While the rest of the resource sector is weak, the increased M&A in uranium, most notably by Uranium One-ARMZ and Fission, may be signaling that the big money feels we are near the bottom. These secondary supplies will now need to be made up by increased uranium mining.)Ĭameco expects the demand for uranium to increase nearly one-third over the next decade. (For 20 years, an estimated 24 million pounds of uranium were supplied to utilities from Russian warheads. The supply-demand imbalance is already present, and investors are looking to capitalize on the upcoming expiration of the Russian HEU agreement in 2013. The general equity markets are hitting new highs while uranium is well below its pre-credit crisis highs of over $125 a pound. Large companies such as Cameco, BHP ( BHP), and Rio Tinto are delaying large capital expansions and may be looking for undervalued juniors in mining-friendly jurisdictions with easier capital requirements. This sector is extremely active with investment interest and confirms my belief that the death of nuclear that was called by so many analysts over the past two years was premature. The sentiment has changed, and is turning positive. Witness the acquisition of Fission Energy ( FSSIF), which borders the famous Hathor Deposit, which was taken over by Rio Tinto ( RIO) in 2011. I highlighted the CB&I ( CBI) deal with Shaw ( SHAW), the Chinese- Cameco ( CCJ) connection, the Russians and Uranium One ( SXRZF), and the coming acquisition of junior explorers in the Athabasca Basin. Already, the two-year downtrend in uranium prices is being broken to the upside, after bouncing off three-year lows. However, this undervalued sector may be poised for a major rebound in 2013, as I expect an increase of institutional interest, as well as merger and acquisition activity. The uranium miners have been basing since Fukushima, shaking out the weak retail investors. Nuclear power generation is once again on the rise, and uranium miners are poised to benefit, writes Jeb Handwerger of.
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