Paladin shares sink as it cuts uranium output
The uranium miner revised down its production forecast for the Langer Heinrich mine in Namibia.
The uranium market has always been volatile, we are still on the right side of the bottom, and are clawing back to a regular place where the uranium market will function. There was some strong volatility at the start of the year, with the price having risen from a thirteen year low. We know the market is oversupplied, even taking that into account, the price is still too low. It’s not priced on fundamentals and the sentiment is generally negative. Any price under twenty is completely irrational since the best mine in the world is not economically viable at that level.
It’s not easy to figure out the uranium market, its pretty thin and there are a lot of factors. During the last rally we had an organic bounce off of the $18 level. The KazAtomProm announcement showed how irrational the price had become. There was some definite price expectations by speculators, however the utilities did not continue buying. On the mining company side we saw uranium stocks double. Things can move quite quickly when there is a shift in price. This is a second opportunity to get in at these levels.
David gives us an update on Denison Mines, he says they are well capitalized having raised money in February. They have a fairly ambitious drilling program for the rest of the year, with more updates toward the end of the year. He discusses some other projects they are working on.
Talking Points From This Week’s Episode
• Thinks price should rise from here, current price is too low even with oversupply.
• Japan has brought a few more reactors online.
• This is a second opportunity to buy, prices are really at rock bottom.
• KazAtomProm are building their own sales division.
David D. Cates is the President and CEO of Denison Mines Corp. and Uranium Participation Corp. He is a Chartered Professional Accountant and holds a Master of Accounting and a B.A. Degree. As Chief Financial Officer, Mr. Cates played a key role in the Company’s mergers and acquisitions activities – leading the acquisition of Rockgate Capital Corp. and International Enexco Ltd. Mr. Cates joined Denison in 2008 and held the position of Director, Taxation prior to his appointment as Chief Financial Officer. Prior to joining the Company, Mr. Cates held positions at Kinross Gold Corp. and PwC LLP with a focus on the resource industry.
By Collin Kettell on June 18, 2017
