Well before the rapid plunge of markets around the world and general deleveraging of risk occurred, the price of uranium and uranium stocks had already been correcting. Of course, now with liquidity being the order of the day and indiscriminate selling in all sectors--forced or not--uranium is to many a symbol of the speculative excesses of an era that few could have imagined would end so terribly wrong.

Signs of a top in uranium were there: interest from the general public to a point where uranium was being discussed in mainstream media, the proliferation of hundreds--many of dubious nature--small explorers with uranium in their name competing for investors' money, the parabolic rise in the price of spot uranium. Still, it is easy to view matters with a retrospectoscope, to condemn with post-hoc analyses.

Much speculative interest and short-term momentum has gone out of the uranium sector. Share prices that went parabolic just months ago have come back down just as or even quicker than they ascended. And still, if one believes in the fundamental story (and really, you only have to consider the logic in governments just suddenly abandoning their billions of dollars budgeted for new reactors overnight) of increasing uranium demand, even the pain endured over the last several months can be tolerated.

Paladin has been busy the last several months. At the beginning of June, the company closed its bid for Summit Resources Limited, acquiring 81.8% of shares and taking full control of the Valhalla exploration project for all intents and purposes.

On a more sobering note, however, Paladin spent the rest of the month defending its Kayelekera Project in Malawi. First, both the company and government were sued by NGOs to delay the project until issues with Malawi's Environmental Management Act [EMA], as well as protective measures for the local community were addressed; the government has said that it has fully complied with the EMA. Secondly, Paladin reiterated its stated goal of commissioning Kayelekera in September 2008 and dismissed contentions that there may not be sufficient power for the project as the company is placing an order for a 10MW power generation facility.

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The first decreases in the uranium spot price to the current $129US/lb, coupled with Cameco's July 11 announcement of further delays in Cigar Lake that will delay production until at least 2011 have spurred short sellers into their present bearish position on the uranium giant.

While on the surface, trading U3O8 futures on the NYMEX has barely created a ripple, uranium bulls believe that anything that serves to focus American investors to yellowcake is a good thing.

Denison Mines (DNN), who started to trade on the AMEX under the symbol DNN a month ago in addition to its existing DML listing on the Toronto Stock Exchange, has remained resilient during the May correction that has recently hit other uranium stocks.

April 17, 2007 CIBC WORLD MARKETS $140 in 2007, $160 2008
April 11 BRENDAN KYNE, LEEWARD HEDGE FUNDS $150-200 next two years
Apr 10 NEAL FRONEMAN, CEO SXR URANIUM ONE $150 end of 2007
Apr 10 LAURENCE ALEXANDER, JEFFREY & CO. $115avg 2007
March 29 ABN AMRO, GLOBAL BANK $140 2007-2010
March 29 JOHN WILSON, RESEARCH CAPITAL RESEARCH $125 2007, $140 late 2008
March 6 Australian Bureau of Agricultural and Resource Economics ABARE $94.20avg 2007 $103avg 2008
Feb 27 ABN AMRO, GLOBAL BANK $95 2007
Feb 26 PATRICIA MOHR, SCOTIABANK at least $90, appear headed to $100 end 2007
Feb 12 PHILLIP SHIRVINGTON, CEO URASIA ENERGY >$100 2007
Feb 12 NEAL FRONEMAN, CEO SXR URANIUM ONE >$100 2007
Jan 31 YURIY NEDASHKOVSKY, UKRAINE DEPUTY ENERGY MINISTER $122 end 2007
Jan 29 BRENDAN KYNE, LEEWARD HEDGE FUNDS $100 in 2007, $125 in 2008
Jan 8 RESOURCE CAPITAL RESEARCH $90 mid 2007, $115 late 2008
Jan 7 PATRICIA MOHR, SCOTIABANK $90 by end 2007
Jan 7 ADAM SCHATZKER, RBC CAPITAL MARKETS $100 in 2007
Jan 5 PETER GRANDICH, THE GRANDICH LETTER $100 ?timeline
Dec 21 BART JAWORSKI, RAYMOND JAMES $90 in 2007
Dec 11 ANITA SONI, MERRILL LYNCH $75 in 2007
Nov 7 LUKE BURGESS, GOLDWORLD.COM $110 by 2010
Nov 6 JEAN-FRANCOIS TARDIF, SPROTT ASSET MANAGEMENT $70 by January 2007
Nov 6 BOB MITCHELL, ADIT CAPITAL MANAGEMENT LP $80-100 ?timeline
Oct 18 DOUG CASEY, CASEY RESEARCH $100-150 ?timeline
Oct 18 GARY STOKER, NUFCOR INTERNATIONAL >$60 in 2007
Oct 16 JOHN ZECHNER, JOHN ZECHNER ASSOCIATES $80-100 ?timeline
Sep 12 DEUTSCHE BANK AVERAGE URANIUM PRICE $59 in 2007
Sep 12, 2006 CIBC BANK $70 by end of 2007

While China had finalized an agreement with Australia last year in the hopes of securing the latters’ uranium supply, political uncertainty still abounds and the prospects of massive uranium production expansion from new mines in Australia is not likely going to happen. Still, as a testament to how serious China is about securing future supplies, Sinosteel Corporation will buy a 60% stake to manage and operate Australia’s Peppinnini Minerals' exploration licenses.

Certainly, the stock of Gold Reserve has appreciated significantly over the past few weeks as the Brisas Project economics began to outshine Venezuelan risk: proven and probably reserves of ~10.4 million ounces of gold and 1.3 billion lbs of copper with average estimated annual production at 456,000 oz Au, 60 million lbs Cu and an internal rate of return [IRR] >30% at today’s prices.

In addition, the stock rose double digits when president and CEO George Glasier went on Canada’s Business News Network last Friday to espouse the virtues of this potential uranium producer. Below is an excerpt of the interview:

George Glasier, president and CEO, Energy Fuels Inc.:

Indeed, signs of increased investor attention to uranium has filtered into the United States. Coinciding with the upward price movement in uranium was a new 52-week high for uranium supplier USEC Inc. (USU). USEC operates the only uranium enrichment facility in the United States; it also is in charge of recycling uranium taken from old Russian nuclear warheads and converting it into useable fuel. As one can see from the chart, USU has had a nice run, rewarding investors with nearly a double over the last six months and appreciating to a $1.6billion US market cap.

March 7: Australia's Energy Resources declaration of force majeure on its sales contracts as a result of flooding in its Ranger mine
March 19: Cameco (CCJ) details remediation plan for its Cigar Lake mine, targets 2010 production
March 20: Uranium Focused Energy Fund closes $195 million IPO
March 23: Uranium spot price raised to $95/lb

Because its news regarding Cigar Lake was deemed to be better than expected, Cameco’s stock has regained much of its luster, traversing from $36 to $45 on strong volume in a matter of weeks, buttressed by a “top pick” recommendation by RBC with a target price of $60.

Key Properties

Whirlwind

Since the bulk of North American uranium stocks are listed on the TSXV and generally move more or less in lock and step with the exchange, overall sentiment should be gauged. However, if one is relatively assured that the correction is mostly over and done with, there seems to nothing that can obstruct uranium stocks from buoying higher.

The rapidity of last week's events caught many investors off guard, with the precipitate being China's Shanghai Composite Index falling nearly 9%; the reason for decline, I might mention, was the government's fear of rampant market speculation, and not attributed to fears of China's economy slowing down. Indeed, one of the influential bulls of our investing world, CIBC's Jeffrey Rubin, noted that where China's economy has grown on average 9-10%/year, its stock market actually declined significantly in the years before this and last, so the correlation is certainly not strong between stock market trends and overall economic outlook in the East.

Rumors of a slowing Asian economy, US sub-prime collapse, or unwinding of the Japanese carry trade notwithstanding, markets found any and every excuse to correct downwards. However, it is important to stress, as I had before during the mini January correction, that uranium fundamentals have not changed. Whether it is commodities guru Patricia Mohr of Scotiabank (at least $90, headed to $100 end of 2007), CEOs Phillip Shirvington and Neil Froneman (>$100) of soon-to-be merging uranium mid-tiers Urasia Energy (UAEYF.PK) and sxr Uranium One (SXRFF.PK) or Australian Bureau of Agricultural and Resources Economics [ABARE] ($94.20 average this year, $103 average 2008), forecasts for yellowcake have only been revised upwards.

An illustration of such is shown below, which is a graph of the total number of subscribers to my uranium stock blog. Also shown for comparison is a 1-year chart of $15.9 billion Cdn uranium giant Cameco Corporation (CCJ) and $1.1 billion Cdn upstart Energy Metals (EMU), one of several promising mid-tier uranium junior companies.