RE:RE:RE:RE:let's be honest people, quakes, malcolm, etcOnce again Dreamin you demosntrate zero knowledge of how this business works. I have worked for utilities for the better part of my working life and none of what you say i8s in fact the case. So let me enlighten you.
Firstly "Utility Managers" means a lot of different people with a wide variety of expertise. If by that you mean the fuelling engineers who are the ones that put in orders for new fuel supplies...here is how it actually works. Remeber this information (which can be verified by anyone who has actually worked in the industry) before you embark on another tireade of bafflegab and nonsense.
All Fuelling engineers care about, and I personally know several of them, is the availability of fuel bundles and ensuring there are enough to run the plant for several years. Note FINISHED FUEL BUNDLES. That is what they order - not U3O8, not UF6 just fuel assemblies they can put into storage and put in the reactor at the next refuelling outage (in the case of BWR/PWR plants) and continuously (for CANDU PHWR plants). Fuelling engineers are concerned about one thing and one thing only and that is maintaining the reactivity of the core so the chain reaction continues. To ensure that the fuel manufacturers have the supply of U3O8 and UF6 required to manufacture those fuel bundles Utilities staff at a senior level will enter into contracts to supply U3O8, UF6 and enriched UF6. They also sign contracts with enrichers (in the case of PWR/BWR plants) as these require enriched fuel.
Once they have those contracts in place they do not care much about future availability of Uranium and no they do not do the type of calculations you think they do.
If what you say is true and that there are armies of accountants and engineers calculating which mines are opening and closing and what is happening in Russia and China and Japan and elsewhere what explains the mad rush during the last bull market? The fact is they do not do those things and the very important piece of the puzzle you fail to observe is what is termed "uncovered requirements". That occurs when utility contracts expire and the fuel they need for future operation is not covered by contracts.
All utilities care about is contracted supply and they rely on the likes of CCO (who DO do those things by the way) with whom they sign long term contracts to ensure there is enough U3O8 and UF6 to supply them. It is up to CCO and the others to decide where they get the U3O8 from.
That is why the recent decision to shutter McArthur River and buy off the spot market is so important. I believe UeX did the same for a supply of 100,000 lbs of U3O8 in the last quarter.
CCO is about to buy 10 MILLION pounds on the spot market rather than mine it themselves.
Which brings me to another very important point to improve your education. The spot market lbs is tiny compared to Uranium consumed by the 453 worlds reactors. Only about 40 M lbs changes hands and much of that is recycled (bought and sold) many times in a year so the actual material that ends up in reactors instead in another warehouse is about half that. So CCO is about to take HALF of the available spot market material. YellowCake is drying up supplies from Kazakhstan buying 25% of annual production to go into warehouses with options to buy more.
So let us put it all together for you. Fuel engineers do not buy U3O8. They buy finished fuel assemblies and they do not care where the U3O8 comes from to make the UO2 pellets that are the actual fuel. All they care about is reactor reactivity....keping it high enough (>1) so the chain reaction is sustained. The uncovered requirements of utilities (except China which mandates a 7 year supply inventory - more on that later) is what drives the contracting cycle. And it is NOT inventory that is important it is security of supply. That is what drove the bull market before (flooding of Cigar Lake plus some other factors) not inventory which was higher then than it is now.
Without about 1/3 of a reactor core's worth of fuel assemblies reactors stop Engineers need around 60 to 70 new fuel assemblies at each refuelling. It takes two to three years to process the U3O8 into UF6 and enrich it then make it into UO2 and then manufacture sintered fuel pellets at the right enrichment levels then put all that into a finished fuel assembly they can use.
So at what point do utilities start to get back into contracting and what price will they pay? Those negotiations...and they are often very prolonged negotiations...are beginning to occur now. CCO already has orders for about 40 Million pounds and is contracted to supply the Bruce Nuclear Power plant for another 15 years or so. Anyone wanting a long term contract at todays prices is going to be unlucky. CCO is not going to sign a loss making contract with anyone.
Uncovered utility requirements are increasing steadily over the next few years and the situation starts to get tense in about late 2020. That is when this market will move.
It is irrelevant what the investing herd thinks or whether they price FCU at 66c or 1c. It is what the investing herd will SEE over the next few years that is important. And what they see will be big investors like YellowCake severely affecting supply and utilities wondering what hit them when they are unable to get any material on the spot market and no-one will enter contracting negotiations with them.
If you do not see that then your are blind. But that is why I am a contrarian. But as many have said simply being a contrarian does not make you money. Being a contrarian armed with knowledge others do not understand (or in your case will not understand) is what makes the money.
Are there guarantees...of course not. Another Fukushima will cause a setback. The sudden ability to extract Uranium from seawater will change things and there are a few other outliers that need to be evaluated....all of them low probaility events.
You should view being able to buy millions of pounds of Uranium at just 66c a share as a buying opportunity and you should never be influended by Mr Market. He usually gets it wrong most of the time. Had I listened to the average investor sentiment in 2008 my portfolio would be worth a fraction of what it is now so I do not pay any attention to it. Only fools do that.
If you are betting on the average investor being right then you'd better put your cash into a slot machine...the odds are far better.
You are clearly not convinced - even with the barrage of positive news coming out of the nuclear industry these days. Over 5700MW of brand new plants online so far this year...none taken off line. Over 4000 MW of plants restarted in Japan this year with more to come and two new plants starting construction.
Inventory can only last so long which brings me back to China. For every new plant that is started up 7 years worth of Uranium is required to be stored in inventory by the Chinese Government. THAT is why CGN bought into FCU...they are not stupid. They are there because they NEED the Uranium that the PLS mine will provide. For that reason alone FCU is not going to stay at 66c.
That is a bit of a long post and if you read it until now..well done. I hope you are better informed and will present posts based on actual facts rather than assumptions regarding how fuel is purchased and how utilities operate.
At 66c with this resource it is a give away. You'll see.
M