At the end of 2012 we were interviewed on uranium and indicated to investors to accumulate as the uranium miners and the uranium price hit three year lows. The pullback in uranium miners and price coming into the year end was a potential buying opportunity as they reached important support levels historically indicative of a bullish reversal. I also alerted you to an increase in merger and acquisition activity in the undervalued uranium sector as there are many discount opportunities trading at ridiculously low levels. This was at a time of great pessimism. Despite being ridiculed by the popular media, GST and smart contrarian investors were bullish and in fact that may have been the "Post-Fukushima"bottom. We are witnessing a powerful rebound in the uranium price and the uranium miners. Please read the prescient article where we predicted this powerful rebound by clicking here...
This week we hear that Uranium One will be bought by ARMZ its controlling shareholder for $1.3 billion in a friendly deal. This means the Russians will have an increasing presence in the Powder River Basin. Putin is pushing nuclear power not only for Russia but to export technologies to emerging atomic nations. A few months ago we predicted a growing Chinese and Russian role in developing domestic U.S. assets.
In September of 2012 I wrote:
"Cameco has announced that they will be actively searching for North American companies on the cusp of production. Uranerz lies directly in the proximity of not only Cameco, but Uranium One as well in the Powder River Basin. Do not forget the Russians and Asians are donning cowboy hats in Wyoming looking for their next target."
This may be just the beginning of an increase in mergers and acquisitions in the undervalued uranium space. This announcement takes a major uranium equity out of the public market. This may be a way that Russia can tighten its control on the potential uranium supply as the Russian HEU agreement ends later this year and only sell the uranium on the condition of using their nuclear services. This will squeeze other nations to search for available supplies which are far and few between. I have already positioned my readers for the coming price spike which may occur even as early as 2013.
Although we did see Germany temporarily back away from nuclear following Fukushima, we are seeing a continuation of the trend towards nuclear power development especially in Europe as a whole. Europe only has one operating mine in the Czech Republic despite being the largest per capita consumer of uranium. This means they have very little domestic supply in the continent. This small cap uranium developer may help fill that shortfall as demand continues to pick up.
Recently another rising uranium miner published a Preliminary Economic Assessment (PEA) on their flagship Berlin Project in Colombia. The study was able to shed light on the potential economics and metallurgical process of the multi commodity project which has uranium, rare earths, vanadium and phosphate. The PEA shows that the project can be economic with zero cash costs for the uranium as it can be paid for by the additional byproducts such as rare earths, vanadium and phosphate.
This small cap uranium developer is operating in a historic uranium mining camp which produced over 300 million lbs of uranium at one time in Ontario. It also commercially produced heavy rare earths. This deposit provides great leverage to the price of uranium and rare earths as it is a big production scenario which could produce close to 2.7 million pounds of uranium and 4000 tons or rare earths. The company recently released an NI 43-101 Preliminary Economic Assessment with an NPV of over $1 billion and a before tax payback period of 18 months. This is pretty impressive for a company with a market cap below $10 million.
This uranium explorer in the Athabasca Basin is making a major breakout above the 50 day moving average on record volume. In 2012, the company had a major vote of confidence by attracting the attention of a team of seismic experts who have helped discover the major Athabasca Deposits such as McArthur River, Shea Creek, Key and Moore Lakes and the Hathor's Roughrider Deposit.
Best wishes for a great 2013 which may turn out to be a great year in the undervalued uranium miners.
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Opportunities Over The Next Decade In Strategic Metals and Miners
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Investing In Miners After the Fiscal Cliff
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