One year ago, the settlement price for a uranium contract was just under $30 a pound. Uranium settled at $45.25 on September 28, after rising to more than $50 a pound on September 17. The commodity price of uranium had not reached that level since the summer of 2012, the year after the disaster at Fukushima.
Uranium prices began rising in mid-August, thanks in part to the launch of an exchange-traded fund that proposed to hold most of its assets in physical uranium. The fund launched with a war chest of $300 million and later raised that total to $1.3 billion. Since its launch, the price of uranium has jumped by more than 60%.
The Sprott Physical Uranium Trust Fund trades over the counter in the United States under the symbol SRUUF. So far the fund has accumulated about 28 million pounds of uranium, the largest stash in the world. According to the Financial Times, that is enough uranium to power the entire French nuclear industry for a year. The CEO of a London-based advisory firm told the Financial Times, “Sprott could single-handedly remove all supply, thereby preventing it from reaching the hands of nuclear utilities.”
There are, however, a number of inactive mines that could be brought back into production if the price rises to around $60 and stays there long enough for mining companies to persuade lenders that the market has turned permanently to higher prices. What are the chances that that will happen, and which mining companies likely will benefit if it does happen?
Here’s a look at five uranium miners that have seen their share prices rise by 30% to more than 80% since last November and that are currently trading 22% to 43% higher than that November price.
The uranium miner that has attracted the most attention from retail investors at Reddit’s WallStreetBets subreddit is Cameco Corp. (NYSE: CCJ). The company is based in Saskatchewan, and it has a market cap of $8.3 billion and an enterprise value of $8.21 billion. Its customers are nuclear-powered utilities in the Americas, Europe and Asia.
Cameco’s stock price has doubled over the past 12 months, and the 52-week high of $26.57 was posted on September 13. Six of 11 brokerages rate the shares as a Buy or Strong Buy, and the rest have a Hold rating. A median price target of $28.44 implies a potential gain of 8.4%, based on a current share price of around $20.70.
Short interest analytics firm S3 Partners reports that Cameco’s U.S. and Canadian combined average short interest in the stock this year is $267.36 million and that for the year to date, short sellers have suffered $121.8 million in mark-to-market losses (45.6% of average short interest). Just over 3% of Cameco’s U.S.-listed float is sold short, and less than half that much (1.26%) of Canadian-listed shares are short.
NextGen Energy Ltd. (NYSEAMERICAN: NXE) is a Vancouver-based uranium miner with a total contiguous mining area of around 89,000 acres in the Athabasca Basin of Saskatchewan. The company’s market cap is $2.3 billion, and its current enterprise value is $2.19 billion.
NextGen’s share price has soared by 160% over the past 12 months, and the shares were up as much as 235% on September 15, after posting a new 52-week high of $6.17 on September 13. Eight of nine brokerages rate the stock a Buy or Strong Buy, and the other one has a Hold rating. There is no price target set on the stock, and it currently trades at around $4.60.
Average short interest in combined U.S.-listed and Canadian-listed shares totals $100.43 million, and short sellers have taken mark-to-market losses this year of $55.9 million (55.6%). Just 2.4% and 2.19%, respectively, of the company’s U.S.-listed and Canadian-listed shares are short.
Since November 20, shares of Denison Mines Corp. (NYSEAMERICAN: DNN) have added about 37.5% to their share price. Like NextGen, the Toronto-based company operates its flagship mining project in the Athabasca Basin. Denison’s market cap is $1.16 billion, and its enterprise value is $1.07 billion.
Over the past 12 months, Denison’s share price has soared by about 220%, and the shares were up more than 320% on September 15 and posted a new 52-week high of $1.81 the next day. The average 12-month price target on the stock is $3.25, implying a potential upside of nearly 140% based on a current price of around $1.40. Six of eight analysts rate the shares a Buy or Strong Buy, and the others rate the stock at Hold.
Average short interest in combined U.S.-listed and Canadian-listed shares totals $26.15 million. Short sellers have taken mark-to-market losses this year of $13.8 million (52.9%). Short interest in U.S.-listed shares is 2.91% and in Canadian-listed shares is 0.71%.
Uranium Energy Corp. (NYSEAMERICAN: UEC) is based in Corpus Christi, Texas, and operates uranium mining projects in the United States, Canada and Paraguay. The company’s market cap is $725.4 million, and its enterprise value is $688.13 million.
UEC’s stock price is up 187% over the past 12 months and 35% since November 20 of last year. Shares posted their 52-week high of $3.77 on September 16, when the stock’s gain was around 265%. All three analysts covering the stock rate the shares a Buy or Strong Buy, and the average 12-month price target of $4.38 implies potential upside of just over 50%, based on a current share price of around $2.90.
Average combined U.S. and Canadian short interest for the year to date is $47.97 million, and short sellers have suffered mark-to-market losses of $22.4 million (46.7%). Short interest in U.S.-listed shares is 9.89% of the stock’s total float.
Energy Fuels Inc. (NYSEAMERICAN: UUUU) is based in Colorado, and all its operations are located in Utah, Wyoming, Arizona, New Mexico and Colorado. The company has a market cap of $1.01 billion and an enterprise value of $933.26 million.
At their peak in mid-September, shares traded up almost 385% over the previous 12 months. The stock currently trades up about 275% for the past 12 months. On September 16, the stock posted a new 52-week high of $8.39. Of seven brokerages covering the stock, all give the shares a Buy or Strong Buy rating. The average price target of $7.45 implies upside potential of 16.2%, based on a current price of around $6.40.
Average short interest in combined U.S.-listed and Canadian-listed shares totals $105.86 million. Short sellers have taken mark-to-market losses this year of $42.51 million (40.2%). Some 11.03% of the stock’s U.S. float is sold short, along with 2.54% of the Canadian float.
In a recent research report on short interest in uranium mining stocks, S3 managing director of predictive analysis, Ihor Dusaniwsky cautioned short sellers in these five stocks “to be alert and be ready to cover their positions if they want to lock in recent mark-to-market gains.”
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