Wednesday, February 23, 2011
As Growth Stock Wire readers know, the uranium bull market is one of the best places to make huge gains this year.
The sector has been in a roaring bull market since last summer. And in this kind of environment, we often see mining companies start to buy each other out. Companies with quality assets can hand their shareholders 100%-200% practically overnight.
So where do we find the quality assets? Last week, I mentioned three hotspots for uranium exploration... including Canada's Athabasca Basin.
Canada is the world's second largest producer of uranium behind Kazakhstan. Mining operations in Canada produced 26.5 million pounds of uranium in 2009.
Canada as a whole is a great place to explore for uranium. According to the Nuclear Energy Agency's Uranium 2009 Report, uranium explorers in Canada drilled over 1,000 miles of exploration holes between 2006 and 2008.
Its potential for more big discoveries led to billions of dollars in investments. From 2006 to 2009, companies spent $1.7 billion on exploration.
The bulk of that attention went to the Athabasca Basin. This stretch of land is one of the world's great "trophy assets"… one all investors should know about.
This giant basin lies in Northern Saskatchewan and skims into Northeastern Alberta. And it's one of the world's greatest energy supplies. The basin contains nearly 1.5 billion pounds of uranium.
Uranium deposits in the Athabasca Basin occur in "traps." The uranium concentrates in folds, faults, or cracks where the basin sediments meet the underlying basement rock. The deposits tend to be small, 300 feet or so. Their small size makes them tough to find, but they're extremely high grade.
Take giant uranium mine Cigar Lake, which blue-chip uranium producer Cameco is developing in the basin. It holds 209.3 million pounds of uranium in 613 thousand tons of rock. McArthur River, a premier operating mine in Athabasca, holds 336 million pounds of uranium in 856 thousand tons of rock.
Now compare that with mining giant BHP Billiton's premier uranium mine at Olympic Dam in Australia. That holds 560 million pounds of uranium… in 649 million tons of rock.
Cameco's ore at Cigar Lake and McArthur River in Athabasca is roughly 1,000 times more concentrated than it is at Olympic Dam.
Because the deposits are so rich here, when a new one is discovered, shares of the company take off. That makes the area incredibly popular among junior mining companies. There are at least 35 public companies operating in the basin...
The largest is Cameco, the ExxonMobil of uranium mining. It's the world's largest low-cost uranium producer. The company produces 18% of the world's uranium. It operates three mines and one mill in the Athabasca region.
Cameco is really the only uranium investment for most investors. It's the lowest-risk way to play a uranium bull market.
The other choices here are high-risk junior miners, which should only be bought by experienced investors. Here's a short list...
As you can see, the market values drop off quickly. Do your homework well before you buy. There's plenty of risk here – including losing your entire investment. But at least keep an eye on these stocks... 200%-plus gains are coming.
"I can't overemphasize the importance of uranium," Matt wrote last week. "The emerging world's demands for energy are only going higher... and uranium is one of the most concentrated fuels we have. Its value will go up." He's got a few ways to profit off this bull market. Learn what they are here: The Best Place in Resources to Potentially Make 200%-Plus.
"These companies performed unbelievably well over the last four and a half months," Matt wrote in October. "And I expect more big things for this group." The six uranium producers Matt talked about late last year are up an average of 94% in five months. Read more here: Triple-Digits in 4 Months from a Brand-New Bull Market.
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