In what seems like a decisive win for Cameco Corporation (USA) (NYSE:CCJ), the Canadian Nuclear Safety Commission (CNSC) awarded the company a uranium mining license that will be valid until June 30, 2021. This long-term validity of the license will allow Cameco Corporation (USA) (NYSE:CCJ) to construct and operate its massive Cigar Lake uranium project. The ultra-high-grade mine is located in northern Saskatchewan, Canada. In this article, I shall focus on Cameco Corporation (USA) (NYSE:CCJ)’s uranium outlook and why investors should focus on uranium stocks in the long term.
Long-term prospects of uranium ore
After the Fukushima disaster, Cameco Corporation (USA) (NYSE:CCJ)’s shares tumbled from almost $43 to below $17. Its shares have risen in the recent past, as Japan is currently governed by the nuclear-friendly Shinzo Abe administration. Japan’s liberal democratic party is particularly nuclear-friendly and the country will restart its nuclear reactors later this year. Moreover, countries like India, China and Russia, which reduced their nuclear energy output following the Fukushima disaster, will eventually follow Japan’s path.
All of these countries have severe energy deficits and are looking for clean and green energy that isn’t extremely expensive to produce. Of course, I shall not discuss the dangers of nuclear fuel as such, but what I want to emphasize is that the market for uranium ore will increase in the long term and will remain that way. Cameco Corporation (USA) (NYSE:CCJ) is one of the largest suppliers of uranium internationally and this increased market demand will help its shares to rise once again.
Cameco Corporation (USA) (NYSE:CCJ)’s future looks bright in uranium sector
This summer, Cameco will begin to drill into artificially frozen orebody to reduce the risk of radiation. A non-entry jet boring system will allow Cameco to collect the ore slurry through pipes so that packaged uranium pounds can be expected as early as the fourth quarter of this year. Phase one of the Cigar Lake contains higher grade uranium ore and has a proven reserve of 226 million pounds. Phase two contains 118 million pounds of lower-grade uranium ore, which is still 100 times superior to internationally available uranium grades.
Naturally, Cameco has access to some of the best uranium ore grades in the world and also the access to the most demanding markets in Asia. This clearly indicates that no matter how much Cameco’s shares have fluctuated in the past, it is a long-term investment option. Uranium will continue to be in demand as fuel and energy costs have risen sharply. More countries will begin to start their reactors to power their cities, towns and industries. Safe or unsafe, nuclear energy will remain in demand for a long time to come until a better alternative is found.