Over the last several months, I've been pounding the table explaining to you that the time to position in the better uranium names is now.
A couple weeks ago, Cameco announced it would extend the shutdown of its McArthur River mining operations to support the uranium price.
The decision is, of course, a tough one for the company as nearly 700 people will now have to look for new jobs.
McArthur River/Key Lake is the world's largest uranium mine/mill.
The closure could remove approximately 11% of the global uranium supply and expedite the rebalancing that was already underway.
In addition to the 19 million pounds of annual production being removed from the market, Cameco will now have to buy a significant amount of uranium in the open market to fulfill contracted commitments.
In Cameco's most recent conference call, it outlined that the company would need to purchase between 11 and 15 million pounds over the next 18 months.
Two to four million pounds will need to be purchased this year.
The uranium spot price has responded and is now up near $26/lb. Up over 25% from the low three months ago.
Recently, I explained that:
"Hedge funds are once again making calls to take positions in uranium equities and physical uranium.
"This hasn't gone unnoticed by the utilities, and, like the executives running majors in the precious metals markets, they'll come in after all the smart money is positioned and fuel the next several legs higher."
I also explained that the major catalyst to look out for will be the utilities coming back to the market to lock up long-term contracts.
The last time Cameco reduced output, Kazatomprom - the largest global producer - followed suit a couple of months later.
I expect a similar scenario this time around.