After the Fukushima accident in 2011 companies mining for uranium had a very hard time because most of the countries decided to stay away as much as possible from nuclear energy. Everybody was afraid that a similar disaster could happen again. Especially hard times have smaller uranium producers and many of them went out of business. Energy Fuels is one of the few who survived all the way until now all these hard years. For the past year Energy Fuels decided to go to rare earth minerals. Energy Fuels have an ability in rare earths space that no other company in the United States currently has. The reason for this is that they have a facility which can process and extract those rare earth minerals . What they decided to do is to ship monazites from Florida to their facilities in order to process them. This sounds like a good idea especially in recent times where rare earth minerals are in such a huge demand especially in electronics, medicine and car industry. All those actions caused the stock of the company to skyrocket from $2/share to $10.99/share on November 12. Additionally the price of uranium in August 2021 was $34.25/lb spot price and in September we had a jump to $42.60/lb. Jump in uranium price is really hard to explain and no one really knows why the price went up suddenly 24% but this jump for sure contributed to an increase in the share price of Energy Fuels. What is suspected is that some investments firms started buying uranium and this pushed the price up. Right now we have a decline in the share price of UUUU around 23% since November 12.
What is the reason for that decline? Probably general pull back in the stock market. You have to remember that from March 20, 2020 until November 12th, 2021 we had a 103% increase in S&P 500, it is a crazy run and the market needs a break.
Energy Fuels is the best positioned company in the US market to capitalize on the future came back to nuclear energy because they are the only one company licensed to process the uranium in the United States. Another point which I’d like to mention here is that this company may be a target for acquisition from one of the giants in the mining industry like Vale, Neumont or even Barrick Gold because nowadays more and more mining companies are trying to diversify their business models. Take as the example Sibanye-Stillwater which started as a gold mining company then moved to the Platinum Metal Group mining and recently decided to branch out into the batteries business. The same situation may happen to Energy Fuels if one of the executives from the big mining companies sees that uranium and rare earth metals have a bright future.
Going to rare earth minerals and rising price of uranium have caused the price of Energy Fuels to go to around $11.39/share but for the last 2 weeks we had a 23% decrease. Which is related to general market pull back.
The reason that I didn’t sell any shares of Energy Fuels is that I’m waiting for the time when the world realizes that uranium is the future source of energy for the Earth. This rally right now in the price of Energy Fuels share I’d call a micro rally when you have an increase in share price because of some moves made by the company by going to rare earth business and by the spike in uranium price caused by investment firms buying uranium off the market. What I’m waiting for is the real demand for uranium coming from existing and new power plants. This demand will push the prices of uranium to the level from 2007 when uranium spot price was $136/lb and long term price was $95/lb. Or the prices may even go higher than 14 years ago. Uranium is the most efficient and the most effective way of creating energy. There is no such a thing as clean energy. There will always be side effects when extracting energy from any source and believing that we can supply all our energy needs for the world from solar, wind or hydrogen energy is an illusion. Time is coming when the world is going to realize this and then share price of Energy Fuels is going to go to $200/share at least.