The Softer Side of Energy’s Boogeyman

This morning, Uranium Producers of America’s president, Scott Melbye, testified at one of the most bullish bipartisan Senate hearings I’ve ever heard.
Once the boogeyman of the energy space, nuclear energy is emerging as an important contributor to help meet the many mandates requiring a significant reduction in the carbon footprint left behind by fossil fuels.
While everyone waits for the utilities to get off the sidelines and start locking up future supply of physical uranium... uranium companies are front-running the utilities by committing to make strategic purchases and stockpiling them.
The plan is brilliant in its simplicity.

Uranium companies know that current spot prices are well below the cost of production for most producers, and are taking it upon themselves to raise money and do what contrarians do: buy at the bottom, wait for the fundamentals to play out, then sell at higher prices.

Denison Mines (NYSE: DNN)(TSX: DML) just closed a strategic financing agreement to raise about US$86.3 million.

The cash infusion will be used to fund the strategic purchase of uranium concentrates to be held by Denison. They’re a long-term investment intended to support the potential future financing of the advancement and/or construction of its 90%-owned Wheeler River uranium project in Saskatchewan, Canada.

Uranium Energy Corp (NYSE: UEC) just raised US$30.5 million and announced its plans to establish a physical uranium inventory.

UEC's physical uranium initiative is fully funded with cash on hand and now includes 1.4 million pounds of U.S. warehoused uranium with one million pounds delivered by May 2021 and another 400,000 pounds delivered by March 2022.

Yellow Cake, which specializes in buying and holding physical stocks of uranium, said it has informed Kazakh uranium company Kazatomprom that it has elected to exercise its full 2021 $100 million uranium purchase option and expects to take delivery of the 3.5 million pounds of U3O8 at Cameco's (NYSE: CCJ)(TSX: CCO) Port Hope/Blind River facility in Ontario, Canada between April and August this year.

The company has also agreed to purchase a further 440,000 pounds U3O8 at a price of US$27.34 per pound, for a total consideration of US$12 million, taking delivery later this month.

Paladin (OTC: PALAF) recently raised $60 million and, just yesterday, Boss Energy (OTC: BQSSF) announced it’s raising AU$60 million of which AU$50 (US$36 million) will go towards uranium purchases from UK suppliers.

Money is flowing, deals are getting done, and uranium speculators are excited again.

I encourage you all to go look at a one-year chart of the companies mentioned. Uranium companies were boring last year — despised, even.


Gold and precious metals companies are boring right now.

Despised, even.

In a year, we’ll be having the same conversation about gold and precious metals companies.

Both uranium and gold are going higher.

You decide where in the cycle you want to buy.

Let's get it!

Gerardo Del Real

Gerardo Del Real
Editor, Daily Profit Cycle

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Daily Profit Cycle, Junior Resource Monthly, and Junior Resource Trader. For more about Gerardo, check out his editor page.

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