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Posts Tagged ‘cameco ccj’

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Time to Buy Uranium Miners In Wyoming?

In Stock Movers on October 21, 2010 at 8:15 pm

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Uranium miners that are close to production in Wyoming are gaining a lot of enthusiastic interest from investors over the past few weeks.   Some of the miners out of Wyoming have made huge percentage gains such as Uranerz (URZ), UR Energy (URG), Cameco (CCJ) and Uranium One (UUU:TSX) as more mines are expected to receive permits to begin operation. There are thirteen mines being developed in Wyoming.  Wyoming produces the largest amount of domestic uranium with Cameco’s (CCJ) Smith Ranch Mine which is also the largest U.S. facility.

There have been recent developments with the recent issuance of the Moore Ranch project to Uranium One which is partially owned by the Russian Government.  Just recently Uranium One’s Moore Ranch received its NRC license, which is the first uranium mine to be permitted in several years and was a major milestone for the industry.  Unfortunately for them due to Uranium One being largely owned by the Russian government, congressional members wrote a letter that shows their concern of U.S. uranium possibly supplying Iran. America is one of the largest consumers of uranium and a lot of the supply of uranium comes from nuclear warheads from Russia.  More than 90% of uranium used in this country is imported.  However, that program with Russia is coming to an end by the end of 2013 and the U.S. will need to find alternate supplies.  Investors realizing this crunch are buying these miners with great enthusiasm.  Right now the new mines from Wyoming are key to the future of power generation in the United States.  Investors are seeing this concern about future local uranium supply.  A concern is that many foreign countries are controlling U.S. uranium which is vital to this countries future power generation.  These small miners will be acquired at premiums or be subject to hostile takeovers in 2011 as they move closer to production.  Cameco (CCJ) recently had an off take agreement with China which will also put pressure on supply over the next few years.  I expect more agreements with miners to be announced as foreign investors scramble for future supply.

I believe these assets provide dollar diversification in low risk mining jurisdictions.  Uranium could move parabolic as more power plants are built and there is not enough uranium available.

Wyoming is a friendly mining jurisdiction and many of these projects are in-situ mining, which means they have to dispose of water.  Groundwater contamination is the greatest concern for local residents.  Investors must research which projects have local support and permits for water disposal as the Environmental Protection Agency could hold a project up for this reason.

Although many commodities have reached new highs the uranium stocks are just beginning its major move.  The growth in nuclear and the supply demand constraints will drive uranium prices very high.  These uranium miners who will progress into production  The U.S. has over 20% of its power comes from nuclear power plants.  There has also been bilateral political support to increase nuclear energy to reduce carbon emissions and is an essential component of the clean energy push.  Expect to hear more news of acquisitions as miners make progress and move closer to production.

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Gold Miners On Verge Of Major Breakout. Cup and Handle Pattern/Ascending Triangle.

In Market Analysis on August 27, 2010 at 7:09 pm

The global debt crisis and the war on deflation by the Federal Reserve is causing more producers to find ways to invest their cash.  This low interest rate environment which may continue for some time will force producers whom are sitting on large cash positions to acquire more reserves.  Mergers and acquisitions in the mining sector have increased over this past year due to a lack of major discoveries as well as supply and demand changes in emerging economies.

We have seen a trend of investments from Asia to purchase stakes in mining companies.  In 2009 the Chinese Investment Corporation, a state owned company, took large ownership positions in Teck Cominco and Penn West Energy Trust. Recently in June, China National Nuclear signed a contract with Cameco to supply 23 million pounds of uranium.  Hanlong Investments took a large stake in General Moly, one of the leading North American molybdenum developers.  Korea Electric Power signed a deal with Denison Mines another uranium developer. Sojitz bought a 25% interest in the Taseko’s Gibraltar Copper Mine. Then recently we saw BHP Billiton trying to make a deal with Potash Corp. and Kinross, a large producer buying Redback, an exploration company.  This trend should continue through 2011.

Investors should be studying the companies that are receiving premiums and position themselves accordingly to make potentially large profits. Junior mining companies that are sitting on large assets that are still relatively cheap or overlooked should be considered.   There are still many companies with strong assets that are trading way below value.  This is an exciting and highly profitable time for the companies with assets close to production in the mining sector.

For producers it is more efficient to acquire explorers to replace their reserves rather than rely on their own exploration team.  I am focussing on the junior mining sector whom are close to production rather than the large producers as they will receive large premiums on their assets.

Following the mining sector on a daily basis the evidence of keen interest to acquire resources is apparent.  There is a search for real assets and natural resources.  Foreign countries are looking for natural resources to diversify their holdings and supply their emerging economies. Large mining producers are searching for replaceable reserves of gold, silver and industrial metals.  As the U.S. attempts to reflate their economy at all costs, precious metals and natural resource assets should receive a premium.

The Gold Miners are close to a major cup and handle breakout.  It also appears to have set up an ascending triangle pattern.  A breakout from this pattern could lead a major move into new high territory.

The strong trend in gold miners is signaling that interest rates will stay low as the Federal Reserve makes every attempt to reflate the economy.  Precious metals prices should stay high which would make producing mining companies highly profitable.

Disclosure: Long Gold and Silver Mining Stocks