You raised your target for Cameco from $25/share to $26/share. Are you expecting the rise to continue there?


DS: Despite the recent run-up in shares, we think there's a good chance of further strength. Cameco is the industry's blue-chip stock. It's the one everyone thinks of when they think of uranium. Given its size and liquidity, it is the only stock many of the big institutional fund managers can invest in. With that backdrop, we think it's going to be the first stock for fund flows as the space continues to rerate, especially as we get more confirmatory news about Japanese restarts and as Cigar Lake passes through the riskiest part of its ramp-up. We think it should be a very good 24 months for the company.


TER: What other companies do you like in the uranium space?


DS: We recently upgraded Kivalliq Energy Corp. (KIV:TSX.V) to an Outperform rating. Our target price there is $0.50/share. The company has been a laggard in the last few months, but it has Angilak, a solid asset in Nunavut with established high-grade pounds and huge growth potential. Current resources stand at 43 Mlb, but we think there is well over 100 Mlb of district-scale potential. The company is derisking the asset by moving forward with engineering work, like metallurgy and beneficiation, ahead of a preliminary economic assessment potentially later this year. We're also excited to see what comes with the newly acquired Genesis claims that sit on the same structural corridor that hosts all the mines of the East Athabasca Basin.


We also like Ur-Energy Inc. (URE:TSX; URG:NYSE.MKT), on which we have an Outperform rating and $2.20/share target price. This stock has been on a major tear. We continue to expect great things from Lost Creek in Wyoming. Early numbers from the mine, which just started up in August, have been hugely impressive to us, a testament to the ore body and execution by management. And the financial results should be equally strong, given the company's high fixed-price contracts. In all, it's a solid, low-cost miner in a safe jurisdiction, which we think should be in a good position to grow production organically or, using cash flow, buy up cheap assets in the western U.S., a region ripe for consolidation of in-situ leach uranium assets.


TER: Do you have any parting words for investors in the uranium space?


DS: I would just say we think the uranium price is going higher over the next 12–24 months. So in anticipation of that upswing, we recommend investors take a hard look at high-quality uranium stocks today.


TER: You've given us a lot to chew on. I appreciate your time.


DS: It's my pleasure, as always.


David Sadowski is a mining equity research analyst at Raymond James, and has been covering the uranium and junior precious metals spaces for the past seven years. Prior to joining the firm, David worked as a geologist in western Canada with multiple Vancouver-based junior exploration companies, focused on base and precious metals. David holds a Bachelor of Science in Geological Sciences from the University of British Columbia.


Want to read more Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.


It doesn't take a Ouija board to predict a rebound in the price of uranium: Global fuel stocks are insufficient, and unmet demand for uranium is growing. In this interview with The Energy Report, David Sadowski, a mining research analyst at Raymond James, explains the forces that will push the price of uranium, and the companies that are likely to benefit. Being selective, he says, will provide the greatest rewards.


The Energy Report: David, the uranium price remains below the cost of production for many producers and the forecasts for uranium production are flat. Why are you optimistic about the uranium space?


David Sadowski: In the current price environment, supply won't be able to keep up with demand growth. That's really the core to the uranium investment thesis. The cost of uranium production spans a pretty wide range, from the mid- to high-teens per pound for the cheapest in-situ leach mines in Kazakhstan, to $50–60/pound ($50–60/lb) for some of the lower-grade, conventional assets in Africa, Australia and East Asia. So we're looking at about $40 to produce your average pound of uranium. That number is climbing on cost inflation and depletion of the best mines.


The current spot price is under $36/lb, so many operations are underwater right now. That's why we've seen numerous deferrals of projects and even shutdowns of existing mines, the most significant of which was Paladin Energy Ltd.'s (PDN:TSX; PDN:ASX) Kayelekera at the beginning of February. That's on top of operations that are at risk for other reasons. In just the last few months, we've seen four of the world's largest mines owned by Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK) and AREVA SA (AREVA:EPA) shut down on operational and political hiccups. Then you look at where the supposed growth is coming from over the next several years— Cameco Corp.'s (CCO:TSX; CCJ:NYSE) Cigar Lake and China's Husab. Those are technically very challenging, too. All of this is occurring in a world no longer benefitting from a steady 24 million pounds per year (24 Mlb/year) supply of uranium from downblended Russian warheads. In short, the supply side is a basket case.


Yet demand growth keeps chugging along. European Union (EU) and North American growth perhaps isn't what it was a couple of decades ago. Pressure from competing energy sources like liquefied natural gas (LNG) in the U.S. is causing some operators to switch off their older, smaller reactors. But reactor retirements are being more than offset by new reactor construction not only in the U.S. and EU, but much more important, in Asia and in Russia. China, India, Korea and Russia are collectively constructing 70 reactors right now.


TER: Japan and the United Arab Emirates (UAE) just announced a program to cooperate in developing nuclear technology. What's the market significance of that?


DS: There is a push toward nuclear in many of these nations in the Middle East. Not only do they have pretty strong population growth and urbanization, thus electricity growth is strong, but some of those oil-rich nations have cited a preference to sell their petroleum into the international markets rather than domestically. The UAE is a very large potential source of demand growth. It is constructing two nuclear power plants at the moment and is imminently going to break ground on two more. There are an additional 41 new nuclear reactors on the drawing board in the Middle East. So in the context of 434 operable reactors today, that's a very meaningful amount of growth potential.


Demand growth remains resilient, and supply is lagging behind. In just a few years, we think this will lead to a deficit that will quickly grow to crisis levels. That's why we're bullish. Uranium prices have to go higher to incentivize more supply to meet this looming supply gap.


TER: Why hasn't that happened yet?


DS: There are just a few forces working against the price. Since the Fukushima accident in Japan, there has been a supply glut in the marketplace. There has been a decrease in demand, with a lower level of buying by some countries, like Germany, Switzerland and, of course, Japan. Additionally, some extra supply was coming out of the U.S. government. There is an extra amount coming from enrichment underfeeding. If you add all that up, there has been essentially more supply than is required, and that puts downward pressure on prices. It's caused the utilities to take a step back from the market.


TER: So do you think conditions in the market itself will materially improve? What will that look like?


DS: For us, it comes down to when the utilities start getting involved again. While the utilities have been sitting on the sidelines over the last couple of years, high-fiving each other for not buying uranium in a declining price environment, their uncovered requirements in the future have actually risen quite dramatically. At some point, they have to resume long-term contracting to cover all those needs. Japan is a key catalyst.


Japan's reactors were slowly shut down after the Fukushima accident. Right now, none of them are operating. The country's inventories have piled up to probably around 100 Mlb. Many of these utilities have asked their suppliers to delay deliveries of fresh uranium. That material ends up in the marketplace one way or another, so it's having a price-dampening effect. In late February, however, the Japanese government announced its final-draft energy plan. Japan will restart at least some of its reactors to stop spending a ludicrous amount of money on imported fossil fuels. There are other economic and environmental benefits, but it’s the country's trade balance that is really driving the restart push.

It's these restarts that we think will spur global utilities outside Japan to resume buying. The signal will be sent that Japan won't be dumping its inventories, it won't be deferring deliveries anymore and, by the way, there is not enough supply to go around in just a few years so you better start contracting again. That's what we think is going to support prices.


TER: That basic energy plan in Japan is a draft, but there is a lot of public opinion against it. You do think its prospects are good?


DS: Consensus is that the plan is going to be approved by the cabinet by the end of March. The opposition is highly regionalized, and many pockets of the country are actually very pronuclear. Nuclear, obviously, provides a lot of jobs and generates a lot of tax revenue in these regions.


TER: Raymond James has revised its uranium supply-demand balance and anticipates a growing supply deficit beginning in 2017. What is the case for investing in the industry today with a payoff so far in the future?


DS: A shortfall beginning in 2017 doesn't mean prices don't move until 2017. In fact, in a healthy market, they should have moved already. But, again, it comes back to the utilities. They view the nuclear fuel market and their own fuel requirements as a game of risk management.


Today, many utilities are sitting on near-record piles of material, so there's not a great deal of risk to the utilities with respect to supply availability over the next couple of years. However, as these groups start to look out beyond that period to 2017, 2018 and so on, they'll realize that it could become more challenging to get the uranium they need. Given that the utilities typically contract three to four years in advance, we're very close to that window where we expect buying to ramp up again and prices to move upward. Again, critically, we expect Japanese restarts to be an important catalyst in that resumption of buying. We expect first restarts in H2/14 with a half-dozen units online by Christmas. So from an investor's point of view, we're already seeing the benefit of this outlook. That's been driving the uranium equities upward over the past couple of months.


TER: You're forecasting spot uranium prices averaging $42/lb in 2014, but three months into the year, the price is still struggling to break $36. What will drive it over $42? When do you expect that to happen?


DS: We think the move this year is likely to happen toward the end of this year, as Japanese restarts spark a return of normal buying levels by utilities. The uranium price should really start moving in 2015.


TER: What indicators should investors look for in watching the uranium price trend?


DS: One of the best indicators is Uranium Participation Corp. (U:TSX). Since the fund's inception, this stock has been a remarkably accurate predictor of where the uranium spot price is headed. When Uranium Participation's share price is above its net asset value (NAV), the market is baking a higher uranium price into its valuation of the stock because the NAV is calculated at current uranium prices. For even more precision, you can divide the company's enterprise value by its uranium holdings for a rough dollar/pound estimate on what the market is ascribing. So right now, we calculate the fund is implying $40/lb, and that's over $4 above the current spot price. This is by no means a bulletproof measure, but absent a black swan event, history tells us that this could be the destination for the price in the near future.


TER: You have said you see $70/lb as the price that will incentivize new mining. What should investors do while they're waiting for the price to reach that level?


DS: Buy uranium equities. It's that simple. We think prices are going higher, so buy uranium stocks well ahead of the upswing.


TER: Do you have a target time that you expect the price to reach that level?


DS: We're looking for the price to reach $70/lb in 2016. We forecast prices flat forward at $70 from that year onward.


TER: Which mining companies are the best investment prospects in this environment? Which are the weaker ones?


DS: They say a rising tide floats all boats. We think all the uranium stocks are probably going higher, or at least the vast majority of them. But we also believe being selective will provide the greatest rewards. Most investors should be looking at names with quality assets, management teams and capital structures.


Among producers, our preferred companies are focused on relatively high-grade projects with solid balance sheets and fixed-price contracts that can buffer them against near-term spot price weakness. After all, we think the spot price could remain weak for most of the balance of 2014.


On the explorer and developer side, the theme is the same—companies with cash and meaningful upcoming catalysts and, again, in good jurisdictions. But if you can tolerate an increased level of risk, I'd be looking at companies with lower-grade assets in Africa. Those are probably the highest-leveraged names out there.


TER: What other favorites can you suggest?


DS: Our top picks at the moment in the space are Fission Uranium Corp. (FCU:TSX.V) and Denison Mines Corp. (DML:TSX; DNN:NYSE.MKT).


Fission has been a top pick in the space for some time. We have a $2/share target and a Strong Buy rating. We view Patterson Lake South as the world's last known, high-grade, open-pittable uranium asset. It has immense scarcity value. There are not very many projects in the world that can yield a drill intersection of 117 meters (117m) grading 8.5% uranium, as hole 129 did in February. There is only one project in the world where you would find an interval like that starting at 56m below surface, and that's Fission's Patterson Lake South. It's in the best jurisdiction, has a management team that has executed very well and has huge growth potential. We think that property probably hosts over 150 Mlb uranium. We would be very surprised if the company was not taken out at some point in the next two years.


Denison is another story we like a lot. We have a $2/share target and Outperform rating on the stock. Denison has the most dominant land holding of all juniors in the world's most prolific uranium jurisdiction, the Athabasca Basin in Canada, the same region as Fission Uranium's Patterson Lake South. The company will run exploration programs at 20 projects in Canada this year, including an $8 million ($8M) campaign at Wheeler River, the world's third-highest-grading deposit, which continues to grow in size, and with a new understanding of its high-grade potential uncovered last year.


Denison has a stake in the McClean Lake mill, which is also one of its crown jewels. It's the world's most advanced uranium processing facility, and it's located a stone's throw from hundreds of millions of pounds of high-grade Athabasca uranium deposits. It's a big part of the reason why we think Denison will get bought out at some point, particularly given that to permit and construct a new mill in the basin would be a herculean task. Denison has a very strong management team and cash position and, once again, big-time scarcity value. It's one of the only three North American uranium vehicles exceeding a $0.5B market cap. Denison has been and will continue to be a go-to name in the space.


TER: What is another interesting name in your coverage universe?


DS: UEX Corp. (UEX:TSX) owns 49% of the world's second-largest undeveloped, high-grade uranium asset in Shea Creek and 96 Mlb in NI-43-101-compliant resources. It's the biggest deposit with that kind of junior ownership in the Athabasca Basin. It's a strategic asset and the company's main value driver. But with the uranium price where it is, the company is also focusing on shallower assets near what is now the southern boundary of the Athabasca Basin, closer to Fission's Patterson Lake South. We're really interested to see what comes of the Laurie and Mirror projects this year.


We have a $0.60 target price on shares of UEX.


TER: Is any of that influenced by the fact that it has a new CEO?


DS: The target price is not heavily influenced by the recent change in CEO. I think the outgoing CEO, Graham Thody, did an excellent job. I'm very hopeful that Roger Lemaitre will continue that trend. Under the new CEO, I would anticipate that the company may ramp back up the level of work intensity at Shea Creek, to build on the achievements of AREVA and the UEX team as well as Thody. But given Lemaitre 's background, including his experience as head of Cameco's global exploration, I wouldn't be surprised to see UEX extend its view beyond the Athabasca Basin as a potential consolidator in some other jurisdictions that may be lagging behind a bit on valuation.


TER: You raised your target for Cameco from $25/share to $26/share. Are you expecting the rise to continue there?


DS: Despite the recent run-up in shares, we think there's a good chance of further strength. Cameco is the industry's blue-chip stock. It's the one everyone thinks of when they think of uranium. Given its size and liquidity, it is the only stock many of the big institutional fund managers can invest in. With that backdrop, we think it's going to be the first stock for fund flows as the space continues to rerate, especially as we get more confirmatory news about Japanese restarts and as Cigar Lake passes through the riskiest part of its ramp-up. We think it should be a very good 24 months for the company.


TER: What other companies do you like in the uranium space?


DS: We recently upgraded Kivalliq Energy Corp. (KIV:TSX.V) to an Outperform rating. Our target price there is $0.50/share. The company has been a laggard in the last few months, but it has Angilak, a solid asset in Nunavut with established high-grade pounds and huge growth potential. Current resources stand at 43 Mlb, but we think there is well over 100 Mlb of district-scale potential. The company is derisking the asset by moving forward with engineering work, like metallurgy and beneficiation, ahead of a preliminary economic assessment potentially later this year. We're also excited to see what comes with the newly acquired Genesis claims that sit on the same structural corridor that hosts all the mines of the East Athabasca Basin.


We also like Ur-Energy Inc. (URE:TSX; URG:NYSE.MKT), on which we have an Outperform rating and $2.20/share target price. This stock has been on a major tear. We continue to expect great things from Lost Creek in Wyoming. Early numbers from the mine, which just started up in August, have been hugely impressive to us, a testament to the ore body and execution by management. And the financial results should be equally strong, given the company's high fixed-price contracts. In all, it's a solid, low-cost miner in a safe jurisdiction, which we think should be in a good position to grow production organically or, using cash flow, buy up cheap assets in the western U.S., a region ripe for consolidation of in-situ leach uranium assets.


TER: Do you have any parting words for investors in the uranium space?


DS: I would just say we think the uranium price is going higher over the next 12–24 months. So in anticipation of that upswing, we recommend investors take a hard look at high-quality uranium stocks today.


TER: You've given us a lot to chew on. I appreciate your time.


DS: It's my pleasure, as always.


David Sadowski is a mining equity research analyst at Raymond James, and has been covering the uranium and junior precious metals spaces for the past seven years. Prior to joining the firm, David worked as a geologist in western Canada with multiple Vancouver-based junior exploration companies, focused on base and precious metals. David holds a Bachelor of Science in Geological Sciences from the University of British Columbia.


Want to read more Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.


Source: Tom Armistead


DISCLOSURE:
1) Tom Armistead conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.




2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Fission Uranium Corp. and UEX Corp. Streetwise Reports does not accept stock in exchange for its services.


3) David Sadowski: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview.



Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview. This interview took place on February 28, 2014. All ratings, facts and figures are reflective of the date of the interview.




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[h=1]Stephan Bogner and the rise of a Euro-Chino-Russian superpower[/h]The Mining Report | April 2, 2014

Stephan Bogner, mining analyst with Rockstone Research and CEO of Elementum International, views the crisis in Crimea as the beginning of a larger global power shift east of the Atlantic. In this interview with The Mining Report, Bogner details what these shifting power dynamics will mean for the commodities market. And take heed—gold and silver may continue to make gains, but uranium, potash and rare earths are the true wave of the future.


The Mining Report: In his recent interview with The Gold Report, Robert Cohen said that now that Crimea has joined Russia, the crisis in Ukraine has run its course, which is why the price of gold has dropped. As a European mining analyst, do you agree with Cohen's assertion?

Stephan Bogner: In my view, high-level Wall Street players are orchestrating the gold price drop as a means of making people believe everything is in order again. They're attempting to convey that the crisis premium has been deducted from the gold price after its rise in the wake of the Crimea crisis, but I wouldn't bet on that.

Remember when gold rose from $300/ounce ($300/oz) to almost $400/oz in 2002-2003 due to the widely propagated Iraq War premium? When the war was over in early 2003, the price fell back to $320/oz. People used the same argument then: the gold price is dropping because the crisis is over. In a few months, the price rose to $500/oz for no reason the experts could explain.

Don't bet on TV experts and commentaries. Bet on your gut feeling, especially when it's getting quiet and experts are going silent.

TMR: What is the general sentiment among the Germans regarding the situation in Ukraine?

SB: According to large polls in Germany, most Germans think that not only Russia, but the Ukrainian government, the EU and the U.S. all have made mistakes and share the blame, and that the crisis is not our business and we shouldn't get too involved. One out of two Germans thinks that we should only use diplomatic measures and only every fourth German thinks that sanctions against Russia would be appropriate. That said, I doubt most Germans know what the full consequences that sanctions against Russia would bring us.

TMR: It seems the west is unwilling to do much to help Ukraine, apart from sanctions against Russia. Is this emblematic of a power shift from west to east?

SB: According to these polls, 75% of Germans distrust Putin and at the same time think that he is "clever and strong", but more than 60% of Germans doubt that Obama can solve this conflict. The traditional thinking that sees Russia as mainly negative and the U.S. as mainly positive is breaking apart. The NSA scandal and George W. Bush laid the foundation for the anti-American impulses that are on the sharp rise again. Vladimir Putin's power and influence have shifted the balance of power from west to east, although we are too proud to fully admit that.

European politicians should know that sanctions against Russia would be useless and counterproductive, to say the least. Germany and especially other European countries are far too dependent on Russian gas supplies and other commodities to threaten Russia with sanctions. We must acknowledge our fault in deciding to abandon all nuclear power plants in Germany, as we are now paying the price for our energy dependence. Putin must be doubling over with laughter about the proposed sanctions, because he's smart enough to understand that the threat of sanctions is merely chest-beating, as we attempt to convince our own citizens that we still have some influence.

Europe should try to get on the same page with Russia. I believe this can evolve to be a good thing, as Europe and Russia can become a happy new superpower, especially as we partner more with China. I rather want to see Europe team up with Russia and China to replace U.S. dollar-based transactions with what I envision as a gold-backed monetary system.

Russia can benefit immensely being strategically positioned in the heart of both and sitting on vast amounts of natural resources that can be fed to Europe and China. Ultimately, I see Russian, European and Chinese economies flourishing, while the U.S. inflates itself and becomes dependent on this new superpower.

I believe that Russia will successfully merge with Ukraine. I also believe that this crisis was the beginning of currency and commodity wars that may escalate. After years of depreciating commodity and gold prices, during which the smart accumulated as much as possible, the tide is turning and higher prices are on the forefront.

TMR: How will an alliance of this magnitude and the prospect of currency and commodity wars impact the U.S. economy?

SB: Russia may already be quietly backing away from the dollar. In late 2013, Russia held some $138 billion ($138B) in U.S. treasuries—a fair amount, yet dwarfed by the more than $1 trillion in reserves held by both China and Japan.

Russia is not in a position to take down the U.S. bond market on its own, yet it may have a significant impact when it decides to sell. Russia will have good reason to sell U.S. debt and U.S. stocks, and possibly pursue other means of impacting the globalized capital markets, if the U.S. continues to act so aggressively. Sales by Russia also could trigger others into selling. If the U.S. imposes sanctions against Russia, Chinese officials may start to get the notion that they are too dependent on the dollar, which could lead China to sell U.S. treasuries.

On the other hand, it would be good for the U.S. in the long run if foreign countries dumped their U.S. treasuries and turned away from the dollar. The U.S. economy is too dependent on foreigners buying its debt. I am certain that Russia, and maybe China, are already reducing their exposure to U.S. debt and are ready to shoot back aggressively with massive selloffs if the U.S. goes far out on a limb. This would bring about a falling dollar and a rising gold price. I would rather bet on that than anything else.

TMR: And how will that affect the price of gold?

SB: In the short term, the gold price can fall due to manipulation, but in the mid- to long-term, betting on gold is a sure thing because Russia and China are betting on gold as well. They both know that the fiat system hates gold and they know that once the gold market has dried up or if the U.S. threatens them, they can let the gold price explode.

TMR: Iraq bought 36 metric tons of gold recently, valued at $1.6B, the biggest gold purchase by a sovereign power in three years. Is this part of the shift that you are talking about?

SB: Yes, I believe so.

TMR: After a strong start this year, the gold price is seeing diminishing support above $1,300/oz. Is the bull simply resting or has the bear returned? What would you say to an investor who is still uneasy after a three-year bear market in gold equities and to a lesser extent gold itself?

SB: I would say don't worry. Be happy with gold and silver. Their times will come, as certainly as there is an "amen" at church.

TMR: Where is gold safer, in your mattress or in cash in the bank?

SB: That is the question that high-level players on Wall Street want you to think about. The orchestrated bear market has become a self-fulfilling prophecy, with China and Russia probably also manipulating the gold price to the downside as they are all purchasing from people who are asking themselves this question—people who are selling or are no longer buying.

In the end, only the brave will be among the winners—those who never doubted that such a question is nothing but a trap to steal your gold and silver and attempt to force a bear market.

TMR: Which gold and precious metals equities are you following at Rockstone Research?

SB: I like Klondex Mines Ltd. (KDX:TSX; KLNDF:OTCBB), because it was able to acquire the Midas mine and mill from Newmont Mining Corp. (NEM:NYSE). This gives Klondex a competitive edge in Nevada that the market has not yet fully understood. The company's management team is among the best in the entire industry and I expect a steady increase in output from now on.

You want to hold high-grade gold in your portfolio in difficult market times. Nevada is the best place in the world to explore and mine for gold. That is also why I like Gold Standard Ventures Corp. (GSV:TSX.V; GSV:NYSE). Dave Mathewson, the former Newmont chief geologist, knows that there are elephant-sized gold deposits—in excess of 20 million ounces (20 Moz)—on the company's district-sized property. The latest Pinion acquisition adds tremendous size and potential for large gold deposits to be discovered in the next months and years.

Keep NOVAGOLD (NG:TSX; NG:NYSE.MKT) on your radar as well. Once gold prices pick up, this company will be ready to either advance its Donlin property into a mine or be taken out. I also highly recommend Columbus Gold Corp. (CGT:TSX.V) and have no doubt of its success. The management team is determined to bring this highly prospective deposit in production just when I anticipate gold prices will have recovered substantially. It's all about timing and Columbus is one of the few gold development companies that is right on track.

I'm very bullish on gold and silver in general. However, these markets are among the most manipulated and thus are riskier, especially now, when it is unclear if the market is in recovery mode or if further selloffs may cause the gold price to fall to $1,000/oz. Nonetheless, I follow a few precious metals companies because I like them fundamentally.

TMR: What about silver equities?

SB: I admire IMPACT Silver Corp. (IPT:TSX.V) for having a management team that knows how to overcome the current depressed state of the market. It will prosper above average once markets have recovered.

The same applies to Santacruz Silver Mining Ltd. (SCZ:TSX.V; 1SZ:FSE). The company has brought Rosario into production with low capital expense (capex) and sound profit margins during bad market conditions, hence Santacruz will prosper nicely when silver prices are on the rise.

Golden Arrow Resources Corp. (GRG:TSX.V; GAC:FSE; GARWF:OTCPK) has already identified a silver resource greater than 100 Moz, and I’m positive that will increase.

But really, I'm far more bullish on uranium, potash and rare earths at the moment. To me, they have virtually no downside risk now and are more likely to rise from today's rock bottom prices than gold and silver. For example, the entire junior- and senior-uranium market is anticipating the beginning of a strong upswing in uranium prices from the current rock-bottom level where it has been holding for quite some time now.

TMR: What is the case for uranium?

SB: I think uranium has one of the best outlooks of all commodity markets right now and my favorite explorer is Lakeland Resources Inc. (LK:TSX.V).

The Lakeland stock has more than doubled since December and other major uranium companies have been on the rise since late 2013 as well. Denison Mines Corp. (DML:TSX; DNN:NYSE.MKT) is up 30%. Cameco Corp. (CCO:TSX; CCJ:NYSE) is up 40%. Fission Uranium Corp. (FCU:TSX.V) is up 60%.

TMR: Isn't this trend largely based on the Athabasca Basin area play and Fission's success with a new type of uranium deposit there?

SB: Of course, Fission has more than tripled its stock price because of its discovery of an amazing deposit. The price increases for Denison, which isn't successfully exploring anything, and for Cameco, a large senior mining company, demonstrates that the entire market is already anticipating a move up in uranium prices, I would argue.

TMR: Do you follow other uranium plays?

SB: I'm pretty much focused only on the Athabasca Basin. I wouldn't want to look in any other jurisdiction than Canada for political and jurisdiction reasons.

I'm looking more at companies with the potential to become the next Fission. Lakeland, with its large portfolio and strategy of forging joint venture (JV) partnerships, is unparalleled in the Athabasca Basin. It will have one of the largest drilling programs in the entire Athabasca Basin in 2014.

TMR: Any other names you would like to mention?

SB: NovX21 Inc. (NOV:TSX.V) has patented a clean platinum group metals (PGM) recovery technology that can be implemented anywhere. The technology uses little energy and creates no pollution. It has a low capex, offers a quick payback and has a gross margin in excess of 30%.

In the U.S. and Canada alone, more than 12 million (12M) catalytic converters are recycled every year. Worldwide, there are some 50M used cars, but only half of their catalytic converters are recycled. Today, PGMs are usually recovered using capital-intensive smelters. These smelters employ a lot of energy to melt metals between 1,500–3,000 degrees Celsius, generating a lot of pollution.

The NovX21 pilot plant in Québec has been running in an outstanding manner for two years now, making this a great investment opportunity with limited risks. Its process will become the gold standard for PGM recycling.

TMR: Most investors consider rare earth elements (REE) an afterthought at this point. What are you seeing?


SB: The REE exploration and mining space is probably the most difficult commodity market for investors to understand. Yet, I believe that once the market understands how to evaluate an REE deposit, the few really promising REE stocks will appreciate in an outstanding manner. In December 2013, we published two articles on REEs, and named Commerce Resources Corp. (CCE:TSX.V; D7H:FSE; CMRZF:OTCQX) as our favorite in the REE space. That stock has more than doubled since December.


Most REE prices have already hit bottom and are beginning to recover. An upswing in market prices would lift many REE stocks strongly. However, there are few promising development projects and my research explains how to find them.


TMR: Does Commerce have the capital needed to be at the right stage once prices start to rebound?


SB: No, but it doesn't need to, because it took out most of the risk already. It is in the prefeasibility stage. The company is looking for a partner that is capital-strong before it takes the next risks and brings the Ashram project into production. I have no doubt at all that Commerce will find a partner and that Ashram will be among the next development projects to be put into production.


TMR: Zimtu Capital Corp. (ZC:TSX.V) holds a significant position in Commerce. Will Zimtu be able to help Commerce get the money it needs to advance its projects?


SB: Well, Zimtu has been backing up Commerce with the right people ever since.


TMR: Zimtu is up about 40% year-to-date. Is there much upside left?


SB: Oh yes. Many of its core holdings have more than doubled year-to-date. For example, Commerce Resources has doubled and Western Potash Corp. (WPX:TSX.V) has more than doubled year-to-date.


Zimtu is one of my overall top picks if the mining market recovers. Its share ownership and diversified investment portfolio offer unparalleled upside to a wide variety of commodities, including potash, uranium, REEs, tantalum and niobium, copper, zinc, graphite and gold. The company consistently adds new positions and commodities through property transactions, as well as creating publicly listed companies. And Zimtu is probably the only publicly traded company in which investors can participate in the company-building process as it is a second-to-none prospect generator that is all about people.


Zimtu has been in this business for more than a decade and has established a reputation that is paying off now. Zimtu's share structure is so tight, with only 11M shares in the market and no warrants outstanding, that its stock is poised to move up in an unparalleled fashion. Management has been very diligent in structuring this company and its shareholder base. I believe that its stock will thrive once the market understands that Zimtu is not only about its core investment holdings but more about future transactions as that is where tremendous value is created and when shareholder value is maximized as no other company in the resource space is capable of doing such on a regular basis.


Zimtu has share holdings in more than 40 publicly traded companies and numerous private companies that are on the verge of going public. Kapuskasing Gold Corp. (OLA:TSX.V) is a good recent example. Zimtu already holds some 2.5M shares and 1M warrants, with an exercise price of $0.10 until 2019. This kind of transaction, made at the earliest-possible moment, is when the most upside can be achieved with little downside risk. Kapuskasing's stock was halted at $0.07 in late February and resumed a few days ago, trading 1M shares as high as $0.18.


The company acquired the Borden North and Rollo properties near Chapleau in Ontario. The Borden North Property is on the southern flank of the Kapuskasing structural zone, approximately 50 kilometers northeast of Probe Mines Limited's (PRB:TSX.V) Borden gold deposit, which was discovered in 2010 and hosts a multimillion ounce gold zone. The Probe exploration team, along with prospector Mike Tremblay, was the recipient of the Ontario Prospector Association's "2013 Ontario Prospector Award" for the Borden gold discovery. Mr. Tremblay joined the advisory board of Kapuskasing Gold after it acquired these two properties. As you see, Zimtu is all about people and creating opportunities.


Zimtu also created Pasinex Resources Ltd. (PSE:CNX) and holds around 10M shares trading at ~$0.05 right now. Imagine the impact on Zimtu if a stock like Pasinex takes off. The outlook for Pasinex turned from bad to fabulous a few weeks ago, as this company holds high-grade zinc properties in Turkey that can be put into production fairly quickly because its joint venture partner is the Turkish mining company, Akmetal AS. As you may know, exploration companies active in Turkey had a really tough time recently, as all exploration projects were forced to be put on hold due to a decree by the Government of Turkey denying any exploration permits. Just a few weeks ago, the Turkish Government issued more than 50,000 exploration permits. Thus, the devalued share prices of exploration companies active in Turkey are likely to recover now, no matter what the gold price or overall commodity market may do. These are the stories to follow as individual market conditions have created opportunities with limited downside risk and rosy outlooks.


TMR: Do you have one final thought on this commodities environment?


SB: Think of commodities prices like a rubber ball floating on water—the deeper you push the ball down into the water, the higher it's going to jump when it finally surfaces.


TMR: Thanks for your time, Stephan.


Stephan Bogner is mining analyst at Rockstone Research, where he has analyzed capital markets and resource stocks for more than 11 years. He is also CEO at Elementum International AG of Switzerland. Mr. Bogner earned his degree in economics in 2004 at the International School of Management in Dortmund, Germany. He spent five years in Dubai brokering and reselling physical commodities and now resides in Zurich, Switzerland.


Want to read more Mining Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent interviews with industry analysts and commentators, visit The Mining Report homepage.


Source: Brian Sylvester


DISCLOSURE:
1) Brian Sylvester conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.


2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Klondex Mines Ltd., Gold Standard Ventures Corp., NOVAGOLD, Columbus Gold Corp., Fission Uranium Corp., IMPACT Silver Corp., Santacruz Silver Mining Ltd., NovX21 Inc., Pasinex Resources Ltd., Commerce Resources Corp. and Zimtu Capital Corp. Streetwise Reports does not accept stock in exchange for its services.


3) Stephan Bogner: I own, or my family owns, shares of the following companies mentioned in this interview: Zimtu Capital Corp., Commerce Resources Corp., Western Potash Corp., Lakeland Resources Inc., Kapuskasing Gold Corp., Pasinex Resources Ltd., NovX21. I personally am, or my family is, paid by the following companies mentioned in this interview: Zimtu Capital Corp. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.


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fat panther

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Good opportunity

Uranium Investing News Wants Your Input
Friday April 4, 2014, 11:35am PDT
By Vivien Diniz - Exclusive to Uranium Investing News

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Dear Reader,

I want to share some exciting news with you and ask for your help.

We are preparing a round table discussion with some of the industry’s most influential executives and are offering you the chance to participate

As you may be well aware, we are possibly on the cusp of a uranium renaissance. With that in mind, we are seeking the opinion of Thought Leaders in the sector and want to make sure they answer your questions.

If you were sitting with an analyst from a major financial institution, an executive from a major uranium company or a world class uranium geologist what would you ask?

Please submit any uranium market-related questions you may have to editor@resourceinvestingnews.com
Stay tuned for more information on the event and how you can join the meeting.

Thanks for reading,

Uranium Investing News
 

SAGI

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COFFEE WITH CARROT HEAD!

JUST A RECAP OF FUNDAMENTALS ON GOLD AND URANIUM.



Good Morning! It has been some time since I posted on the thread. In the last four weeks since my last post, there has been literally nothing significant that has changed in the uranium sector. However the fundamentals are getting stronger for the price to move up.

In the past few weeks Russia and Ukraine had a tiff. This is significant because Russia’s oil and gas partly passes through Ukraine to the West. A crisis in this area naturally leads to volatility in the price of crude oil and gas. It was worth noting that gold did not rise as significantly as anticipated in the wake of the Ukranian crisis nor did the price of the stock indexes go down significantly.

Oil and gas are more significant for Germany which decided after Fukushima to close all its nuclear power plants in 2022. This leaves the country susceptible to energy price increases without the ability to reduce them based on an inability to produce energy locally. This can lead to cost of production within the country to rise significantly enough for industries to become less competitive in the world markets and thus making their products prohibitive.

The USA has its own resources and while there are significant imports of oil they do have significant resources at hand to reduce the impact of price hikes. The USA in the last few years has taken significant measures to increase fracking gas and perhaps even oil as they do have considerable oil reserves that can be released through the fracking system.

Germany on the other hand does not have any significant natural resources such as oil and gas and is dependent on its western and eastern neighbors for importing them. A considerable electricity import will come from countries such as France which have continued to depend on Nuclear power. France is the largest producer of electricity through nuclear power. As other countries that have recently joined the EU will continue to progress we will see an increase in the demand for both electricity and fuel. These countries for the lack of suitable infrastructure will in part import their energy either from Russia or from one of the other countries in Europe.

Countries such as the UK have taken the option to increase their reliance on Nuclear power with a view that there will be a significant increase in the demand for electricity in the next fifty years with population increase as well as a change in the historical demand for vehicles from pure fuel based internal combustion engines to hybrid and significantly rechargeable vehicles as well as in anticipation of oil supply eventually showing significant reduction in reserves world wide.

With this in mind it also means that both miners and explorers of uranium have strong reasons to continue to raise capital in order to continue an aggressive drive towards exploration and eventually production of uranium which will be required in significant quantities. Investors in these companies for the moment are cautious and to add to the cocktail there are very few significant finds of reasonably priced uranium deposits around the world. There have been two kinds of deposits which have been found world wide with the exception of the USA. Either large scale multiple mineral deposits which are diluted or highly concentrated but deep deposits. Out of these there are very few that are at a level of exploration where they have the capacity to move to become producers. Large deposits which are diluted in concentration have been suffering for the last three years as the price of uranium dropped significantly enough for many to either cut down production or to even shut down in some cases.

At the same time we are seeing indications that Japan may be on the verge of starting up at least part of its Nuclear power plants perhaps ten or more and this is a good turning point for Uranium. China too continues to construct power plants as does India and the Middle East. Dubai has already begun one and are in the process of constructing a second. They are more acutely aware of what happens when oil and gas reserves run out. Dubai is almost entirely dependent on trade, tourism and transport. They have a 5% dependence on oil and therefore their income from it is not significant enough to make an impact, at the same time it has continued to grow its infrastructure in leaps and bounds, and though many of its neighbors have significant quantities of oil and gas reserves I believe they are watching Dubai as a test for the future of the middle east and its ability to succeed without oil. Historically they have survived for thousands of years without oil through trade but many of these supplies are now of no significance or have been eradicated completely. At one time the middle east’s trade was significant in spices, ivory and slaves. Two of these do not exist officially and the third is no longer important as transport routes have changed. Dubai is probably the only one that is depending an everything but oil and gas in this area of the middle east and yet have confidence that demand for power will continue to increase, to continue to build power stations. This is an indication that many other countries also have long term plans for expansion and growth and in anticipation of this will also plan their power requirements and address these. While other countries in the middle east continue to enjoy the benefits of oil Dubai is striding away to begin another era of trade. They already have good relations with the near east but in recent years have developed good ties with the far east as well.

Additionally we have now had the dilution of war heads better known as the mega tons to mega watts program that has now stopped reducing supply by about 25 million pounds.

Uranium deposits geopolitical locations make a significant difference due to the metals sensitivity to security issues. Some of the deposits are in politically unstable locations and it’s a double edged sword because these deposits potentially have the ability to go sooner to production than those in stable geopolitical areas. The licensing laws in stable countries are strong enough to take at least a few years for approval and these turn into a decade easily if not two before a mine will actually begin production. This is especially true for larger or more concentrated deposits. The Anthabasca basin is known for its high concentration deposits, but other areas of large deposits are significantly lower in concentration such as the Niger, Botswana, Namibia and Australia. Russia continues to have strong ties with Khazakistan which is a large producer but the majority of this produce will end up in Russia. All this leads to a possibility of a shortfall in the supply in short and medium term. Australia has some of the largest deposits in the world two mines are significant one owned by Rio Tinto knows as the Ranger mine currently not in production due to a mishap there and Bhp’s Olypic dam which has put its expansion plans on hold due to the drop in price of commodities as its mine is multi mineral mine and despite uranium production is one of the largest it makes up a small part of the mine in terms of other minerals. Further stoppages have occurred at Areva’s mines in the Niger. While the prices remain low there is very little motivation by these companies to add more production if their current contracts are being fulfilled.

All of the above provides reasons a for a possible move of spot prices in the coming two years to a higher level.

This forces investors interested in uranium to look at potential producers, the majority of which are in Saskatchewan and Anthabasca in Canada. There are strides being taken in areas such as Botswana where A-cap is expected to go into production in 2017 and Namibia where both Rio Tinto and Paladin resources have operating low concentration deposits.

It also makes sense to look at potential producers whose costs of production are going to be as low as possible. Other companies are simply continuing to explore. Of all of the companies I have come across I believe that the cheapest producer out there is Paladin. They have one mine operating while another remains under maintenance, and several significant deposits in both Australia and Canada.

In my opinion it is always better to go with producers and even within that it is better to go with leaders. The leader in the Uranium sector is Cameco. This is the company with the richest mines in the world. They have the monopoly on finding high concentration deposits and for the foreseeable future they will remain the leader.

If you want diversification within uranium there is no better company to go for than Areva. It does have problems and recently was taking losses. It reduced its assets around the world significantly and has concentrated on power plant assembly and construction as well as mining. Areva is in partnership with Cameco on several projects, and they have several mines around the world including two in the Niger.

There are a number of other uranium producers but very few are pure plays. The largest pure play continues to be Cameco, followed by Areva, then Paladin. There are a few smaller producers such as energy fuels, Uramin and Uranertz but none as large as the ones above. Good explorers with significant deposits are Dennison, Greenland minerals, Fission Uranium, and A-cap resources. All of these can be producers but it will take at least 5 years to ten years for them to come into production. Factoring that there is an anomaly occurring in the demand supply equilibrium that will come to a head if Japan begins some of its reactors and reduces the outflow of over supply of uranium into the markets, this will leave only five to ten producers to make up for the shortfall that we anticipate. Since time is not on the side of uranium and BHP as well as Rio have reduced their production it will take them at least a year to revamp this and this will be the time when stocks such as Paladin will rise up very quickly. The estimated time for this is between end of 2014 and middle of 2016. Paladin depite its losses and medium term loans will continue to produce and can bring back its east African deposit into production very quickly. The deposit that will possibly come on early is the A-cap deposit as they have already announced that they will begin production in 2017. There is no anticipation of problems in this as it is a shallow deposit, low concentration and there is the added benefit of coal in or near the same deposit. This will help to reduce the cost of mining and cost price is expected to be between 25 dollars and 35 dollars per ton of rock. The stock currently is worth 5 cents per share and we are considering risking taking a dab in it. If we see unusual volume this can be considered a strong indicator. It has to break past 8 to 10 cents to confirm that it is in up trend. The next level to consider for resistance is around the 22 cents mark followed by the 35 cents mark. A push above this price will indicate a strongly trending price.

For the time being based on recent drops here are some of the support areas for some of the stocks in order to give guidance for a better buy price.

FCU.V- fussion uranium has been driven higher based on its recent findings and the merger with its partner. There are two good support areas for FCU one is at 1.55 and another at 1.43. A break below these two areas can see it retest the 1.20 area and stability at this area can lead to a rise again. There are several minor support areas for the price between 1.43 and 1.20. 1.30 is a good half way point.

CCO.TO- Cameco can be on the verge of making a down turn and retest the 25.50 area if this breaks below we can possibly get an opportunity to get in at 22.50.

PDN.TO- Paladin is retesting currently the 47 cents area but if this support breaks we can see it retesting the .4250 area. PDN is currently in a short term down trend so please wait for a good opportunity; while it is tempting to purchase at the lower prices I prefer to wait for the stocks to begin trending upwards before purchasing.

DML.TO- Dennison like Cameco is making a U turn and heading a little downwards. A possible retesting of the 1.64 area and a break below this can see the 1.45 area being retested.

In conclusion there appears to be a correction in place for now and we know that old phrase of; “Sell in May and come back on Labour day” It is unfortunate but there is always a silver lining somewhere in the cloud. We are getting too near to the calender area of summer where we historically do see a downturn in stock prices. It is better therefore to await another opportunity now to buy in.

My suggestion is that if you did buy earlier in the year this would be a good time to to take some short term profits and await another entry, perhaps in June or July when stocks have reached their bottoms. Too many times I have been burnt at this time of the year. The fundamentals remain strong but it is vital to understand when to enter the markets so as to be able to make profits. Gold continues to hold value for many I predicted that it would drop in march and find lows, subsequently I also stated that it would drop in June and this would be a good opportunity to purchase gold. Gold did drop in March but not to the extent I was hoping for. I had hoped that it would retest the 1185 mark; alas it has not. Let us wait and see if the current drop will result in it breaking below these support areas. If it does we may yet see a retest of the 1180 area and perhaps as low as just below 1100 and even below 1000 this summer. If it does this would be a fine opportunity to purchase physical gold.

Have a great trading week.

SAGI:cool1::beerglass:
 

fat panther

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Uranium Participation Corp (TSX:U) is the only physically backed uranium fund. The company’s primary objective is to achieve appreciation in the value of its uranium holdings through increases in the uranium spot price. In December, Raymond James analyst David Sadowski made a case for investing in UPC, a fund managed by the management team responsible for Denison Mines (TSX:DML), explaining that the fund offers investors with “great exposure to a uranium price rebound without the typical exploration, development or mining risks associated with some of the other equities.”

After having completed a $57.6 million bought deal financing on February 6, UPC has made its first purchase of uranium in four years. The company announced on Friday that it would use a portion of bought deal financing to purchase 850,000 pounds of U3O8 at an average cost of US$34.74. UPC notes that 250,000 pounds have already been delivered, the remainder will be delivered by the end of June.

In a note to investors, David Sadowski views UPC’s latest announcement as a point in the company’s favor, supported by the overall sentiment that uranium prices are set to strengthen over the next 12 to 14 months on supply shortfalls and JApanese reactor restarts. Given these variables, and the companies current available cash, Sadowski expects to see another purchase of 800, 000 – 900,000 pounds of uranium sometime in the coming weeks.
UPC’s uranium purchase could not have come at a better time. As Sadowski highlighted in his note, uranium spot prices touched down at $33.88 per pound according to UxC’s daily average price chart on Friday, marking the first time in more than eight years that spot prices have dipped lower than the $34 per pound support level. The lower price environment has provided UPC with a prime opportunity to reduce its average purchase cost, as well as take a further chunk of excess uranium off the market. Assuming UPC does make another purchase in the short term, Sadowski estimates that a 1.7 million pound uranium purchase (850, 000 pounds bought so far, plus another 850,000 pounds in the future), would cut the forecasted 2014 over supply estimate to roughly 7 million pounds.

Overall, UPC purchasing uranium combined with mine shut downs only help to take a small edge over the overarching problem of an oversupplied uranium market, which can account for the continued weakness in uranium prices. With the expectation that Japan will restart its reactors in the near future contributing to further alleviate the oversupply, the firm sees upward pressure on prices in the future that could lend support to bring new, desperately needed, mines online.

Sadowski sees this reflecting in shares of UPC, which have been trading at a premium to net asset value since October. Raymond James maintains a BUY recommendation on UPC, with a target price C$6.75. The firm has prices this target on the fund’s inventory of 15 million pounds of U3O8 equivalent at US$46 per pound (adjusting fo current assets and liabilities). UPC currently has an implied price of uranium at US$39 per pound.



Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.