Uranium Mining - Nuclear Power

Your fearless editor took a secretive trip a few weeks ago.  My intention was to uncover some long hidden assets that have been ignored for more than 30 years.  The area I visited was quite remote, and the trek to get there took over 7 hours by car.  In the end I was glad I went, what I found amazed even me.

Thirty years ago, the US was suffering from high oil prices and an economy in turmoil.  Alternative energy sources were being widely pursued, and the advent of nuclear energy was widely heralded.

The US Government was continuing to develop stronger and stronger nuclear weapons, and to encourage the mining of uranium the government opened up wide swaths of land for exploration.  In some instances, they even did radiological surveys to help mine exploration in some remote parts of the country.

Hardened men staked claims, armed with nothing more than pick axes and shovels they started digging for Uranium.  Digging was their life’s work, and when they were able to extract a single ton of ore containing a few pounds of uranium they made money.  The work was back breaking and dangerous, and many of the miners ended up going blind or developing lung cancer from the radon gasses that they inhaled while mining underground.

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These miners worked and slaved, supplying mined uranium to both reactors used to produce power, and to the government to produce weapons of war.  These miners enjoyed a hard but good life, that is until March 29, 1979.  This is the date that the Three Mile Island incident occurred.  Uranium prices spiraled downward and mining operations the world over began to shut down.

Now here we are 30 years later and a revolution in the power industry is taking hold.  Emerging markets like China and India are installing nuclear power plants to keep up with their growing power demands.  Reactor safety and development has improved significantly.  The use of military uranium for powering non military reactors for electricity generation went well.  As a result, the weapon grade stockpiles in both the US and the former USSR are diminishing quickly.

Uranium prices have climbed to historic highs and the industry of exploring for and mining uranium is once again active.  A number of major mining operations like Rio Tinto (RTP) or Cameco (CCJ) have uranium mines that are actively producing ore. However, I believe its the smaller explorers, the junior mining concerns, who will find new major deposits.  It is these small companies that will benefit most from this revival of the industry, and make the investors in their stock rich.

•  Texas Instruments (TXN) suffered a slew of downgrades this week from Credit Suisse, Jefferies & Co, JP Morgan, Lehman Brothers, and UBS. All of the downgrades were after the company announced its Q4 guidance for revenue and EPS, which were below the analysts estimates

•  Washington Mutual (WM) received yet another downgrade this week, this time form Lehman brothers. If you remember, the company was downgraded last week by DA Davidson, Friedman Billings, and Punk, Ziegel.

•  DeVry (DV) the educational and training company received upgrades from Bear Stearns, BMO Capital Markets and Piper Jaffray this week.

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