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Thursday, February 28, 2008

Turning Bullish on Uranium Again!

That's right, you heard it here first. I'm turning bullish on uranium again. I think we could be in for a 20% rise this year at least.

First, let's look at the chart ...
The Uranium Participation Corp. holds physical uranium and therefore closely tracks the price. It jumped over 9% today. I think we could see it rally back to $14, which would be a 22% rise from present prices.

Here are some of the reasons why ...


Canada's Uranium Participation Corp said today (Feb 28, 2008) that it would issue C$65 million worth of shares to fund the purchase of 900,000 pounds of uranium. Thehe purchase would represent about 5% of the whole 2007 spot market activity in uranium.

Uranium Participation Corp is the smart money. If they’re buying it now, they think the spot price of uranium is cheap.


About 6% of US uranium needs comes from its own mines. That's even worse than our domestic supply/demand situation in crude oil, where we produce over 20%.

The United States' 104 nuclear power plants get roughly 85% of their uranium from other countries, including the Russian "Megatons for Megawatts" program, which expires in 2013.

The US has a strategic interest in seeing more uranium mines come online.

Many small US miners and near-term miners are undervalued. If the US dollar continues its downtrend, their mining costs will fall compared to miners elsewhere in the world.


More than half the world’s uranium-mining production comes from Australia, Kazakhstan, and Canada. Experts say Kazakhstan is on track to becoming the largest producer of uranium in the world.

One uranium miner after another has come forward to announce disappointing results. Uranium One’s 32% cut in its production forecast is just an example. Another is Cameco's big project at Cigar Lake, which has been pushed back to 2011 as they try to drain the flooded mine. It could be pushed back longer than that. There are many other examples. 25% of all mining projects are delayed, and that holds true for uranium miners as much as anyone else.

Costs – labor and energy – are rising, which will make marginal projects impossible without a big rise in uranium prices. The corporate credit crunch will also mean the end of the line for some junior explorers. This is better for those companies that survive.


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