lance sjogren

Merrill McHenry on Uranium: Looking at the Big Picture

In answer to road runner, the world is not running out of Uranium any time soon.

The cost of the Uranium itself is a vastly smaller fraction of the cost of producing power than for something like coal. In other words, the price of Uranium could skyrocket and it wouldn't have a big impact on the economics of nuclear power.

And, if it did skyrocket, the supply would greatly increase due to marginal deposits becoming economic.


I am more concerned about a glut of Uranium rather than a scarcity. When Cigar Lake finally comes online, that will add quite a bit of supply.

Still, I do own some Uranium stocks, namely Terra Resources and Hathor.

Keeping Metals In May, Not Going Away

As to the rise in production cost versus metals prices:

That's why you want to own high grade deposits. In my view, stocks like Novagold whose assets consist of gargantuan mineral deposits of low-grade ore are the riskiest because those deposits are on the hairy edge as far as whether they are profitable.

In contrast, I think companies with high grade underground deposits of gold e.g. in Quebec and Ontario are more certain to be profitable in the face of high costs. I am assuming that energy is the biggest driver. Of course, labor is also an issue. Hopefully the labor supply isn't so tight you have to pay CEO wages to hire a gold miner.