After two years of mostly falling stock prices in the uranium sector, triggered by the Fukushima-Daiichi nuclear meltdown in Japan, junior miners have become attractive acquisition targets as investors eye more bullish conditions ahead.
“Uranium is an area of focus as it is one of the few commodities with a price that is not above its long-term average,” Chang wrote to clients recently. Uranium also has “an excellent supply and demand backdrop.”
Positive factors for uranium prices and demand include the scheduled end, later this year, of a 20-year-old program that Cameco says converted an estimated 24 million pounds a year of highly enriched uranium from Russian warheads into fuel for reactors.
And at the same time, construction continues on 64 new reactors worldwide that will sharpen demand. Cameco expects a net 91 net new reactors by 2022, pushing consumption up nearly one third to 220 million pounds per year.
Fukushima “didn’t shut the nuclear industry down,” said Rich Boberg, director of public relations and human resources for Ur-Energy. “They’re still building plants.”
A savvy investor might want to get in soon, said Doris Meyer, chief financial officer of European Uranium Resources Ltd , which hopes to build a mine in Slovakia.
“The market hasn’t turned, but people ahead of the market think it will,” she said at the mining convention. “If you wait until it starts turning, it’s too late.”
Read more at Uranium juniors attractive again post-Fukushima