The Uranium Bottleneck
By Andrew Mickey
Last week was another great milestone for uranium. In the spot market, uranium prices tacked on another $5 last week to set another 27-year high of $125 per pound.
What’s driving uranium prices sky-high?
It’s been the same problem for the past six months: Cigar Lake. Cigar Lake is Cameco’s massive uranium mine that was flooded out back in October. The mine was expected to account for as much as 17% of the world’s uranium production in 2008.
Initial reports estimated the flooding would cause an 18-month delay in the new uranium supply coming on line. But that was far too optimistic.
There’s no good news coming from Cigar Lake… at all. After all, Cameco not only has to pump all the water out of the flooded mine, but it’s going to have to dispose of the uranium contaminated water, complete a new environmental study, and get new permits all under the watchful eye of Canadian watchdog bureaucrats.
Needless to say, it’s going to take years for this supply to come back on line.
But that doesn’t mean the uranium bottleneck is going to last forever. According to the self-proclaimed original uranium bull James Dines, “this is not a sustainable boom.” And when he turns bearish, you know the end is only a few years away despite the Cigar Lake issues.
For now though, there’s a huge uranium bottleneck and there’s not much to do about it. But nuclear power plants aren’t sweating the problem. There is a solution and its one of my favorite uranium plays. Lucky for us, it’s still just under Wall Street’s radar.
Jeff Saut, Raymond James Chief Investment Strategist, had this to say about my favorite uranium company:“[It] could change the [uranium] bottleneck, upward pressure on uranium prices should continue until enrichment capacity is added in sufficient quantities to go to lower tails assay and save uranium.”
This company has one of the only solutions to the uranium crunch that has been driving uranium prices to record levels. And it’s still not too late. Learn about my favorite uranium play here.
That’s all for now,
Andrew Mickey
Chief Editor, BreakAway Investor
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