Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
The uranium market had a lot going for it at the start of 2014, including the prospects of a Japanese nuclear reactor restart that now, at least partially seems to be close.
The end of the Russia-US megatons to megawatts program last August, eliminating a huge source of supply was also supposed to support the market that had been in a long-term decline since hitting all-time highs of $135 in 2007 and was devastated after the Fukushima disaster in 2011.
China’s plans to approve six to eight plants a year through 2020 – part of its war on pollution – is still being worked at but so far the uranium price has shrugged all good indicators sliding to $28 a pound earlier this year, levels last seen in 2005.
That dragged the long term price, where most uranium business is conducted, down to $44, a six year low, where it continues to languish.
Haywood Securities in a new research note reports that the turnaround in the spot U3O8 price is gaining momentum, jumping 4.3% to $30 a pound this week.
The broker’s average price tracked by the Vancouver-based independent investment dealer with $5 billion under management has enjoyed eight straight session gains, adding nearly 8% to $30.88.
Volumes in the spot market remain subdued however, and Haywood points out that purchases over the last three quarters appear to be entirely discretionary.
After an early 2014 run-up uranium stocks entered a sharp correction in March, but with many shares in the sector now lagging the spot price Haywood says it’s “watching equities to stabilize and perhaps find some soft support.”
Way to early to for uranium stock investors to rejoice, but at least a bottom seems to be forming.
Source: Haywood Securities
