Value Microcaps Free-For-All

[micham2012]

re Uranium:

"Uranium Catches On With Niche-Savvy Investors"
venerdì, 15 settembre 2006 1.45

By Nick Trevethan

LONDON (Reuters) - Uranium could be the next big thing for investors searching for high returns in niche markets, with growing interest in nuclear power fueling the boom.

A number of funds have already moved into the physical uranium market including Canadian-listed Uranium Participation Corp and Nufcor International, a joint-venture between AngloGold Ashanti Limited and FirstRand Limited which manages Nufcor Uranium.

"I think we are seeing the tip of the iceberg of financial investors entering the physical uranium market," said Mitchell Dong, chief investment officer of Solios Asset Management Inc. It operates several funds and pools of private capital investing in energy assets, including uranium.

"We think we will see a move from a purely physical market to a blended physical and financial market, as we see in the power markets in the Nordic countries and the United States."

Spot uranium prices have nearly doubled over the last 12 months to $52 per pound, according to the website of Ux Consulting (UxC), a leading publisher of uranium prices and price forecasts.

Uranium demand from the world's 440 nuclear reactors runs at around 80,000 tonnes per year, while mine production is around 50,000 tonnes.

The shortfall made up from finite stocks of highly enriched weapons-grade material from nuclear warheads that is downblended for use in commercial reactors.

Analysts said increasingly sophisticated investors would want to cash in on rising prices.

"We are seeing a requirement for more sophisticated, more active investment products. It is no longer simply a question of putting money into an index fund and coming back in five years," UBS analyst Robin Bhar said.

"This more active approach will require a myriad of new imvestment products such as structured notes and niche markets like uranium."

Recently, ETF Securities announced plans to launch a series of products that would allow investors to gain exposure to commodity price movements by tracking indices.

"We could see more speculative activity in uranium that doesn't rely on holding physical material through exchange traded-notes (ETNs) -- assets that are based on benchmark prices rather than a store of physical material," Bhar said.

In addition to the ETFs, around half a dozen private hedge funds hold physical uranium.

"Five years ago over 80 percent of spot market volume was purchased by utilities. So far this year under 20 percent has been purchased by end users," a European uranium analyst said.

Andrew Ferguson, manager of Geiger Counter Limited, a closed-end uranium mining and exploration fund with 13 million pounds under management, said the market was too new to cope with exchange traded notes.

"There are people out there looking at paper-based assets, but the market is a bit too new for those."

"Some clever person will come up with something along those lines. We are happy investing uranium miners and assets like Nufcor. Physical uranium is also an option, but we see the greatest upside with producers and explorers," he said.

Gary Stoker marketing manager Nufcor International Ltd said: "Certainly uranium markets have been very interesting for investors over the last three or four years and it does not appears as if that interest is abating."

"Uranium until recently saw no investor interest and even now 90 to 95 percent of the market is producer to end-user business, but investors are starting to get into the market"

He said the financial community was investing anticipating substantial growth.

"Various numbers are bandied around. The one thing that is certain is that the economics of a nuclear power station are fairly insensitive to the price of uranium.

"Even if prices double from here, it won't significantly affect the competitiveness of nuclear power."

That bullish view was shared by investors in Nufcor's fund, which holds over 1,000 tonnes of uranium and trades at around 30 percent above its net asset value.





http://www.borsaitaliana.reuters.it/news/newsArticle.aspx?type=fundsNewsUK&storyID=2006-09-15T11...