Uranium Mining Stocks: Time Bomb Ticking

Odds favor the eventual disintegration of hundreds of uranium mining juniors over the next few years. More than 500 companies now claim to be exploring for uranium, developing one or more uranium projects or producing uranium. As 2010 approaches, 90 percent of those companies will have changed their name and/or moved onto something new. Investors are vulnerable to the subsequent stock rollbacks in those highly speculative issues, which could result in the entire loss of their investment.

After three years of research, we’ve watched the entire sector jump by twenty-fold from a few dozen uranium companies to the present number. As many as four hundred companies were never really serious about becoming uranium producers. They were simply trying to ‘raise money’ and capitalize upon the hottest commodity sector. Our intensive six-month research investigation found less than 25 of the new uranium companies likely to mine any uranium before 2011.
The next two years will likely to witness a massive consolidation within the uranium space. Only those companies which have moved their projects forward are poised to survive the eventual ‘downdraft’ in the uranium price. Earlier this year, we forecast high volatility in the uranium price. The spot uranium price has soared, but the amount of actual uranium material trading hands continues being delivered at much lower prices. We also forecast a price hiccup, probably as early as this summer. Investors must question whether some of the marginal exploration companies remain safe, even for momentum trading.

Conservative Voice