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Online Share Trading

Engage and learn about markets and trading online

Some of my research

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Not applicable
As we speak SXR's share price is tumbling. Sentiment turned against it after the announcement of the latest deal with EMC (fears of overpaying). An issue about a large resource base of which only a small portion is actually proven (rest inferred & measured) was also raised. A third concern is their ability to stick to the production timeline they are punting. I still believe that this is on of the best 5 year stock ideas available in the market currently. First, I believe in the future of nuclear energy. Second, if SXR's production plans falter price will go higher and what they do manage to produce will be sold at even higher prices than available today. Third, the EV/resource base valuations show that EMC is trading at a 50% discount to SXR which in turn is on a 50% discount to Cameco (the sector leader). Fourth, even if the 10-fold production increase proposed only half succeeds it will still be close the best organic growth available from any resource counter.
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12 REPLIES 12
SimonPB
Valued Contributor
the problem is surely that uranium is everywhere and plentiful with everybody findiong it these days. This mean that eventually over supply will become a problem forcing the price down.

this is an issue with all comodities (soft and hard), as supplies drops off and price rises - more is mined and hence price falls to a point where we have over supply and then mines start closing etc. So all comms have a floor and a ceiling, more or less.
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Not applicable
I agree in principle. However, in uraniums case the current market shortfall in more acute than for another commodity. Also in much of the developed world you have the not in my backyard syndrome which will restrict supply. So far the uranium price has responded to the current supply shortfall. It is yet to respond to the demand from the new nuclear power stations currently being build and planned. SXR is the closest to production of all the new uranium exploration companies. So at least it will benefit during the window of shortage. Anyway there are plenty of sellers that currently disagrees with me
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SimonPB
Valued Contributor
fair enough. But isn't NIMBY going to hamper/slow the roll out nuclear stations? be they a good or bad thing, building is going to be a slow and complicated process?
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barry_1
Super Contributor
methinks some uranium is sold on contract,so figures of shortage not really accurate.ANG/AGL has major supplier for many years during times when uranium not popular and had built up good relations with buyers,these facts have never revealed to us shareholders.Same thing happened with gold/plats in all major groups and only with great reluctance were some revealed.
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Not applicable
Just to add, Namibia is agressively selling uranium mining concessions - as are countries like Finland, Kazaksthan and others with large U deposits. Much of the uptake is by mining juniors - speculators who buy up the rights and flog them on. The Toronto stock exchange is glowing like Chernobil in the night with all the Uranium venture stocks listed onnit.
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Not applicable
Point is the mining juniors are years away from production. Exploring for uranium is different fom flooding the market with production. NIMBY is mostly a developed world issue - most of the new/planned nuclear power stations are in the developing world (whereas at least half the countries will lots of uranium reserves are first world). Where I do agree on the supply issue is where some marginal gold producers switch focus as time to market is much shorter (from mining primarily for gold and getting the uranium as a by product to mining for uranium and getting the gold as a by product). On the contract issue - SXR has tied up virtually all of its planned production to 2013 on contracts to utilities but crucially not at a fixed priced (well not entirely - there is a floor price but no cap), ie spot price will apply when delivered. Anyway my bias is quite clear. See SXR is trading 5% up in Canada now
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john_1
Super Contributor
Barry. It is my understanding that ALL uranium is sold on contract and through Goverments, its not the sort of thing we like to let Bin Laarden and a chap in north korea get there hands on if you get my meaning, point is the spot price of Uranium is a little fictious as it is not actually market related in the way gold or other comm's trade.
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TJB
Contributor
SXR IMO is a good one for a long term. I do not see demand for uranium decreasing anytime in the next 5 - 10 years. Watch out for a Dark horse named China, proposed plans for 18 new reactors by 2020. Herad a rumour SA is planning another reactor from what i've heard. The USA also needs couple more reactors, at this point they don't even have enough power to run all the household lights at any 1 time and thats not including all the heavy industry they have over there With the Eurasia deal SXR is now the fourth largest uranium producer in the world and holds some of the largest/richest deposits. Another fact that instills confidense in SXR for me is that Neal Froneman is in the driving seat IMO a very wise, knowlegable and business orientated man who knows what he is doing. The future of SXR is glowing bright green and I do not see any signs of it dimming
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SimonPB
Valued Contributor
but isn't everybody still just missing the point. Uranium is the most plentiful commodity in the world, that single fact makes evrything else, well pointless ???
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deSaad
New Contributor
just throwing this out there - In raw form sand/silicone is probably the most abundant - SAB still had a shortage of glass (and beers!!!) though.
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SimonPB
Valued Contributor
aha, a good point
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deSaad
New Contributor
well actually the point was about the psycho-social impacts of a beer deficit
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