Cameco shares jumped this week as it announced that
it continues to make progress with remediation at the
Cigar Lake Uranium Project in northern
Saskatchewan.
Cameco has submitted an application to the Canadian
Nuclear Safety Commission (CNSC) to allow
dewatering of the project.
The CNSC has approved Cameco's plans to pump the
water out of the mine and to inspect the mine once
the water is pumped out.
Cameco expects to pump water out of the mine over
the next several months beginning next week.
Cameco stated that it will be able to provide a firmer
production timeline for the mine date after the water
has been pumped out.
Despite weaker stock markets, uranium stocks have
posted some decent gains in the last week.
Uranium stocks have been pounded over the last
year. But it now seems that they can look forward to
a nuclear construction program in India and China
that rivals the ones undertaken during the oil crisis of
the 1970s.
Uranium prices have fallen from $130 per pound of
yellowcake (U308) to $58 a pound this week.
However, the momentum appears to be shifting as
there were six transactions in the uranium spot
market this week from traders, investors, producers
and utilities.
Although most are bearish on uranium prices, there
are a few who expect the price to rebound to $90 a
pound as India will start up three reactors this year
and another six will start up in China, Russia, India,
Canada and Japan in 2009.
Nuclear reactors will continue to start up due to
record prices for oil and coal, along with concerns
that emissions are causing global warming to worsen.
The International Energy Agency stated that the
world needs to build 32 new nuclear plants each year
as part of measures to cut global emissions in half by
2050.
There are 439 nuclear reactors operating globally
with 34 currently under construction. U.S.
Republican presidential candidate John McCain
stated that he will push to almost double the number
of nuclear reactors to lessen the nation's dependence
on foreign oil. Democratic presidential candidate
Barack Obama also backs nuclear power.
There are currently 104 reactors in the United States.
However, the last one to come on line was in 1990.
I believe that uranium prices have bottomed and that
they will have to increase if companies like Cameco
are going to supply the world's rising demand of
uranium in the future.
n Kevin Johnston is a senior wealth adviser and
director of wealth management at ScotiaMcLeod in
Regina. The opinions stated are not necessarily those
of ScotiaMcLeod, a division of Scotia Capital Inc., a
subsidiary of the Bank of Nova Scotia.