Email of the day (3)
"David, re today's piece on Uranium, you may not know that ERA is separately listed (ticker ERA!), yields 2.8% and has negligible debt. Canadian coy Denison, DML, (formerly in the RTZ stable) also has many irons in the uranium fire and manages Uranium Participation Corp, (TSE:U) which may be an alternative to access a pure-ish metal play for FMs who don't use futures."
David Fuller's view Thanks for this
reminder and also the link. Energy Resources of Australia (weekly
& daily) is the uranium
company majority owned by Rio Tinto, mentioned in yesterday's report. The share
looks cheap and seems to have a good balance sheet. It has no debt and pays
a dividend which can vary widely, having been 4% last year and indicated at
2.82 for this year, according to Bloomberg.
Denison
Mines (weekly & daily)
looks more speculative to me, although it is trading at a price to book of only
.55. It is currently losing money, but has almost no debt and will presumably
do well when the uranium price strengthens.
Uranium Participation Corp (weekly
& daily) looks
like the more conservative play at the moment but I would prefer Denison when
the price of Uranium starts to rise. My strategy, if I increase my uranium exposure
which is conservative at the moment, may be to buy Denison when the actual metal
begins to perform.
Prices
of the previously moribund uranium mining companies are beginning to stir but
that is not yet a compelling argument. There will certainly be money to be made
in this sector but we may have to be patient. The beauty of a genuine bull market
in uranium, as we discussed last time around, is that the weekly Metal Bulletin
price can be unrelentingly strong, rising in small weekly increments, due to
very limited futures activity. However when it was accelerating higher (the
Type-1 trend ending, as taught at The Chart Seminar) savvy investors anticipated
trouble and sold the shares before the metal peaked. This pattern and sequence
of events could easily be repeated in the forthcoming upward cycle.