Red-Hot Resources

"Luck is not chance, it’s toil; fortune’s expensive smile is earned.”

Friday, May 18, 2007

I Just Flew In From Vegas, and Boy Are My Arms Tired

I caught the red-eye from Las Vegas last night. I landed in time to rush to my son's school, where they were having a Father's Day Breakfast. My son made me some amazing gifts I will treasure for a lifetime, including a hand-made tie (from a 4-year-old, so maybe it a was a bit irregular in the cut) and a barbecue apron. Cool beans. I wouldn't have missed it for the world. Another dad just drove in non-stop from Tenessee for the breakfast. What is it with dads being scattered around the country on business?

Anyway, I've never been able to sleep on airplanes, so the flight back gave me ample time to reflect on what I learned and saw at the Money Show. These shows keep getting bigger -- it was packed this year. That goes doubly so for my presentation on uranium. Since it was slated at 6 pm in a room that even I had trouble finding, I thought I would be speaking to a small handful of people. Boy was I wrong. A LOT of people showed up, and they had good questions, too. I love talking to smart people about the hottest metal around.

And speaking of that, have you seen uranium stocks today? ZOOM! Anyone who bought the stocks I profiled at the show is already reaping open gains (one of the stocks I talked about at the show just spiked higher and now trading is halted on that issue -- NICE! We'll see what that is about shortly). And the stocks in my Small Uranium Wonders report are blasting off.

And yet we have little news to drive it. Obviously, this is speculative money at work. Anyone who buys these stocks will have to develop a strong stomach for ups and downs. And even if your favorite stock craters for a few days or weeks, remember the longer-term underlying trends are HUGELY bullish.

What am I talking about?

Stuff like ...

Brazil needs up to 8 nuclear plants to meet energy demand

Areva tells its partner Denison that uranium production at the McClean Lake Mine will drop by as much as 40%!

China so desperate for uranium that it's even going to process coal ash to get it!
When I tell people that coal-fired power plants put out more radiation than nuclear power plants, it's a bit of a shocker. Apparently there's so much uranium in some coal ash that the Chinese feel its recoverable. Wow!

And here's something of note: Uranium Participation Corporation reports its net asset value at April 30, 2007 was CDN$815,168,000 or CDN$14.66 per share. On a fully diluted basis, after assuming the full exercise of all outstanding warrants, net asset value per share was CDN$13.96.

It's now trading at C$16.23, a 16% premium to its assets. Now this is nothing new -- Uranium Participation Corp, a fund that holds physical uranium and is Canada's uranium ETF, has traded at a premium to its assets for quite some time. The premium shows that investors are bullish -- they believe that the price of uranium is going much higher.

I believe they're right. It will be interesting to see what the next uranium spot price will be.

Have a good weekend.


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