savvy_trader

A Nuclear Growth Opportunity with Denison Mines

Uranium supply will be dominated by the companies with larger profit margins which are built on higher grades and/or lower operating costs. Small underground, low grade mines will have to compete against these. Historic production from these underground mines has been 4-7 tons/manshift, with labor rates running at approximately $600/manshift. Assume labor is equal to 50% of your production costs, throw in freight, royalties, and milling costs, add mill recoveries and you are at $75+/lb pretty quick. Throw in $5/lb for capital and a RoR of 15% and that will give you an idea of where uranium prices need to be for these deposits to be feasible. Western Australia has just lifted its ban on uranium mining and has massive supply potential. Look there.

A Nuclear Growth Opportunity with Denison Mines

Look at Denison's stated grade (NI 43-101) and their production grades (substantially lower due to mining dilution). Do the math. The $45 floor will not help much. Profitability will kick in at a number twice that figure. Denison still has not released cash cost figures. Why is that?

Seven Uranium Stocks to Fuel Your Portfolio

Look at the deposit grades (%U3O8). Cameco has the grade to support their costs. At current market prices, who else does? These companies need to be disclosing what their production costs are before I would invest a single dime.

Nuclear Power's Second Coming Will Lead to a Uranium Boom

Uranium mills are not very useful if you have no feed for them. Take a look at the mine's reserve grades (%U3O8), mining costs ($/ton & $/lb) and distance to the nearest processing facility. Only the higher grade deposits (>1% U3O8) are viable unless the current spot price doubles. The lower grade deposits will have to wait until these richer deposits play out. Currently, most uranium producers do not want to disclose their costs, and for good reason! Do you homework before investing.

Denison Mines: A Play on Escalating Uranium Demand

Denison reserves are relatively low grade. What are their production costs? These deposits cannot compete financially with the bigger player's higher grade deposits and will only be exploitable when the spot price rises above $100. As an analyst, you are not asking the right questions!