From Collin Kettell: In this interview, energy analyst Daniel Major discusses the long-term potential of uranium and why the industry needs higher prices to fill the supply gap.
The short-term issues are that 75% of the industry remains near or below the cost of production. Companies currently can’t afford to replace their resource. Cameco has taken the lead in closing down one of the best mines saying that it’s cheaper to purchase uranium from the market. Cameco’s announcement was a major event for the uranium industry.
The enrichment sector is also beginning to have issues with contracts coming off. Capacity cutbacks will affect underfeeding. It will be interesting to see how these cuts affect the long-term price. If you look at GoviEx, they have been trading at a substantial discount for a company with excellent resources and a fully permitted project. Currently, everyone is risk-adverse. As the market unwinds and the uranium price improves investors should become more interested.
The markets are not rational and can’t continue to trade at these discounts. As interest in quality companies returns, investors should see where the value is in this market. He feels they are one of the few that can turn a project into cash-flow.
Daniel discusses the various projects and properties that they have acquired and how they fit together to provide a very impressive prospectus. He feels they are in a much better postion than most of their competition as they have been able to consolidate research, finances, and projects into one centralized plan.
Much of these plans are contingent on the uranium price. They plan to continue work on financing and deciding where their next exploration focus will be.
The Global X Uranium ETF (URA) was unchanged in premarket trading Friday. Year-to-date, URA has gained 19.89%, versus a 17.28% rise in the benchmark S&P 500 index during the same period.
URA currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #72 of 129 ETFs in the Commodity ETFs category.
This article is brought to you courtesy of Palisade Research.