Australian Uranium stocks

Submitted by Marco on 8 April, 2006 - 10:46

Have you missed the boat? Who knows - look at your charts... However, in 2002 the uranium industry was dead. Now it is active as ever, with deals being made to export the commodity with China and plans to export it to India soon coming. Think about this: Paladin increased in price 5 times compared to last year - hows that for returns!?

Among the uranium stocks listed on the ASX (Australian Stock Exchange) are: Globe Uranium, Uranium Exploration Australia, Uranex, Marathon Resources, Deep Yellow, Redport, Curnamona Energy, Summit Resources, Valhalla Uranium, Energy Metals, Nova Energy, Paladin Resources, Monaro Mining and Energy Resources of Australia.

But here's the catch: A lot of them aren't even making money yet, or even have operating mines. Perhaps the only one is Paladin with their African mine. Is this a bubble? Almost certain it is: these junior miners are over priced: it will be years before large scale production will start and thus no earnings to justify current levels.

This week marked an agreement signed by Australian Foreign Minister Alexander Downer and his Chinese counterpart Li Zhaoxing that will allow uranium to be exported to China. While the deal boosted the popularity of uranium stocks with investors, it will take a while until real profits start to roll in. As far as traders and investors are concerned - this was a political deal and doesn't mean anything commercially yet. We are seeing these share prices becoming bloated... companies with little or no cash flow at all watching their share prices soar... a bubble indeed.

But in the long term, there is a strong supply-demand fundamental underlying the reasoning for these share prices to soar and it is probable that the price will strengthen in future.