It looks like the pain continues for Energy Fuels (UUUU), which is down another 5% this morning, currently trading at $1.90/share.
Most recently, I purchased another batch of 1,500 shares at $2.05/share. How much more downside remains?
Who knows…
But I did hear back from management this morning and they had this to say regarding the selloff:
- There is no discernible reason for the large decline in share price.
- The company issued a press release to confirm no material change.
- No large institutions are selling at this time.
- Large retail investors from NY are liquidating substantial positions.
- The Uranium Global X Funds ETF (URA) has been getting some redemptions and might possibly still be overweight in their UUUU allocation.
- Tax-loss selling has commenced and this is a likely contributing factor driving prices lower.
- The ENTIRE uranium sector is experiencing a decline to some degree at this time.
Lastly, the company re-affirmed their belief that results from their Q3 earnings report were positive. As far as Energy Fuels is concerned, they are executing their plan accordingly and it’s business as usual, in spite of the massive share price decline.
So, please take this news for what it’s worth… Investing is tricky (and risky) business, so please do your own due diligence before forming any definite conclusions!
There are no guarantees!
As I mentioned in the last post, I feel like I’m sufficiently allocated in my uranium holdings at this time, so I am not planning on making any additional moves. However, if the selloff in UUUU continues, I will have to periodically re-assess the situation and consider adding more shares.
I am using UUUU as my “non-expiring call option” on the future rebound in uranium prices… And in my humble opinion, the shares are immensely attractive at these low prices!
Happy Hunting!
As long as oil and NAT gas is cheap, there is no reason to use nuclear power. You will need some uranium to power existing reactors, but not as much new demand.
Iran is creating new reactors, but that is an entirely new debate…
Once the economy starts to get powered up, more fuel will be needed.
Eric,
20% of electricity production in the U.S. comes from nuclear alone… Yet we only produce 2% of the world’s supply and are the largest consumer of nuclear fuel… 30%+ of U3O8 production comes from Kazakhstan alone… and these days they are selling a lot more to China… I don’t think anyone would peg Kazakhstan as the most reliable long-term source for supply… There is a lot of interest in renewables these days, but to realistically supply the base load requirements we need, those green sources are not as reliable (wind and solar are intermittent); nuclear is 24/7 and also CLEAN, which is what the world is gravitating towards.
From World-Nuclear:
Today there are some 437 nuclear power reactors operating in 31 countries plus Taiwan, with a combined capacity of over 380 GWe. In 2014 these provided 2411 billion kWh, over 11% of the world’s electricity.
Over 60 power reactors are currently being constructed in 13 countries plus Taiwan, notably China, South Korea, UAE and Russia.
Most of the new demand is coming from China, which is not surprising… Japan is re-starting their nuclear reactors as well…
In the near term, I don’t think supply will be an issue… My own personal take is that we are in a deflation for resources, so I doubt prices will rise sharply in the near term… Readers should know that my own investment here is with a mindset that this play could take 5-10 years to play out…
I might sell 1/2 of my position on the first double so that I can pull my “downpayment” back out and utilize it elsewhere…
Other investors/speculators need to figure out their own gameplan before jumping in b/c these markets are indeed volatile…
And in case anyone is interested, pre-Fukushima, Energy Fuels stock (split-adjusted) peaked around $79/share from a low of around $6.50/share…
Obviously no guarantees that will happen again, but you never know…
Take care!
I have been researching this company and outlook of Uranium in general and I am getting very interested and put it in my watch list. Will give a read on their financial statements now. Thanks for sharing! We may be a fellow shareholder on this one. 🙂
Cheers!
BSR
BSR,
You bet! When it comes down to it, there really aren’t that many choices of producers in the U space. With that said, I really like the valuation of UUUU right now and think it’s one of the best producers out there.
All the best!
I was wondering if you have any thoughts on what will happen to mining shares if gold does drop to 850. There has been nice support of hui at 100 level.
I have been looking at ngd, 1 of Pierre lassondes companies, any interest?
I have also been adding in to mux, aem, and ag. If silver drops below 10 I would consider call option on silver Wheaton.
Your blog has sparked by interest in first finance.
Re uranium companies I like the idea. I would think that these junior companies will explode at some point. Probably uranium prices will move in similar fashion at this point to the energy commodities and solar companies. I do think this is safer bet than coal companies. Have you ever investigated junior potash companies? That is a substance that can not be substituted for food production. I was looking at mosaic and potash and they are trading at historic lows.
Keep up the good work.
Sean,
Thanks for the comment. If gold hits $850/oz, no doubt the mining stocks will continue to get punished… Could that happen? Sure, anything is possible…
From my own experience, when gold hit below $1,100/oz, the demand for physical went soaring and the local bullion shop I frequent had trouble keeping up; the phones were ringing off the hook. I can’t imagine what things would be like at $850/oz… For a prolonged slump in that range, hardly any miners (probably none unless the USD also went hyperbolic and oil fell to $20/barrel to offset operating costs) would be profitable, and most would be forced to halt production.
I am not a huge fan of NGD, but at current prices, I definitely am (similar to how I feel about IAG). When it comes to miners, I am a fan of really any quality company at low enough prices. When it comes to NGD, I think their management is top-notch but I’m just not all that attracted to their properties and development-stage projects. Rainy River looks good but the CAPEX is pretty high. They do operate in the best jurisdictions though, so NGD is a great play for that.
As it pertains to uranium juniors, NexGen and Fission are the talk of the town right now… but at current valuations, I would much rather own Energy Fuels… They are a proven (de-risked) mid-tier producer with millions of lbs in the ground. At sub $100 million market cap, it’s a no brainer as far as I’m concerned.
Up to this point, no I have not looked into potash companies. Thanks for the tip. But with so many good deals in: gold, silver, copper, and uranium, I’ll most likely stick to what I know best.
Take care!
At any rate, the business looks to be stable and growing,
and long-term investors could make out big if they’re patient,
and willing to ride out the ups and downs.