UsCameco (CCJ) is the second largest producer and since it sold off its gold interests, the company is a pure play on uranium. The largest producer is Kazatomprom. Cameco may be the safest play based on their legacy contracts, but will probably not see as large of an upside with the increase in spot price. The company also has very cheap production. Paladin's production in 2010 shows impressive growth from 2009. In 2009, 3.5 million lbs. were produced. In 2010, it was increased to 5.6 million lbs. The company is estimating production of 7 million lbs by the end of 2011. Areva produced an impressive 15 million lbs. in 2009 and 2010.
Lastly, and my favorite, is Denison (DNN). The company produced 1.4 million pounds in 2009 and 1.6 million in 2010. It has zero debt and operating capital of $78 million as of September of 2010. In 2010, the company saw large increases in revenue and has cut earnings losses to a much more manageable level.
We have seen a convergence of the spot price to long term price of uranium. The price of vanadium has doubled. When looking at Denison's production growth targets, its timing may be perfect. In 2013, Russia will discontinue its conversion of nuclear warheads to uranium fuel. This is 65% of the world's current uranium consumption. In 2014 Denison's production will increase to 4 million pounds. In 2016 this production will increase to 6 million lbs. In 2018 production will be almost 12 million lbs. Denison states it can increase production to a sustainable rate of 10 million lbs.
To put that in to perspective, as of 2010 that would place Denison as the sixth highest producer of uranium in the world. Also, estimated cost of production for Denison in 2010 of $37.07 per lb of uranium in U.S. dollars. With the current spot price above $60 lb., and previous high at $137 lb. it is conceivable to have a price in the triple digits sometime in the near future.