Value Microcaps Junior Energy

[Bobwins]

I recently got interested in Uranium again. It blasted off in late 2020 without me. The U stocks faded this year so about a month ago I bought UUUU, URNM, UEC and LEU. I also bought smaller positions in GLATF and BSENF. I did so after reviewing a bunch of youtube videos presented the bull case for uranium. Obviously the war in Ukraine has turned a spotlight on energy and Uranium is becoming a pretty big part of the story.

Russia is a big supplier of uranium but probably more importantly is a major player in enrichment, turning the raw U308 into a usable fuel source.

I always thought it was kind of crazy to rely on Russia for this task but it worked for several decades. Unfortunately they did it so cheaply that the uranium enrichment industry in the US went away. France still relies on nuclear more than us so they still have enrichment capacity but not enough to totally replace Russia right now. Luckily the nuclear reactor utilities typically plan well in advance and have sufficient fuel supplies on hand for awhile.

But the resurgence of the US uranium industry is really going to happen. The existing players aren't really producers. They have mothballed projects that can be activated with money and time. I expect US producers to be subsidized at first. So here's why I bought the various stocks:

UUUU Energy Fuels has the only licensed plant in the US able to turn yellow cake into U308. The plant is currently being used to separate rare earths. They have survived the nuclear winter and the White Mesa plant ensures that they will be part of any nuclear renaissance in the US.

URNM is an etf with uranium stocks run by Sprott.

UEC has been collecting uranium assets for a long time. They have several uranium producing projects in mothballs waiting for the price of U308 to rise so they can profitably produce. They bought Uranium One and acquired several projects as well as 5 million pounds of U308. They are a billion dollar market cap player with no production! But they are well positioned with several ISR projects that can be restarted relatively easily.

LEU Centrus Energy is an active supplier to the worldwide nuclear power plant industry. They help design solutions for utilites and provide the potential for improved fuel rods for the industry. They actually have revenues! Their stock was hurt by the fact that they have contracts for enrichment with Russia and could be hurt by tough sanctions. But if there is a nuclear revival in the US and new, better fuel is part of it, it's hard to imagine LEU won't benefit.

GLATF Global Atomic is building a uranium mine in Africa. They are well into construction and will likely beat many of the restarts into production.

BSENF Baseload is further down the chain and is a true junior explorer. They are much small in market cap than the others on this list.

A secondary theme in Uranium stock revivals is that the whole clean energy revolution has turned up a big problem. Solar and wind are intermittent. They haven't been able to provide baseload power. Ask Germany if pouring billions into solar and wind has worked. In addition, whether they like it or not, nuclear emits no CO2. Yeah, we still have the spent fuel problem but this winter, Germans and Europeans will have a much bigger problem than theoretical arguments about spent fuel. They could freeze to death. Nuclear provides safe baseload power. That's why the Chinese are building 150 nuclear reactors. The Chinese are building traditional very large reactors. Another interesting part of the nuclear story is SMR. Small modular reactors could become very important to the mining industry as well as small remote towns and villages. These smaller reactors can theoretically be built in a more factory like manner and bring down costs and time to build. US plants can take 30 years to design and build. The first Western SMR is scheduled to be built and operating by 2027. Success here could invigorate the industry and open up much wider usage of SMR's.