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News Flow Picking Up
Friday, September 15, 2006

This past week has been momentous for those invested in uraniums and some of our other equities we think are special. Although their momentum has carried them downward (a sharp contrast to the last few weeks when they began to take off) due to inflation fears striking the market once again, the underlying foundation of our uranium hypothesis is strengthening with the news discovered this week. The first event, which will most likely interest the stock investors deals with a little uranium company in Australia by the name of PepinNini Minerals and the Chinese company Sinosteel. Sinosteel has purchased the right to 60% of PNP's two uranium deposits for nearly $39 million. This will supply PNP with much needed capital to develop these deposits which have an estimated combined cost of nearly $300 million to develop ($120 and $180). Also, it is important that they have a deep pocketed investor to help them develop the deposits into mines and secure cheap financing because these deposits cannot even be mined at this point for a profit. This is probably the most significant aspect of the deal.

In America, Uranium is not even on the radar yet, however we are going to need tons more of it to supply our reactors over the next few years and with utilities wanting to build more...well in short we simply need a lot more. Even with this supply problem on the horizon, the investment community seems to be oblivious to the fact that a new baby bull market is waiting to take charge, but not the Chinese. The Chinese are out making investments...and these are true investments, because the are buying deposits that are worthless right now under the assumption that they will rise in value in the next few years. They are locking up reserves because with their massive building program underway (more on this to follow) they realize that they must act now and secure resources and a reliable supplier.

Also, a story not picked up by the American media...or really any media in the world really was the fact that Russia came out and stated that they may need 40 new nuclear reactors by 2030 in order to increase its output of nuclear energy to 25%. Currently Russia produces 17% of its power from nuclear means, and are a huge exporter of uranium. It is very important that you keep in mind that their inventory of uranium (nuclear warheads and such) is the only reason we have enough supply to keep the reactors around the world running. In my opinion, this effectively will allow for the end of the program the world currently has for Russia's uranium when it expires in 2014, and give Russia a reason not to renew it. After all, why would anyone sell something they are going to need later on when the price of it is increasing nearly everyday?!?!?!?! They will not once the contract expires and this will give the demand side major problems, not to mention what will happen to the supply side...or shall we say what is left of it.

It also appears that Russia will win the contract to build the next round of nuclear reactos in/for China. That was mentioned in the same article as Russia's future needs and seems to highlight the belief that nuclear is the way to go in Asia...and as we are seeing, around the world.

With China moving quickly to lock up reserves and build its reactors, we see a tightening of supplies and added demand to the market. Russia's stated goal also adds to the pressures on the market in more ways than one can imagine. We cannot imagine any more evidence one would need to start to buy into this idea that uranium is the future and that uranium stocks will reward you greatly one day. The uranium industry died once, but it has reemerged and will become an important and respected industry quite soon. When Wall Street becomes enamored with these same uranium stocks that it ignored during the early years (today) that is when we will know it is time to begin to take profits, if not jump ship.


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