Energy

Uranium Investing

It’s no secret that the uranium industry has seen tough times this year.

It’s no secret that the uranium industry has seen tough times this year. In fact, it’s having its worst start to the year in over a decade, with uranium prices currently sitting at $25.25 a pound  as of August 29. This is the cheapest uranium spot price since 2005. 
No question, the Fukushima disaster has heavily impacted the uranium industry and, right now, there aren’t that many buyers looking at the market. Because of this, many uranium miners have been selling at incredibly low prices, the Economic Calendar reported.
Since the disaster, it’s been difficult for the uranium industry to recover due to an oversupplied market, and the demand for uranium has been pretty bleak, most notably in Japan who have turned to other ways of generating electricity.

Will the uranium industry pick up?

While the industry has been struggling, all hope isn’t lost in the uraniums sector.
In FocusEconomics‘ August 2016 report, it notes that investors may be betting on a recovery for uranium prices sooner rather than later as demand from China and the increase in nuclear plants will ramp up the price.
According to the World Nuclear Association (WNA), there are more than 440 commercial nuclear power reactors operating in over 30 countries with at least 60 more currently under construction.
When it comes to the uranium spot price, the panelists surveyed by FocusEconomics expect the price to increase slowly in the medium term as a result of a rise in demand from India, Russia and China. Panelists project the price to average $33.20 per pound in the fourth quarter of 2016, and reaching an average of $39.50 per pound by the end of 2017.  Given that the price is currently $25.25, there’s still a long ways to go for it to climb over the $30 per pound mark.
That being said, panelists over at FocusEconomics aren’t the only ones projecting the uranium spot price to run. In Cantor Fitzgerald‘s July 2016 commodity outlook,  it notes that the company believes a “violent increase in the price of uranium is coming.”

How are uranium stocks performing?

Although the uranium price is struggling, some mining companies in the uranium industry have still been successful. Here’s a brief overview of a few of those companies.

CanAlaska Uranium (TSXV:CVV)

CanAlaska Uranium has been exploring uranium in the Athabasca Basin since 2004, with $86 million worth of high grade uranium targets explored. According to its website, CanAlaska holds one of the largest land positions in the region, making up approximately 2.1 million acres.
The company has two key uranium properties: the West McArthur Project and the Cree East project. CanAlaska has also recently set foot in the diamond sector with two projects, the Athabasca Diamond Project and the Pikoo Diamond Project
CanAlaska most recently announced that the De Beers’ exploration team is preparing to start drilling kimberlite targets at its West Athabasca Diamond project.
Looking to the company’s shares, CanAlaska’s have made a significant increase year-to-date, rising 1,100 percent to $1.32.

Uravan Minerals  (TSXV:UVN)

Like CanAlaska Uranium, Uravan Minerals is also focused in the Athabasca Basin. The company’s principle assets and active exploration projects include the Outer Ring, Halliday and Stewardson projects.
In August, Uravan announced its intention to issue a non-brokered private placement of up to 8 million units at $0.30 per unit for aggregate proceeds of up to $2.4 million.
Year-to-date, Urvan’s shares have increased 280 percent to $0.38;

Purepoint Uranium (TSXV:PTU)

Purepoint currently operates the Smart Lake project, also in the Athabasca Basin region under terms of an agreement with Cameco (TSX:CCO; NYSE:CCJ) permitting the company to acquire up to a 50 percent interest on the project. The project includes two claims with a total area of roughly 9,800 hectares in the southwestern region of the Athabasca Basin.
Year-to-date, the company’s shares have increased 228.57 percent to $0.115. Over a one-year period, Purepoint’s shares have steadily risen 380 percent overall.
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This article was originally published on June 2, 2016.

Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.

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