Uranium Miners Staging a Comeback


". . .uranium companies are quickly becoming the comeback kids of the mining industry."

The uranium spot price is clearly rebounding from its $40 per pound bottom. According to TradeTech, the price spiked a solid $4 to US$49 per pound last week. Today, another industry consultant, UxC is reporting a spot price of $51 per pound.

TradeTech also reported "robust" buying interest responsible for 2.5 million pounds of yellowcake in 11 transactions. The total purchase amount for 2009 is now 10.5 million pounds of U308 equivalent.

While utility companies represent about 50% of the recent transactions, the other half was purchased by hedge funds, who now believe it is "safe" to re-enter the commodities markets. TradeTech interprets this as a "strong signal" the spot price for uranium has indeed bottomed.

UxC expects this positive price momentum to continue at least in the short-term. The firm points to demand out of China as contributing to the price action and quotes one industry source saying "they had never seen a more active delegation than the Chinese in Sydney during the WNFC meetings."

With rising spot prices, renewed investor interest in the commodities sector, and growing demand for nuclear energy, uranium companies are quickly becoming the comeback kids of the mining industry.

"Global portfolio flows indicate that among mining stocks, listed uranium names have been in strong demand over the past few months," says Mineweb's Barry Sergeant, "third among mining subsectors only to specialist miners of nickel and zinc."

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