Uranium stock ranking

Consider reserves, rewards, risks and financial strength, I like following companies to own to play the great uranium bull markets:

1. EMU. Market cap 940M. I think it has the best potential with over 260m lb of reserves, pure uranium play. High risk and reward.
2. URZ. Market cap 178M. About 13 to 26 m lb of reserves. Pure uranium play. Very speculative play, high risk and reward.
3. FRG. Market cap 774M.. About 90 m lbs of reserves, which it owns 47%. Also a gold discovery company. Speculative play. High risk and reward.
4. CCJ. Market cap of 14B. Largest pure uranium company. Low risk and reward.
5. RTP. Market cap of 75B. Mainly a steel and iron company. Low correlation to uranium.
6. BHP. Market cap of 137B. Mainly a copper, silver, zinc company. It does have one the largest uranium reserves in the world. Again low correlation to uranium, very low risks.

Uranium spot price hits $85 per lb

1. Weekly Spot Ux U3O8 Price as of February 19, 2007 is $85.
2. One week ago the price is $75.
3. Source: http://www.uxc.com/review/uxc_Prices.aspx

Uranium stock comparison

1. CCJ's uranium reserve is the largest among pure uranium stocks. It has over 805Mlb.
2. EMU has 260M lbs.
3. FRG has 58M lbs, plus 32M lbs of indicated, which it owns 47%.
4. URZ has 13M lbs, up to 26 M lbs.

Based on current Uranium of $75 per lb and cost of $30 per lb, from uranium only, I calculated the worth of the uranium reserves:

1. CCJ: 36.2B.
2. EMU: 11.7B.
3. FRG: 1.9B. (Factor in 47% FRG owns).
4. URZ: 585M to 1.2B.

Market cap of these companies:

1. CCJ: 12B.
2. EMU: 800M.
3. FRG: 740M.
4. URZ: 130M.

Of course, I have not consider the gold reserves FRG has, and CCJ's reserves have two underground reserves, which don't use ISR method to recover and the cost may be lower. But one of the underground reserves is Cigar Lake, which is flooded and won't bring it online until 2008 or even 2009. BTW, Cigar Lake can produce 24% of world annual demand once it's fully operational, this is how big the impact it has on CCJ and rest of the junior uranium stocks.

Other factors, such as permit, local government application process, the quality of the reserves, etc, are not considered in my calculation.

But from valuation perspective, EMU has the best value, URZ is second, CCJ third.

If uranium, as experts predicted to reach to $200 in 3 years, then all these companies can easily triple their stock price.

Once uranium becomes cover story on Times, then it's time to sell. Maybe a few years away.

Uranium reserves update for FRG and EMU

1. I checked EMU's recently financial statement, it has total of 260m lbs of uranium reserves (including measured, indicated, inferred and historic data). Actually 190m lbs of that are from historic data.
2. FRG just reported today, in its uranium deposit (owned by Aurora Energy, which is owned 47.2% by FRG), the latest estimate is:
   1. A Measured and Indicated resource of 58 million pounds of U3O8 ("uranium"), and
   2. An additional Inferred resource of 38 million pounds of uranium.
3. So both of these two companies have lot of reserves.

Uranium stocks ranking

Only found 4 stocks traded in U.S. that people can buy, others are traded in Canada and Australia.

1. FRG. Market cap is $700M. It's a uranium and gold discovery company, therefore there is zero production cost and permit application process. There is a great up potential should it announce new discovery, which happens every few months.
2. CCJ. Market cap is $12.86B. The largest uranium company in the world, recent accident in Cigar Lake caused its price to dip and other junior uranium stock to soar.
3. EMU. Market cap is about $740M. Energy Metals Corp began trading on the NYSE ARCA. Energy Metals is currently developing their Texas uranium in situ recovery mine for production in either late 2007 or early 2008. It has many reserves in U.S. Mainly use ISR (in-situ recovery mining methods) to produce uranium, which costs about $30/lb to produce. Reserves are around 100m lbs, plus or minus 15m lbs. Since there are lot of historic data, it's hard to accurately calculate its reserves. But suffice it to say, they have lot of reserves.
4. URZ. Market cap is $124M. It is a recent entry to the American exchange as first pure-play uranium company to trade on this exchange. Uranerz is now the second publicly traded company, after Cameco Corp. Mainly use ISR to produce uranium, which costs about $30/lb to produce. Reserves is about 13m lbs to 26m lbs.
5. Out of these four stocks, I like FRG the most, CCJ is the safest. I think both EMU and URZ will outperform CCJ in the long run, but these two are considered very risky, just like FRG.

Uranium facts

Uranium is in a bull market for the next 10-15 years, maybe even longer. Uranium is used by nuclear power plants to generate electricity. Uranium price has doubled in 2006 to $75 right now, many believe it will break $100 this year. Let's check the economics behind uranium and profit from it.

1. Operating Plants
   Currently, there are 103 commercial nuclear power plants producing electricity in the United States. They are, on average, 24 years old, and are licensed to operate for 40 years with an option to renew for an additional 20.
   As of January 2007, 30 countries worldwide were operating 435 nuclear plants for electricity generation. Twenty-nine new nuclear plants were under construction in 12 countries.
2. Electricity Production
   Today, nuclear power plants—the second largest source of electricity in the United States—supply about 20 percent of the nation's electricity each year.
   In 2005, U.S. nuclear plants generated 782 billion kilowatt-hours of electricity. In 2004, they produced 788 billion kilowatt-hours.
   Nuclear power plants provided some 16 percent of the world's electricity production in 2005. In total, 16 countries relied on nuclear energy to supply at least one-quarter of their total electricity.
3. Economic Performance
   The average electricity production cost in 2005 for nuclear energy was 1.72 cents per kilowatt-hour, for coal-fired plants 2.21 cents / kWh, for oil 8.09 cents / kWh, and for natural gas 7.51 cents / kWh.
   To produce one Watt of electricity, it takes 1.0 lbs. of coal/kWh from coal plants using steam turbines, 0.48 lbs. of natural gas from natural gas using steam turbines, 0.37 lbs. of natural gas/kWh using combined cycle technology, 0.58 lbs. of Heavy Oil/kWh using steam turbines, and .0000008 lbs. of Uranium enriched at 4% U235 and 96% U238 for use in a commercial nuclear reactor.
   A 100 watt light bulb that ran continuously for an entire year would consume 876 kWh. Producing the necessary electricity would require 876 lbs. of coal, 377-324 lbs. of natural gas, 508 lbs. of oil, or 0.0007 lbs. of Uranium enriched to 4% for use in a commercial nuclear reactor.
4. Environmental Protection--global warming.
   Of all energy sources, nuclear energy has perhaps the lowest impact on the environment.
   Nuclear energy is the world's largest source of emission-free energy. Nuclear power plants produce no controlled air pollutants, such as sulfur and particulates, or greenhouse gases. The use of nuclear energy in place of other energy sources helps to keep the air clean, preserve the Earth's climate, avoid ground-level ozone formation and prevent acid rain.
   In 2005, U.S. nuclear power plants prevented 3.32 million tons of sulfur dioxide, 1.05 million tons of nitrogen oxide, and 681.9 million metric tons of carbon dioxide from entering the earth’s atmosphere.
5. Industrial Safety
   Even if you lived right next door to a nuclear power plant, you would still receive less radiation each year than you would receive in just one round-trip flight from New York to Los Angeles.
   You would have to live near a nuclear power plant for over 2,000 years to get the same amount of radiation exposure that you get from a single diagnostic medical x-ray.
6. Political supports
   In the early days of my life in Congress, I was an opponent of nuclear energy because of questions on how to dispose of the waste. … The technology has changed, and I bring a more open mind to that subject now because I think we should look at this technology, and compare it to the alternatives. —House Speaker Nancy Pelosi (D-Calif.)
   House Committee on Science and Technology Hearing
   Feb. 8, 2007
7. “If … one of our objectives is to be serious about dealing with the environment, there’s no cleaner source of energy than nuclear power. And so we’re spending money and research to make sure that the next-generation power plant is safe. But also we’re spending money, interestingly enough, on how to process spent fuels better. And believe it or not, actually, we’re beginning to permit nuclear power plants here in America. And that’s going to be good for your children. It’s going to make us less dependent on natural gas from overseas, and it’s going to make us better stewards of the environment.”
   —President Bush
   Wilmington, Del.
   Jan. 24, 2007
8. In summary, I think uranium is in high demand not only in developed countries like U.S. and France (78.5% of its electricity is from nuclear energy), but also in developing countries like China and India, which relies on nuclear energy for its future.
9. Many believe uranium will hits $200/lb within 3 years and becomes the most profitable commodity for the next decades.