Uranium is commodity non-grata these days.
Case in point: Shares of Energy Fuels have cratered in recent weeks under the weight of a nuclear crisis in Japan and environmental opposition to its Colorado uranium mill.
Energy Fuels Inc. (TSX: T.EFR, Stock Forum), a Toronto company, recently won a green light from regulators to build and operate a uranium processing mill in Colorado. After hitting a 52-week high of $1.59 in February, the stock fell to 41 cents this week, a victim of investor reaction to the earthquake in Japan and legal action from environmentalists in Colorado.
At current levels, Energy Fuels has a market cap of $51 million Canadian based on 124 million shares outstanding.
Energy Fuels is not alone in experiencing fallout from the massive earthquake and tsunami, which wrecked Japan’s Fukushima Daiichi plant in March, releasing radioactivity and prompting governments to reassess their nuclear strategies.
Parties in German Chancellor Angela Merkel’s coalition government just agreed to shut all of the nation’s nuclear reactors by 2022. Hit just as hard have been shares of Uranium One Inc. (TSX: T.UUU, Stock Forum) Denison Mines Corp. (TSX: T.DML, Stock Forum). Cameco Corp. (TSX: T.CCO, Stock Forum) and (NYSE: CCJ, Stock Forum), the world’s leading uranium producer, is trading at $27.58, down from around $44 before the earthquake occurred.
Before the Japanese earthquake, Energy Fuels had risen all the way from 13 cents ahead of a regulatory decision enabling the company to develop what will be the first new uranium mill to be built in the United States since the Cold War.
The $175 million Pinon Ridge Mill, which is to be located on a site in western Colorado, would allow the company to reopen two dormant uranium mines in Colorado and Utah, producing Yellowcake for use in nuclear reactors.
The stock’s U turn has coincided with news that Energy Fuels faces a court challenge from The Sheep Mountain Alliance, an environmental coalition seeking a judicial review and invalidation of the radioactive materials license which was recently granted to the company.
Based in the moneyed skiing town of Telluride, Colorado, the alliance is suing the state, claiming that regulators failed to follow federal state law by issuing a radioactive materials license for the 500-tonne-per-day processing mill. It alleges that Colorado regulators:
- Violated the Atomic Energy Act by issuing the license without giving the public an opportunity to ask questions about the mill in a formal setting.
- Violated state law when they issued a license to Energy fuels before the company had posted the necessary financial warranties to cover the cost of cleaning up radioactive waste.
- Ignored data that revealed groundwater samples taken at the Pinon Ridge mill site exceeded allowable standards for both radioactive materials and heavy metals
Court documents say many members of the Sheep Mountain Alliance live downwind from the proposed mill, which is to be sited in Montrose County, about 10 kilometres above the town of Bedrock, Colorado, and Dolores River.
Energy Fuels’ Colorado uranium plans are likely to be tied in court for some time to come, a scenario that is unlikely to help investors who bought the stock at much higher levels. Last month, the environmentalists won a round in fight to stop the mine when a Denver District Court rejected a motion filed by the company and the Colorado Department of Public Health and Environment to have the Sheep Mountain lawsuit dismissed.
(Company officials were not available to comment on either the lawsuit or the court decision to allow the suit to proceed. We tried to reach them.)
Meanwhile, reports on the aftermath of the Fukushima nuclear disaster are focusing on the impact on the health of local children, reminding investors of the core meltdown at the Three Mile Island nuclear station in Pennsylvania in 1979 and the 1986 accident at the Chernobyl nuclear plant in Ukraine.
Greenpeace has also slammed Japanese authorities after new data from its radiation monitoring raised concerns about continued long-term risks to people and the environment from contaminated seawater.
Faced with the likelihood that Fukushima will continue to dominate world headlines, companies that were previously focused on uranium are now turning to other commodities. United Energy Corp. (TSX: V, UTY, Stock Forum), for example, said this week it has struck a deal to earn a 100% interest in a gold property in northern Saskatchewan.
Analysts say it is a trend that is likely to continue, especially if there are more news reports about radiation in basic food products or evacuations caused by nuclear contamination.