U308:

Recent strong rebounds in spot uranium prices have analysts convinced the bull is back in the sector, which is now expected to weather nicely the current economic storm. Sure, many miners remain in trouble, but hopes of continued spot gains run high, bringing with them opportunities.

Salman Partners analyst Pat Donnelly is also very bullish on uranium this week, telling CP that the recent plunge in prices resulted from commodity and hedge funds dumping whatever material they could as they hunted for liquidity when global stock markets crashed in October. Donnelly says that production stoppages and delays of new projects, while initially responses to low prices, could eventually bring in a real shortage of supply, thus further driving up prices.

Boy, do those delays ever keep coming. Cameco and Uranium One both cut all kinds of output, and now Denison Mines Corp. is joining their ranks. The company just announced it’s postponing development of its Midwest uranium project in Saskatchewan and temporarily shutting down its Tony M mine in Utah. Denison shares lost more than a quarter of their value on the TSX on Tuesday, as investors responded to the news.

Finally, amid the burning wreckage of stock prices, the global nuclear engine continues to burn ever hotter. BBC News reports Romania just signed a deal to build two more reactors at its only nuclear station, Cernavoda, on the Danube.The US$5-billion deal left the majority stake of 51% with Romania’s state-controlled Nuclearelectrica, farming out the remainder to six European commercial partners. BBC says the two existing Canadian-made reactors at Cernavoda generate some 20% of Romania’s electricity, but with Bucharest now fully aboard the nuclear renaissance train, that percentage is expected to grow in years to come.

My comment: The question for investors is can any of these uranium companies get their act together with respect to putting together some sustained consistent operating results. It always seems its one problem or another whether it is Cigar Lake for Cameco or Dominion for Uranium One. Buying uranium directly through the Uranium Particpation Fund is another option.

John Polomny
The Real Deal