Paladin (PDN) up by 15% today. ERA up 5%. There are more stirrings following some mainstream press attention to the current price of uranium and the inevitable, not probable, demand for this unique energy metal. Lets look at some real brick and mortar fundamentals with uranium that make it a must have in all investors portfolios going forward into a world likely to hit expensive oil again.
Global consumption has been steadily climbing up to around 60,000 tonnes per annum. Half of this is pulled from the ground and the rest comes from desembled weapons inventories maining in good old Russia! However these inventories are about to run down at a point in time where countries around the world ramp up nuclear power plans. The cost of uranium account for only 5% of the cost of nuclear energy with the rest coming from plant establishment and maintenance. Uranium recently hit a 20 year high of US$20.70 /lb and has continued to rally regardless of oil prices coming back from their US$57 /barrel highs in late 2004. Australia has around 45% of the known global resource that is currently able to be mined at these prices and only three mines are in production in Australia. One is the Beverley mine down in SA which is not listed on the ASX or anywhere for that matter. It is privately owned by the US giant General Atomics. The other two mines are WMC's Olympic Dam and ERA's Ranger Mine. All the market fundamentals point to a continued rally in uranium stocks this year. Keep an eye on the uranium price in particular (uxc.com). The best thing about this commodity unlike gold and silver is that if you want a piece of the action you have to buy shares. You can't physically buy uranium. There are some great Canadian stocks also and investors over there are much more aware of the potential of this sector of the energy market.