Monday, June 6, 2011

Denison (DNN) (CCJ) (USU) (URRE) Ready to Rebound?

Shares of Denison Mines Corp (AMEX:DNN), Cameco Corporation (NYSE:CCJ), USEC Inc. (NYSE:USU) and Uranium Resources, Inc. (NASDAQ:URRE), among other companies with significant uranium and nuclear exposure, have been taking a big hit since the middle of February and afterwards, as the earthquake and tsunami in Japan caused some damage to some of its nuclear reactors, which gave some pause to the industry, which had been flying high.

The most recent hiccup was the decision by Germany to shut all of its nuclear reactors by 2022, which resulted in a number of the companies taking another hit.

As Bill Gates recently stated, wind and solar may be "cute" industries, but nuclear is the future of energy, and is mostly the only choice to realistically meet the growing demands of the market.

In the U.S., natural gas is also a legitimate source, as the supply in the country is extraordinary, and could last for a century or more.

From the nuclear sector standpoint, Germany is irrelevant in the long term, as they only have 17 reactors, accounting for only about 5 percent of global uranium demand.

Other major nuclear demand comes from the U.S., which has 104 reactors; France with 58; and China, which has been on a huge nuclear built out, has 27 under construction at this time, another 50 in the planning phase, and 110 more proposed.

All that has happened is the time it'll take to get the new nuclear reactors operational may have been extended; at least that will be the official line fed to and reported by the media.

How many think that China and its vast need for energy has halted anything, no matter what they may assert to the media? They may have went over their safety measures, but the Japanese earthquake was a rare anomaly which can't really be planned for, and the idea we can live in a risk-free world is Utopian, not a reality.

So the nuclear industry will continue to grow quickly, although it will still be a long-term play for those investing in it, and will include a number of issues over the short term which will generate volatility, as in the case of Germany saying it's going to abandon nuclear.

Uranium Resources closed Friday at $1.73, falling $0.08, or 4.42 percent. USEC Inc. ended the session at $3.94, dropping $0.11, or 2.72 percent. Denison closed at $2.12, down $0.02, or 0.93 percent. Cameco Corporation closed at $28.15, declining $0.62, or 2.16 percent.

1 comment:

Anonymous said...

USEC is NOT a uranium mining company, it is a uranium enrichment company. Therefore it's future has little relation to the price of uranium ore; rather it is related to the drop in short-term demand for nuclear fuel, especially from Japan.

USEC's only enrichment plant is scheduled to close in 11 months, its supply contract with Russia ends in 2013, and its proposed new plant remains unfinanced.

Thus, no rebound for USEC.