Back in April, I sent out an update to JMM subscribers outlining the news out of Russia that sent uranium stocks noticeably higher.
Since then, the stocks have once again consolidated but looked poised to continue higher.
Some of the consolidation is due to news from Reuters that Kazakhstan's state uranium miner, KazAtomProm, had delayed its plans to list in London this year due to falling prices of UX-U3O8-SPT, used to power nuclear reactors.
The news cuts both ways. It was received negatively as the public listing has always been a catalyst that many were waiting for.
While the listing is a catalyst, it is not "the" catalyst.
The catalyst to watch is the first utility to come back to market and lock down future supply at higher prices. That's where the coiled rusty spring that is the uranium space will spring.
I recently had the pleasure of interviewing Amir Adnani, CEO of UEC. You can read that here.
For those of you inclined to not read through the entire interview, let me share with you some of the more pertinent insights from one of the best-connected insiders in the uranium space.
The recently proposed Russian law submitted to the State Duma would ban nuclear cooperation, including uranium supply, not only with the U.S., but also with "other foreign states" that support U.S. sanctions against Russia and "those who support Washington's position on Syria." If the draft law is approved by the Kremlin, the U.S. utility industry may be in for a major supply shock as a result of its over-dependence on uranium coming from countries under the Russian sphere of influence.In 2005, when the spot price was below $20/lb., there were something like 30 companies worldwide engaged in uranium exploration/production. By 2007, the uranium price approached $140/lb. and the number of companies grew to over 500.Now in 2018 we're back to about 30 or so companies.The market price needs to have a sustainable $40 handle before we will restart production. (This is true for most if not all of the lowest-cost producers.)Fundamentals for uranium production here in the U.S. are improving because the extreme dependence on foreign supply raises the kinds of strategic security issues that are gaining the attention of top congressional and executive branch decision makers. These are game-changers.The bottom line is the interest of the major state-owned entities and lowest-cost producers in the world is now to act in a manner that forces prices upwards.
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I anticipate more cuts and I anticipate them happening in a coordinated way throughout the year.
Does that happen next month or at the end of the year? No one knows.
What I do know is that quality uranium companies will benefit immediately and dramatically once these catalysts come to pass.
We've seen previews of 15-20% moves in one day. Those gains have since been trimmed a bit.
When the next leg of the uranium bull market kicks off, those 15-20% moves will happen daily and go on for months if not years.
Position now.
An additional note: I'll be attending the 2nd Annual 121 Mining Investment New York summit taking place from June 5-6 at Convene, 730 Third Avenue in New York. This is New York's largest mining investment event.
If you're around, reach out and say hello.
To your wealth,
Gerardo Del RealEditor, Junior Mining Monthly and Junior Mining Trader.
For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.