The price of uranium, like that of all commodities, is based on a volatile mix of many variables feeding supply and demand. Like rogue waves on a choppy sea, spikes and troughs can easily mislead, disguising powerful general trends. When the spot price of uranium peaked in 2007, only to fall back over the following few years, there was no shortage of pundits attempting to target the bottom, which now appears to have been hit and solidly defined. The spot price of uranium has now increased 25% since earlier this year, and exploration/development companies like Uranium Energy Corp. have shot up. Shares of UEC have jumped from around $2 in mid July to well over $4 today.
However, it’s only fair to say that there really aren’t very many companies like UEC, the American company currently in line to become the next major in-situ producer of uranium. Unlike commonplace uranium exploration companies, UEC has access to the massive Kerr-McGee database of uranium exploration, compiled over a period of 37 years, giving the company unparalleled ability to identify promising U.S. sites, which it has done. In addition, unlike other companies, UEC already has its own fully-licensed uranium processing plant, located near its most promising sites in Texas. UEC is also totally debt free, with $26 million in working capital.
So, as outside events push uranium prices back up, it’s not surprising to see UEC at the very top of the wave. Although production in Kazakhstan has grown, various major uranium mines in other parts of the world have not been able to produce as expected, and supplies from former Soviet weapons stockpiles have also shrunk. In the meantime, the ongoing demand for nuclear fuel continues to swell, a powerful underlying demand that is expected to grow for years due to the move back to nuclear power. The number of new nuclear power plants will jump dramatically in the coming years, with new projects being started all over the world.
The result is a clear gap between uranium supply and demand, a gap that UEC is in a uniquely strong position to fill.
For more information, see the company website at www.UraniumEnergy.com.
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