Previously I vowed to dig into the strategic stockpiles of highly enriched uranium (HEU), a secondary source of the U235 isotope that competes with uranium miners such as Cameco. HEU can be down-blended into LEU by mixing with un-enriched uranium and processed into fuel rods. In a future post I will discuss a third-source of nuclear fuel: recycling.
Some days ago I opened length in Cameco (CCJ), the Canadian uranium processor, with an initial belief that they could sustain their dividends and ride out the trough in U3O8 prices. Uranium spot prices (as quoted by Ux Consulting) have fallen from $70 per pound in 2011 (pre-Fukushima disaster) to $19 per pound recently. Cameco doesn’t deliver at these low spot prices but holds utility customers to long-term (and more expensive) supply contracts. However, these customers would understandably like to renegotiate the level for the duration of their existing deals or threaten to find a new supplier when it is time to renew. In other words, the plunging spot price does effect revenue. Continue reading Cameco and the supply of Yellow Cake