Nuclear Boom Good for Canadian U308 Miners

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"If you buy now. . .you're going to be well rewarded in 12 months time."

Investors in uranium miners stand to reap the rewards of a coming boom in nuclear power construction, but they will have to be patient to win big.

The nuclear renaissance is centered in Asia, where China plans to more than double capacity by 2020.

Concurrently, Russia says it will stop down-blending weapons-grade uranium from 2013, creating what some expect will be a 20 Mlb. hole in an already-tightening world supply. Analysts say this gives plenty of upside potential to Canadian companies.

"We're forecasting very significant deficits, mostly starting around 2012-2013, growing by 2020 to more than a 100-Mlb. deficit," said RBC Capital Markets analyst Adam Schatzker. "That's huge."

"Our view is we're going to see a strong uptick in the uranium price towards the end of 2011, probably more into 2012. For a lot of (investors) that's just too long to wait."

BMO Capital Markets Analyst Edward Sterck said an oversupply in the market means it will likely be 18 months to two years before the uranium stocks really start moving again.

First Asset Fund Manager John Stephenson is more bullish.

"If you wait until the plants are built, the uranium has been ordered, shipped and delivered, you've probably missed the run-up in the prices," he said.

"If you buy now. . .you're going to be well rewarded in 12 months time."

The spot price of uranium peaked at $136/lb. in June 2007, before the world economic crisis began, and is now at around $45/lb. Sterck said, while the price will likely be steady into 2011, it could quickly climb back to the $70 range if China starts stockpiling ahead of a likely shortage.

The 440 working reactors in the world today need nearly 69,000 tons of uranium annually, but the World Nuclear Association says that could double by 2030.

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