With tax-loss selling in full effect and the equity markets experiencing extreme volatility heading into the Christmas season, we take a look at uranium and the companies involved in the mining and exploration of yellow cake. What do you need to know about uranium?
In mid-2007 the price of Uranium reached over (US) $135.00 /lb, a high point for U3O8. The high price spurred expansion of existing mines, construction of new mines; and, the reopening of old mines as well as new prospecting.
Then the bubble burst and uranium beat a hasty retreat to the (US) $40.00 /lb mark. Earlier this year on March 11th, while the price of uranium was making a resurgence, Japan experienced the worst earthquake disaster in its modern history. The earthquake, a 9.0 on the richter scale, was followed by a deadly tsunami that resulted in near complete destruction of the infrastructure in northern parts of Japan and served a serious blow to the uranium market.
The Fukushima disaster certainly cast a shadow over the uranium mining industry and, these days, forecasting the spot price of uranium is akin to predicting the direction of the wind. But Dundee Capital Markets Vice President and Senior Mining Analyst, David Talbot, sees very strong fundamentals for uranium – particularly in the absence of substitutes for nuclear generation. His assessment suggests that uranium use will rise with growing populations and needs.
Talbot notes in a recent interview, “We forecast uranium prices of between $65 and $75 per pound over the next couple of years, especially once the HEU (highly enriched uranium) Agreement goes offline.”