Good News and Bad News for Cameco

The good news for Cameco shareholders is the company will buy back up to $715 million worth of its own shares . The bad news is that its Port Hope Nuclear Fuel Conversion Plant may have more delays, and may even lay off workers.Personally, I can think of a long list of uranium stocks I'd rather own than Cameco.

And what do the delays at Port Hope mean for the nuclear industry? I'm thinking more delays on the supply side, which should be supportive for prices. However, analysts at RBC don't agree. They just lowered their uranium price forecast to $100 for 2007 and $110 for 2008, from previous estimates of $120 and $145.

Despite that, RBC thinks Cameco is a buy with "excellent upside potential." If they're lowering their forecast on uranium, how did they get that?

Paladin, meanwhile, says that at least 25 new uranium mines will be required by 2020 to meet global demand for nuclear fuel to service the explosion in reactor numbers. "Explosion" is an unfortunate choice of words when you're talking about nuclear reactors, but I agree with the outlook.

Here are some notes I scribbled down before a radio interview I gave today about uranium ...

1. There are 32 nuclear power plants under construction, 74 on order or planned, and 214 proposed. By 2013, 48 additional nuclear power plants, producing 43.5 gigawatts of energy, should go into service, according to the World Nuclear Association. Over the next 10 years, an additional 100 plants will be built, with 40 of them in Asia.

2. A typical 1-gigawatt nuclear reactor requires around 200 metric tonnes (440,924 pounds) of natural uranium per year. During start-up, a new nuclear plant can use TRIPLE its normal requirements.

3. Add in the 32 new plants under construction and that’s more than a 7% increase in demand. Add those already on order or planned, and that’s a whopping 24% increase in demand.
   

4. Mines can only meet 66% of current demand. Where is more uranium going to come from?

So now we get to the "ink-blot test. Look at the following chart and tell me if you see "scary decline" or "buying opportunity" ...How about both? LOL!

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