Final Trade Detail
- Denison owns some of the highest grade uranium deposits in the Athabasca Basin.
- It's trading below the net present value of its ownership in the Wheeler Project.
- 25% of global production was shut offline in the past 3 years in order to rebalance supply and demand.
- "Kazakhstan, the world’s largest uranium miner, will support prices at current levels and is ready to cut production again if the market were to fall any further, Kazakh Energy Minister Kanat Bozumbayev said in June."
My friends… there’s a bull market no one is talking about.
The time to get in is now… before the mainstream media gets wind of it.
No, it’s not the next Amazon. It’s not the next pharma company that will cure cancer. And it’s definitely not a cryptocurrency or cannabis stock.
I’m talking about uranium.
Quietly, uranium is up 55% since its November 2016 lows. It’s up almost 28% this year alone… even as the U.S. dollar starts breaking out into its own bull market.
You see, commodities are cyclical. Miners get slaughtered when the commodity entera a bear market.
But they absolutely soar when that commodity enters a bull market.
That is why we’re going to invest in Denison Mines.
Denison Mines is a uranium miner based in Canada.
Its projects span about 790,000 acres in the Athabasca Basin in Saskatchewan, Canada.
It’s crown jewel is the Wheeler Project… the largest untapped uranium project in the Athabasca. It owns a a 63% (soon to become 90% by end of 2018). The Wheeler Project has more than 109 million pounds of high quality probable reserves.
At the current spot price of uranium, this mine’s pre-tax net present value alone is worth about $1.5 billion … yet Denison’s market cap sits at just under $400 million. (This assigns no value to any of Denison’s other ventures whatsoever.)
But we think uranium prices are headed even higher over the coming years.
Uranium Headed Higher
KazAtomProm- Kazakhstan’s state-owned producer – makes up about 40% of global primary uranium production. Its the equivalent of Saudi Arabia in the oil space.
Well, KazAtomProm decided to take 25% of their production offline… which represents 10% of global production.
Cameco – another major uranium producer – has indefinitely suspended its McArthur River mine. McArthur produces about 18 million pounds a year, accounting for 15 percent of global production.
That’s 25% of total uranium production coming offline in the past couple years.
Cameco and KazAtomProm couldn’t take the glut anymore. They tried producing through the cyclical nature of the commodity.
But they both said mercy and cut production. That’s when you know we’re towards the bottom of the cycle.
Global Thirst For Uranium
Today there are 54 reactors under construction, 151 planned and 337 proposed according to the World Nuclear Association.
China and India are responsible for 37 of the reactors currently under construction. They have a vested interest in getting these reactors up and running. Both countries struggle with curbing pollution.
Nuclear power is carbon neutral. And China and India want to move away from coal as fast as possible.
Denison is one of the best leveraged ways to play the uranium market.
It’s got some of the highest uranium grade assets in the world.
As of now, it’s trading at a 73% discount to its net present value of just its ownership in the Wheeler Project. This assigns no value to its 4 licensed mines and 3 licensed mills. Cigar Lake, Rabbit Lake, McArthur River Mine,
Denison was trading around $0.90 in early 2017 when spot prices were lower than they are today. Resorting back to those prices would give us an immediate 38% gain. We think that’s a chip shot.
In commodity bull markets, the miners soar higher than you can imagine. Massive gains can be made.
We see no reason why Denison can’t trade back to its 2014 high of around $1.80 – a 181% gain from today’s prices. (Denison rose over 570% the last uranium bull market that ended in 2011).
Denison is volatile, so expect to see major price swings day in and day out. We don’t want to get shaken out of this position, so it’s better to limit the size of your position rather than setting a small stop loss.
Buy Denison up to $0.68.