Uracan: Politically safe, financially secure
By James West
nineMSN.com

Thursday, February 12, 2009

The art of buying low and selling high is picking up stocks in the bottom of cycles to which their products are subject. Currently, uranium is at the bottom of a broad market sell-off that would appear to be ending, and so its time to look at opportunities in the sector where ultra-cheap shares in exploration juniors with above average discovery potential might be hiding.

Uracan Resources (TSX.V:URC) is cashed up and actively discovering new uranium mineralization in ultra mining-friendly Quebec and uranium-rich Saskatchewan. A testament to its attractiveness to investors, the company raised over $4 million in October of last year when most companies couldn't raise a dime for a cup of coffee.

Demand for uranium is driven exclusively by its consumption by power utilities generating electricity from nuclear power plants.

According to a January report issued by Canaccord Capital Corp:

Pressures on uranium prices towards the upside will likely develop as projects are abandoned in the near term due to absence of funding and credit. Canaccord says it sees uranium production growing by 4.4% per year through 2020.

There are currently 436 reactors in operation around the world producing 371,927 MWe of energy (representing around 16% of the world's power), requiring approximately 170.0 million lbs of U308 per annum. In a January 5, 2009 update, the World Nuclear Association (WNA) identified 41 reactors under construction and another 374 reactors under consideration (108 planned and 266 proposed).

Somewhat surprisingly, and despite the current global credit and financial crisis, this compares favorably to the previous update (October 2008), which identified only 36 reactors under construction and 331 under consideration (99 planned and 232 proposed). This also compares to 34 reactors under construction and 315 reactors under consideration (93 planned and 222 proposed) in its January 2008 update. We note that each GWe of increased capacity will require about 195 tU/yr of incremental mine production, and 3x this for the first fuel load.



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