uranium prices up -- completely unrelated to FIUThe spot price for uranium is now $73. For anybody thinking this impacts the value of FIU, guess again. Every mining company I hold is up because their commodity prices are up -- except FIU. This is bizarro world, and the actual present value of the mine that FIU owns and apparently is on path to turn into a profitable operation within a year or so doesn't change according to the price of the commodities that are in the ground.
I can completely understand that the value of the stock should be around $1 if gold was $800/oz and uranium was $55 which would put the NPV of the mine at around $500-600M, and since the company is still a year or two away from profitable operations and therefore a 50% discount for 300M shares at $1 each would be reasonable.
But gold is way up, and so is uranium.
The gold and uranium could also be valued at the NPV of the total resource of the gold + uranium less the cost to extract it, but I don't want to commit to FIU being worth 30M oz x $600 + 50M lbs x $35 = $20B. How ridiculous is that number? I mean, the company is currently trading for $200M, and anybody thinking there is currently $20B in value in the ground means that this stock could go up an improbable 100 times. But, just for argument's sake, if this company could even possibly by worth 100x the current share price, I might be tempted to hold my shares and buy more if the price falls to
.49. Just saying.
So, here's my theory: the major shareholder's are benefiting from low stock price. They don't care if the price is $7 or $2 or $1 or
.10, all they care about is accumulating more ownership. If FIU needs more money, they will happily give it more money as long as they keep their ownership percentage. But then again, I seriously doubt RBC, an old and very large bank, is thinking long term like this. They probably just care about the next quarters results.
So, how then can the major shareholders be benefiting with the current stock price? My guess is that a long term low stock price and huge volatility is causing other shareholders to bail more than it is attracting new share purchases. That will continue to happen until either investor risk tolerance increases, or a significant amount of ownership with the major shareholders is lost to new shareholders. Oh, and when FIU keeps coming back to the market for more money, the major shareholders are acquiring more ownership because they are ponying up the money as FIU needs is and the retail investors are, in essence, bailing.
IMHO -- anybody bashing FIU without solid facts is part of a campaign to spread Fear, Uncertainty and Doubt (FUD) about FIU. Major FIU shareholders are benefiting from this, and it will continue.
If you are a small shareholder and are in this company for the long term, each time FIU comes back to the market for more money, you should buy more shares and maintain your ownership share.
In the meantime I will start a serious effort to get my friends and family to put small amount of high risk capital into this capital, if they promise not to bail for a few years. I don't know of any other 100x possibilities, but they'll all love me when their $1000 investment turns into $10,000 or possibly a lot more.
Just my opinion.