I’m sure you’ve heard this before but it could finally be the time for select uranium stocks to shine. Recent catalysts include a court decision in Japan that could restart two reactors as early as June, as well as an agreement India signed with Canada to buy 3,000 tonnes of uranium over five years.
According to the International Atomic Energy Agency, there are 69 nuclear reactors under development and 184 on order or planned, this in addition to the 438 that are currently operating throughout the world. China uses 19 million pounds of uranium per year and that is expected to grow to 73 million by 2030. The United States is currently the world’s largest consumer of uranium at more than 50 million pounds per year, yet only produces about 4.7 million of that demand annually. So where is this uranium going to come from? The expected supply squeeze could power the stock prices of many uranium-related companies, including the following five.
Energy Fuels Inc. (TSX: EFR): The miner supplied approximately 25% of the uranium produced in the United States in 2013 and its White Mesa Mill is the only conventional uranium mill currently operating in that country. Energy Fuels expects that its pending acquisition of Uranerz Energy, announced earlier this year, will make it the largest integrated uranium production company focused solely on the United States.
Denison Mines Corp. (TSX: DML): With the sale of its U.S. mining division to Energy Fuels Inc. in 2012, Denison Mines is now focused on uranium exploration and development in the Athabasca Basin. Denison has majority ownership in the world’s third-highest-grade deposit (Phoenix), with a current resource of 60 Mlb of uranium at 16.6% U308. An important component of Denison’s value is the cash flow ($2.5 million expected in 2015) from its 22.5% ownership in the McClean Lake Mill, one of just three mills in the Athabasca Basin and the only one capable of processing very-high-grade ores. More promising results from its Gryphon discovery could add to Denison’s appeal in the future.
Fission Uranium Corp. (TSX: FCU): Raymond James analyst David Sadowski called the company’s Patterson Lake South (PLS) discovery in Saskatchewan’s Athabasca Basin the last known “high grade, easily open-pittable uranium asset left un-mined in the world.” He added that it should operate with extremely low cash costs and still has plenty of exploration upside. Its stock price has surged 35% so far this year, which allowed Fission to raise $20 million recently to do more exploration drilling.
NexGen Energy Ltd. (TSXV: NXE): NexGen shares have also had a stellar 2015 to date, up 34%. Drill results from the Arrow Zone on its Rook 1 Property in the Athabasca Basin have piqued speculators’ interests. Dundee Capital Markets, in a recent research report, noted that the property could host up to 14 million pounds of uranium. NexGen ended the year with approximately $14 million in cash and equivalents.
Uranium Energy Corp. (NYSE.MKT: UEC): The company has a producing mine (Palangana) as well as a near-term producer (Goliad) in Texas, in addition to properties in Wyoming, Arizona, Colorado, and Paraguay. Uranium Energy also has a processing plant in Texas with a two million pound per year physical capacity. Its stock price, meanwhile, has shot up 49% so far in 2015.
