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Eventually Molten Salt Reactors Will Boost Uranium Miners: Cameco Corporation (USA) (CCJ), Denison Mines Corp (USA) (DNN)

Molten salt reactors (MSRs) are commonly viewed as negative force for traditional uranium miners. Their ability to use waste from conventional reactors will create a number of power plants that do not need new supplies of uranium. It is important to analyze the situation from an industry perspective and look at the potential synergies between traditional plants and MSRs. These synergies can help to ease the worries of regulators, support traditional light water plants, and help maintain overall demand for uranium.

The Nuclear Waste Issue

Nuclear waste is not an easy substance to remove and efforts to create permanent waste disposal facilities in the U.S. have gone awry. The Federal government is responsible for dealing with the waste produced from light water reactors and as more nuclear plants are approved, the need for an effective plan only increases. Groups opposing new nuclear plants have a much stronger case when they point out that any new nuclear plant will only increase the nation’s waste challenges.

MSRs that recycle waste will help to clean nuclear’s image and deal with the waste issue. Transatomic’s MSR continues to be developed and its MIT trained scientists are encouraged with their overall progress. The emerging market is a major growth area for nuclear energy and there are a number of policy makers considering the use of nuclear energy. The deployment of traditional light water reactors alongside newer MSRs could deal with a large portion of a nation’s nuclear waste issue, meet energy needs, and support the overall demand for uranium.

CCJ Total Return Price data by YCharts

The Best Uranium Investment

Cameco Corporation (USA) (NYSE:CCJ) is a well-known uranium producer with high yield mines in Canada. It is expanding its operation and its cigar lake facility will further boost the firm’s earnings. The company is profitable even in the light of recent difficulties in the industry. It has a total debt to equity ratio of 0.31 but its margins are strong enough that it is easily able to support some debt.

The recent difficulties in the industry have affected the company and helped to push down its return on investment to 4.2% and return on assets to 3.2%. In the long run the world needs more power and Cameco Corporation (USA) (NYSE:CCJ) is in a great position to help fuel Asia’s energy needs. The Chinese continue to build new nuclear reactors and Cameco Corporation (USA) (NYSE:CCJ) is ready to support the increased demand that these plants will cause.

Other Possible Investments

Global X Uranium ETF (URA) offers a more diversified exposure to the uranium industry. The fund’s biggest position is in Cameco with a 21.68% weighting. The fund has positions in a number of uranium juniors. These smaller companies are very volatile and help to explain the ETF’s large fall over the past year. Currently the fund looks cheap with an average price to book ratio of 0.70.

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