Value Microcaps Junior Miners

[Bobwins]

Uranium! Missed the last runup in Uranium miners. Could never tell the companies with real deposits from the Moose Pasture guys that put Uranium in their stock name. Anyway I forgot about Uranium until last year. Read a bunch of articles about the upcoming shortage of Uranium and the US reliance on Russia for enrichment.

Basically we produce minimal U308 in the US, even though we have one of the biggest fleets of nuclear reactors in the world. China is going to pass us by a long ways but they have no worries about buying fuel from Russia.

Anyway became convinced that Uranium was actually headed for a shortage. We appear to be very close now. But still had the same problem of not being able to tell the Moose Pasture guys from real Uranium stocks.

So I went the safe way. I invested in LEU, CJC, URNM, UROY and recently URNJ.

LEU is not a miner. They are involved in enrichment. They recently fulfilled a Dept of Energy contract to provide sample amounts of HALEU, the fuel of the future for new design nuke plants. They actually make a small profit and are the logical choice to build actual enrichment facilities on US soil. Bought in the mid 30's so happy with the current mid 50's price and think it can run further as the price of U308 brings in new investors in the field.

CJC Small position. Resisted at first because it's the big safe play but the stock has done really well so have a small position. As the general investors and funds get excited about Uranium, they will go to Cameco first. They are restarting mines and are an actual producer. They still have trouble with flooding in their mines in the Athabasca Basin but those mines are big and will be important for domestic nuke plants that need acceptable sources of U308.

URNM Sprott sponsored mutual fund that covered U stocks. This is redundant because CJC is one of their largest positions but I thought it was the quickest way to cover the industry without me buying tiny amounts of 20 or 30 nuke stocks. Sprott has been pounding the table on Uranium for several years. They are not heroic, they started a physical uranium fund to buy up the physical surpluses of Uranium left over from the Fukashima disaster and say they are not going to sell into the current market. Eventually they will find a way to alter their charter. They have a vested interest in seeing U308 soar.

UROY This is the only uranium royalty company. They have 18-20 royalties from some pretty big names and could turn into a long term hold like Franco Nevada for gold IF this uranium pricing cycle holds up long enough for the quality royalties that they hold to turn into actual producing royalties. Same model as gold, low overhead and IF the royalties produce, very profitable. They were formed by UEC so CEO is also officer in UEC and benefits from that sponsorship. The big current benefit is that UROY can also buy physical U308. They have 2.65 million pounds of yellowcake that was bought at $54/lb. Current spot price of $106 means they are holding $281 million bucks in physical U308 vs a market cap of $381million. So there is a substantial asset in this stock plus a couple dozen royalties that look decent. Bought a small position recently at $2.65 so doing ok.

URNJ Bought very recently. This is the Sprott fund for junior uranium miners. This is hopefully the Moose Pasture plus stocks that could actually have U308 in the ground. Bought a small position because I remember the last time U stocks took off, the juniors left CJC, LEU and other legitimate players in the dust. So far so bad. Got excited and chased it during a recent high of over $29. Currently mid $26.

Will likely stop for now. The news flow should be very positive. Utilities have to purchase enough fuel to keep their reactors producing electricity. The world has finally figured out that renewables can't supply base load energy. Nukes are the current answer. Utilities will have to payup for nuclear fuel. The actual fuel costs are negligible compared to the revs produced by the plants. So if fuel is scarce, they will still have to step up and secure long term supplies. US passed a bill forbidding purchases from the Russian bad guys but left an out in case there is no other viable choice. I think that's going to be the case for awhile. China is going to soak up all available supplies as they are building dozens on new nukes. They don't care where they get it so they will finance uranium mines, buy from the Russians and do whatever to get more energy.

Gold miners and silver miners are still way undervalued but they have been that way for awhile with no signs of changing. Uranium looks like the near term way to profit from miners. Lone Clone knows the gold and silver players and has probably done fine but my miners suck except for the U stocks. Good luck all. Bobwins