(Image via US Global Investors.)
Spot uranium prices are up in the face of production disruptions that have been caused by the COVID-19 pandemic.
This is according to one of the largest global providers of the heavy metal. Canada’s
Cameco Corporation (TSX:CCO) recently reported in its
Q1 2020 results release, that the spot price for uranium has increased by more than 35% since the it announced the first disruption occurred at its Cigar Lake mine on
March 23rd, 2020, which caused a suspension of work at the mine. The company had also suspended work temporarily at its Blind River refinery and Port Hope conversion plant.
Meanwhile, Canadian based resource company
Fission Uranium Corp. (TSX:FCU) has been tracking
recent increases in the uranium spot price, which is up over 30% in the past six weeks and improved uranium market sentiment, as a result of additional mine supply coming offline.
Is it time to devote a chunk of your investment dollars into “the other yellow metal”?
Some analysts say, not so fast.
A recent report found that indexes are on the rise beyond 30%, and even though uranium gains can often yield larger returns than gold, its volatility can’t be understated.
(Chart via Katusa Research.)
From the report:
Uranium isn’t a supply issue — it’s a demand issue. There is no shortage of uranium. […] Cameco will need to buy 11 million pounds in the market to meet its sales contracts.
Because of the forced shutdowns and maintenance by the coronavirus spread, these analysts believes that production from the leading country in this market, Kazakhstan, will be lower than expected in 2020. He sees this potentially cannibalizing some above-ground inventories, which may cause utility companies to lock in higher long-term contracts later this year or early 2021.
Cameco noted a loss of $19 million (or a nickel per share) in the first quarter, compared with a loss of $18 million (or a nickel per share) in the same quarter from 2019. The company ended the quarter on March 31st with $346 million in revenue, which is up from $298 from that same period last year. Cameco noted that it earned $29 million (7 cents a share), looking at an adjusted basis, compared to an adjusted loss of $33 million or (eight cents per share) in Q1 2019.
Partner
Orano Canada Inc. also closed its affiliated McClean Lake uranium mill. Both companies stated that these facilities would be placed under “maintenance mode” due to the threat posed by the COVID-19 coronavirus pandemic.
Canada is the second largest producer of uranium with 22% being mined from the Great White North prior to the coronavirus-led shutdown of operations and low prices of uranium. Are you following this market more closely given its increased coverage, or do you choose to follow other, more “stable” investments? Let us know your thoughts in the comments below.
For more of the latest info on Metals & Mining stocks, check out the Metals & Mining Trending News hub on Stockhouse.
FULL DISCLOSURE: Fission Uranium Corp. is a client of Stockhouse Publishing.