Uranium stocks rallied hard this week, breaking this year's formula of excellent long-term industry news vacuum-sealed from the sector's disastrous market performance. As industry takeovers, international trade deals and political agreements march relentlessly on, sentiment is shifting in the beleaguered sector as investors look around for bulls.
Spot uranium prices held steady at US$60 a pound U3O8, with price publisher Tradetech reporting the conclusion of two transactions at current prices. A level of uncertainty remains in the sector, but sellers are starting to stand firm and no longer entertain lowball offers for material. Buyers are also starting to creep back into the market, hoping to cash in on rumours of the investment community gearing up for some massive buys. New demand is still scarce, but sufficient to buoy the metal's spot price at current levels.
According to the weekly uranium update from Toll Cross Securities, junior explorers jumped five per cent compared to last week, while advanced explorers moved up nine per cent, production visibility companies skyrocketed 17 per cent and producers jumped 10 per cent. The Toll Cross Junior Uranium Index jumped 6.7 per cent, moving to 369.34 from last week's high of 346.09.
Tuesday was a particularly strong day for uranium stocks on the TSX, with many companies posting significant gains. Here are just a few winners:
Uranium explorer and developer Khan Resources gained 20 cents, or 22.7 per cent, to close at $1.08 Tuesday, after Western Prospector announced the formation of a committee to review Khan's unsolicited takeover offer. Khan remained strong through Friday, closing the week at $1.03. Western shares jumped nine cents, or 14.5 per cent, to 71 cents a share, after the announcement on Tuesday, before settling Friday at 70 cents.
Khan announced a hostile takeover bid for Western Prospector Group last week, looking for synthesis of joint developments at its Dornod uranium deposit and Western Prospector's Gurvanbulag uranium deposit in Mongolia. The bid came after 18 months of friendly talks between the companies failed to reach a deal.
Khan offered 0.685 of its own share for each common share of Western Prospector, a premium over Western Prospector's then-current trading price. Shareholders of a merged company, if the takeover is successful, would enjoy in excess of US$100 million of savings in infrastructure and operating costs.
Shares of Uranium One enjoyed the highest jump they've seen in more than a month, climbing 43 cents, or 9.5 per cent, to $4.95 on Tuesday. The move came after The National Post reported last weekend that Jean Nortier, the company's interim CEO, wants to bring investor confidence back to Uranium One.
Nortier told the Post that he'd rather scale back his company's forecasting and thus under-promise and over-deliver. This strategy follows criticism that Uranium One did just the opposite late last year, when it hit production troubles at its flagship Dominion mine in South Africa. Uranium One shares have since eased, falling 14 cents, or 2.9 per cent, to close Friday at $4.69.
Forsys Minerals is on fire of late, posting eight straight higher closes on the TSX, including Friday's big move, when the company jumped 63 cents, or 15.3 per cent, to $4.74. The company was worth $3.14 a share on May 12.
Hathor Exploration continued its steady ascent, gaining 10 cents, or 3.3 per cent, to $3.15 on Friday. The company was a penny stock earlier this year, before shooting skyward after some key discoveries, the last of which promised extensive uranium mineralization on the company's Roughrider zone in Northern Saskatchewan and further excited investors returning to take another look at companies in the Athabasca Basin.
Friday also saw flurries of penny stocks closing higher, including Blue Sky Uranium, which gained 3.5 cents, or 11.1 per cent, to 35 cents; Bitterroot Resources, which gained four cents, or 10.8 per cent, to 41 cents; Cash Minerals, which was up 2.5 cents, or 10.4 per cent, to 26.5 cents; Capella Resouces, which jumped 2.5 cents, or 18.5 per cent, to 16 cents; Formation Capital, which gained eight cents, or 15.7 per cent, to 59 cents; and Yankee Hat Minerals, with jumped 2.5 cents, or 27.8 per cent, to 11.5 cents a share.
Now here's a look at the week's global nuclear industry news. Perhaps the momentum the sector is gaining on a global scale is finally starting to permeate the markets.
For starters, Electricite de France (France's main electrical utility) and Exelon (the largest nuclear power operator in the United States) signed a five-year agreement to cooperate on nuclear power matters. World Nuclear News reported the new agreement is similar to those Exelon has with major South Korean and Japanese utilities, specifically excluding any joint venture or new build efforts.
Then on Friday, France's Areva announced that one of its subsidiaries has finalized a US$2.7 billion deal with the U.S. Energy Department to build and operate a nuclear fuel plant in South Carolina. The plant, the first of its kind in the United States, will mix leftover plutonium from dismantled nuclear warheads with uranium oxide to make fuel pellets for commercial nuclear reactors.
Perhaps the biggest news came out of Asia, where Chinese and Russian officials signed a $1-billion deal to have Russia build and supply a nuclear fuel enrichment plant in China. The deal cements Russia's role of supplier to China's expanding nuclear industry.
The hits kept coming, as Agence France-Presse reported Thursday that Italy is ready to reenter the nuclear arena. Italy said it would begin building nuclear power stations to reduce dependence on foreign oil and gas, reversing a 1987 referendum decision to reject nuclear power.
Also Thursday, European Commission President Jose Manuel Barroso spoke at a nuclear energy forum in Prague and called nuclear energy a cheap and carbon-free source, which could contribute to Europe's fight against climate change.
Elsewhere, Kazakhstan's new sulfuric acid plant is expected to come online in June. The plant will be a blessing to that country's uranium producers, who have been battling supply problems, some of them directly related to the shortage of the acid, which is an essential component of in-situ ore leaching.
Finally, Toshiba expects orders for at least 33 nuclear power reactors by 2015 and plans to expand all its nuclear businesses over the next decade.
Talk about strong fundamentals for the nuclear industry. It's no wonder investors are finally taking note.
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