Is Uranium Ready to Run?

June 2, 2016

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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 $27.25 a pound  as of  May 31. This is the cheapest uranium spot price since 2005. 

On the other hand, the long-term uranium price hasn’t changed since July 2015, sitting at $44 a pound for almost a one-year period.

In Haywood Securities‘ metals and mining outlook released at the end of May, they say that uranium equities were dominated by a downward spiral in uranium prices between January 2013 and the summer of 2014.

Between summer 2014 and the end of 2015, Haywood writes that “the equities demonstrated their sensitivity to major sector news catalysts coming out of Japan, and elsewhere, where often the producers have lead the pack directionally.”

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Will the uranium industry pick up?

Since the beginning of 2016, Haywood notes there has been a significant difference as to how uranium stocks have reacted to the price movements so far this year.

The report states that the TSX Venture Exchange (INDEXTSI:JX)  has made gains of 29 percent on the year. Haywood says that exploration and development companies will benefit from strong long-term fundamentals in the uranium industry, “underpinned by a deep global reactor construction pipeline of more than 60 reactors.”

So what does this mean for the overall uranium industry outlook?

FocusEconomics May 2016 report states that panelists surveyed expect the uranium price to average $39.70 per pound in the fourth quarter of 2016, picking up in 2017 to an average of $44.80 a pound.

Haywood also sees gains for uranium in 2016, with up to 12 reactors under construction and due to be commissioned this year. 18 more units will be on the way in 2017, which will increase demand for uranium, with a more predictable and normalized supply/demand response for the uranium industry emerging in the coming years.

While still somewhat bleak at the moment, the outlook on the future of the uranium industry is positive: Haywood says they expect the period from 2017-2020 to “be a landmark period for the nuclear sector and uranium stocks, as the global operating nuclear reactor fleet expands.”

Uranium Future Outlook: Uranium Price Forecast for 2016 and Onward

A look at where analysts see the uranium price moving in the short and long term.

Read the full article!

How are uranium stocks performing?

Although the uranium price is struggling, some = mining companies in the uranium industry are still faring well. Here are a few that have seen success this year:

NexGen Energy (TSXV:NXE)

NexGen Energy announced just this week that they have entered into a binding term sheet with CEF Holdings to issue and sell its shareholders of $60 million in aggregate principal amount of unsecured convertible debentures of NexGen.

Leigh Curyer, president and CEO of NexGen said in the press release they have been working to secure a partner for Arrow for over a year to advance the project.

“This supportive strategic investment represents one of the most significant financing steps in NexGen’s history and provides the Company with sufficient capital to continue to optimize the future development of Arrow,” Curyer said.

Year to date, shares of the company have made significant gains by 247.22 percent, or $1.78 to sit at $2.50 per share.

CanAlaska Uranium (CVE:CVV)

CanAlaska Uranium has been exploring uranium in the Athabasca Basin since 2004, with $86 million worth of high grade uranium targets explored.

Most recently, it was announced that  the first drill hole of Cameco‘s (TSX:CCO) year one program at West McArthur has intersected the C10 south structure with sandstone alteration in what could potentially be the hanging wall of the target conductor.

CanAlaska’s shares have boosted 345.45 percent or $0.38 for the year to reach $0.49. Over a one year period, the company has continued to see success with an overall increase of 113.04 percent.

Get Our Expert Guide to Uranium Investing FREE!

Download this FREE Special Report, Uranium Future Outlook: Uranium Price Forecasts and Top Uranium Stocks to Watch 

Purepoint Uranium (CVE:PTU)

Purepoint currently operates the Smart Lake project in the Athabasca Basin region under terms of an agreement with Cameco, permitting the company to acquire up to a 50 percent interest on the project.

The company’s most recent news came at the end of May, wherein they announced that the Hook JV partners reallocated funds for continued drilling at the Spitfire Zone this year.

Purepoint’s shares have seen gains this year, rising by 128.57 percent on the year to $0.08. Over a one year period, the company has jumped 60 percent overall.

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Uranium Future Outlook: Uranium Price Forecast for 2016 and Onward

A look at where analysts see the uranium price moving in the short and long term.

Read the full article!

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

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Category: Energy