Uranium: A Glowing Opportunity?

Featuring Adam Rodman

Is it time for investors to get into uranium? Adam Rodman of Segra Capital Management sees the makings of an unusual opportunity in a very unusual commodity. Breaking down the supply and demand sides of the equation, Adam lays out the upside potential, and explains how investors can get involved. Filmed on November 29, 2017 in Dallas.

Published on
6 December, 2017
Topic
Micro, Energy Commodities
Duration
33 minutes
Asset class
Equities, Commodities
Rating
34

Comments

  • MS

    Michal S.

    10 10 2018 20:44

    0       0

    1 year has passed, uranium still in the downtrend... maybe it needs more time.

  • HH

    Hector H.

    23 3 2018 09:53

    0       0

    what is the marginal cost of uranium?

  • AR

    Abishek R.

    11 3 2018 05:07

    4       1

    @realvision You guys must display a thumbnail over the time scroll bar. Its now impossible to find a graph shown in an hour long video by scrubbing.

  • CL

    Chewy L.

    21 1 2018 20:22

    4       0

    Is it just me or anyone think he is guy pierce’s Brother?

  • DY

    Dmytro Y.

    20 1 2018 13:24

    3       0

    So far my investment in URA done basis RVTV and GMI advise are short term 7 percent down...

  • PC

    Pablo C.

    24 12 2017 02:57

    1       0

    Excellent thesis. On $CCJ, isn't there an ongoing tax case in Canada that could represent a few billion in potential liability for the company?

  • MB

    Matthias B.

    14 12 2017 10:34

    2       0

    interestingly, BMO sees supply/demand differently than Scotia: they exp a 13m llb deficit in 2018 and only a small surplus in 2019 of 4m llb but from 2020 onwards a growing deficit again.

  • MB

    Matthias B.

    13 12 2017 20:54

    2       0

    the analyst from broker Scotia is cautious as well and in a very recent note after the supply cut news, he cites his conviction that the uranium market remains materially oversupplied between 2019-21 as he expects market surpluses of 16m lbs, 14m lbs, and 4m lbs respectively, to quote: "believe the highly anticipated uranium price recovery is likely to disappoint investors over the next few years. We view the recent improvement in the spot price and - sentiment likely to be temporary - in our opinion as a selling opportunity." (unquote). I do not know though how good the analyst is.

  • SM

    Sanjay M.

    12 12 2017 21:55

    5       3

    What I find amazing is that no one is talking about the immense demand required to mine bitcoin. As you can see in the link below, bitcoin mining by 2020 will require all of the world’s current energy needs by 2020. So regardless of whether you think bitcoin is a bubble or not, one thing is clear. The supply/demand balance for uranium will clearly improve with demand needs increasing rapidly at a time the key producers are curtailing supply. Missed bitcoin? Go long URA!!!

    http://www.newsweek.com/bitcoin-mining-track-chttp://www.newsweek.com/bitcoin-mining-track-consume-worlds-energy-2020-744036onsume-worlds-energy-2020-744036

  • dm

    daryl m.

    11 12 2017 13:19

    2       0

    If the numbers from Brent Cook are even somewhat accurate, the uranium market will not come into balance for several years. This seriously challenges the thesis of Adam Rodman from a timing perspective. Brent Cook is a well respected analyst in the metals market. Any comment that Adam could provide would be much appreciated !

  • dc

    daniel c.

    11 12 2017 09:23

    4       1

    started investing in uranium 6 years ago... it's been a painful 6 years. Hopefully my patience will pay off and allow me to retire in 5-6 years

  • dm

    daryl m.

    11 12 2017 01:46

    2       0

    From Brent Cook at Exploration Insights: According to it's latest Balance sheet, Cameco inventories include around C$872 million worth of uranium concentrate. Global inventories was estimated to be around 1.4 Billion pounds at the end of 2015. There was another surplus in 2016. A more conservative estimate of inventories by a brokerage firm was 800 million pounds.

  • EL

    Edward L.

    10 12 2017 21:39

    0       0

    Thanks Adam. Very informative as always

  • BB

    Brent B.

    10 12 2017 06:01

    14       0

    I have been involved with uranium for the last 18 - 24 months and recently added size weeks before the production cut announcements.....lucky. The Alkin April RV video also sparked more of my interest in this space and is worth a look for those that have not seen it. Watching the market reaction lately, I think we are still quite early in the market waking up to this opportunity. Many stocks have bounced off lows but I suspect still have much room to run.....with patience. Not too long ago, I came across @quakes99 on Twitter that I highly recommend for those looking for a really remarkable trove of information regarding the uranium energy space.

  • DC

    Dave C.

    10 12 2017 02:02

    4       0

    His insight regarding Kazatomprom was certainly on the mark

    https://www.ft.com/content/5808adb1-b430-3d19-a9ad-136a7782e427

  • MV

    Mark V.

    10 12 2017 00:30

    2       1

    Just heard Marin Katusa say that there are 4 or 5 years of above ground stocks on hand and for Uranium price to double it would need 20 to 25 new reactors to come on line globally. This seems at odds with Adam's analysis.

  • TP

    Thomas P.

    9 12 2017 23:47

    0       7

    For the presenters information, a price move from 20 to 60 is a 200% increase, not a 300% increase as he stated several times.

  • BR

    Ben R.

    9 12 2017 19:59

    1       0

    I’ve heard this presented by many different people, and it all makes complete sense. It seems too easy....

  • CT

    Christopher T.

    9 12 2017 04:20

    1       1

    long these types of videos

  • CB

    Clifford B.

    8 12 2017 14:32

    1       0

    Contrary view: https://seekingalpha.com/article/4038836-uranium-etf-will-decay

  • rc

    random c.

    8 12 2017 03:04

    0       12

    An informer island. And a poor one at that

  • DT

    Douglas T.

    7 12 2017 16:19

    73       0

    I liked the interview, and timing is good. I've been investing U for a while so it's preaching to the choir. However, it was light on specifics, and some of the important issues at play.
    First, the reason we've been in surplus is because of the Russians and Americans decomissioning a large number of warheads, which were de-enriched and dumped on the Uranium fuel market. Then, after Fukushima the Japanese sold off much of their fuel supplies extending the glut. Those were both one time, temporary events that depressed the price and pushed a lot of mines out of production. So as those sources are exhausted, mines will come back on line but only after considreable delay. A deficit of supply is unavoidable that can only be filled with restarts and new mines.
    During those 'dumping' programs, the price dropped below production costs, because both sources were willing to take a loss. The weapons had been paid for decades ago, and the Japanese just wanted to offset their energy importation costs after shutting down 50+ reactors.
    Second the market is not only inelastic, but dominated by long term contracts. After you've built a reactor the last thing you want is to shut it down because you forgot lock in the fuel supply. So utilities will contract for Uranium going out many years, perhaps even decades.
    This is a key reason Cameco and Khazatomprom are reducing production and driving up prices. They don't want to renew contracts down here.
    And a key element in India and China switching to nuclear, is that they don't have other sources of secure cheap electricity. More improtantly, they are killing people with their terrible smog. Dehli is the worst, followed by many of China's cities. For them, the risk of nuclear is small compared to the absolute certainty of millions of resperatory deaths.
    As for investing, keep you r eye on Japanese restarts as the key to the near term. China has committed to building 10 reactors per year indefintiely, which is key to the medium term. Long term we need better reactor designs and fuel mixtures. Breeders would multiply the fuel efficiency of reactors many fold, and solve the Actinide waste problem at the same time.
    The Athabasca basin remains the premier Uranium district in the world, and Canada has rule of law.

  • JF

    Jonathan F.

    7 12 2017 12:02

    1       0

    Power/electicity demand from Bitcoin mining is no joke...wonder how this affects power supply/demand cycle and hidden boom for uranium....thoughts???
    "An index from cryptocurrency analyst Alex de Vries, aka Digiconomist, estimates that with prices the way they are now, it would be profitable for Bitcoin miners to burn through over 24 terawatt-hours of electricity annually as they compete to solve increasingly difficult cryptographic puzzles to "mine" more Bitcoins. That's about as much as Nigeria, a country of 186 million people, uses in a year."

    https://motherboard.vice.com/en_us/article/ywbbpm/bitcoin-mining-electricity-consumption-ethereum-energy-climate-change

  • MR

    Marten R.

    7 12 2017 10:47

    3       0

    This bear market has been brutal, dragging on for longer than most expected. (including me!)
    Here's Mike Alkin on RVTV from back in April this year with another great overview / presentation: https://www.realvision.com/rv/channel/realvision/videos/9aa5029643ed4b179967a0778ea6adc8
    Given the market dynamics and supply side responses we've seen recently.... things are really about to get interesting.
    I agree with Adam wholeheartedly - this is an A symmetric, one way bet, with imminent payoff.
    Correlation with the broader market / other assets is also low, which is unusual in the everything bubble.
    I think all RVTV subscribers should look hard at this opportunity... it's a ripper.
    MR

  • FV

    Fredrik V.

    7 12 2017 07:15

    0       0

    ...ucing laws and by the way will IPO Kazatomprom 25% in 2018, with help from JPM.
    Please, visit my list of energy and nu links on LinkedIn for some added info.
    http://linkedin.com/in/fredrikvitaback

  • FV

    Fredrik V.

    7 12 2017 07:07

    1       0

    My two cents:
    Energy security/nationalism will weigh positive for US explorers. All Kazahk uranium to US is routed through China.
    Pricing power: Kazaks have established a trading arm, changed the prod

  • AC

    Andrew C.

    7 12 2017 07:06

    2       0

    A fantastic opportunity; and as David W. commented below, can we get Adam back in 12-18 months (and 3-5years, assuming I'm still around ?!?) to discuss continuation or exit strategies for the uranium trades?

  • PS

    Patrick S.

    7 12 2017 03:06

    5       0

    this is just for ontario but cool regardless http://live.gridwatch.ca/ Ontario has the worlds largest Nuclear site at Bruce Power one of Cameco's largest customers, Cameco used to own Bruce Power until they divested it to fully focus on just the extraction of uranium. But they do the whole fuel cycle start to finish, and consulting. One other point he doesn't touch is start to finish yellowcake to fuel rod is a 2 year process.... how quickly does the oil from the ground get processed and used up in a diesel car say.... this is a unique (spot and long term uranium) very illiquid market it trades akin to a penny stock can move 20+%/day . The miners are leveraged to this 3-5x . This is like gold in late 2015 except on steroids now with kazatoprom announcement. The only downside to this thesis as one other reader pointed out is a crash in the overall market will bring the highest quality name like CCJ / CCO down with it.

  • GS

    Greg S.

    7 12 2017 02:29

    2       1

    no need for personal commentary about age. I don't doubt his dedication to analysis. My question to him is the source of supply he did not discuss, which is the military supply of uranium that is currently being diluted to the commercial market. And that is a vast supply of nuclear arsenals.

  • sw

    shaun w.

    7 12 2017 00:25

    0       1

    In the last meeting, Adam spoke about the 2nd market for high end watches. I wonder if he can elaborate on how does someone get access to those market?

  • vp

    vasilis p.

    6 12 2017 23:49

    0       0

    Great presentation, strong investment thesis. Congratulations to Adam Rodman and his team for this gem and RV for giving it to us!

  • DW

    David W.

    6 12 2017 21:41

    14       0

    Years ago, the same scenario existed for gold. It cost more to get it mined than it was selling for. It was obvious that price increases would eventually address that imbalance. Indeed - the price of gold (and mining stocks) skyrocketed. I was a genius, right up to the point where I held on to those investments all the way back down. As I learned from my experience, and recently on Real Vision, commodities go in cycles - you have to sell them!! I'll remember that this time!
    It seems we are getting a replay of the gold situation with uranium. Even more, uranium is a required commodity. Society demands its production. While this current imbalance has existed for several years, I believe patience will be well rewarded. Great video!

  • jh

    john h.

    6 12 2017 21:30

    4       0

    Adam failed to mention that MacArthur River production only suspended for 10 months, not shut down. They could easily bring that supply back on stream if prices rose materially.

  • SS

    Steve S.

    6 12 2017 20:32

    0       0

    Very interesting idea. Excited to research this.

  • gg

    gurdeep g.

    6 12 2017 20:29

    4       0

    Just go back to his Lithium call few years ago..money! One of my fave guests

  • PW

    Phil W.

    6 12 2017 20:09

    2       0

    Let's see if Adam will do an update in 6 months. great interview

  • JL

    James L.

    6 12 2017 19:45

    10       0

    This video puzzles me. Cameco and Kazatomprom both are putting mines in maintenance mode, so they could ramp production to meet contract requirements when higher prices appear, and large buyers will want to contract with a major player. There are also a few smaller "in situ" producers that can ramp production quite quickly, but given their low cash burn they may ultimately be an acquisition target. Finally, besides the URA ETF you can also buy the Uranium Participation Corp shares and own uranium directly. Yes, opportunity, but the ways to play it are pretty straight forward. The cure for low prices is low prices.

  • MC

    Minum C.

    6 12 2017 19:25

    1       0

    'Tis the season.

  • AG

    Austin G.

    6 12 2017 19:18

    7       1

    Austin G.
    There are a few issues that I have with uranium, and they mostly have to do with timing.
    That utilities are slow to react to what is going on does not surprise me.
    That the demand for uranium will go through the roof when these new reactors need the start up load and then inventory needs to be satisfied I agree with.
    China has serious air quality issues, and everyone and their cousin is talking about huge numbers of electric cars....this supports the nuclear thesis. It also could be part of a future divergence between oil and uranium. Oil and uranium are correlated...so the prices affect each other because of people trading on this correlation. Long term if electric cars eventually totally replace gas burning cars, I expect oil to go down. Long term there may be fusion, in which case uranium will go down.
    But, in there medium term my concern is the market....the baby in the bathwater....at some point we get a bear market and if it is bad enough, everything gets dumped. Look at gold in 2008, look at Teck resources in 2008...so Cameco may be a great company but the price may go lower when the market dumps.
    I bought some CCJ not long ago at a great price, but if it goes up quickly in the next couple of months, I will sell take my profit and see what happens with the crash....it will come...don't know when but it will. When I bought my CCJ it had a yield of close to 4% but now it is about .8 so I am not happy to hold for yield. There could be a pop in spot prices for uranium, this could cause a rise in uranium stocks, but nothing other than cryptocurrencies goes just about straight up...so there will be opportunities to buy uranium stocks in the future, even if prices double and then go sideways. I'm just antsy about that bear market, what with leverage so high, debt so high, ETF inflows, buybacks...Elliott waves say we have a monster coming...so if I get a quick gain on my CCJ I grab the money and run.
    FWIW I have physical precious metals and zero cryptocurrencies...call me old fashioned

  • MB

    Martin B.

    6 12 2017 17:01

    7       17

    I had to chuckle when Adam said it is the best opportunity he has seen... in his career!!! He’s only about 22!!! He’s only just given up his paper-round... and I’m sure his beard is glued on!

  • MB

    Martin B.

    6 12 2017 16:46

    5       3

    I would have thought the Global Warming sentiment and anti-carbon policies are bullish for nuclear also.

    Surprising it wasn’t mentioned.

  • MB

    Martin B.

    6 12 2017 16:42

    2       2

    Look up Rick Rule pieces on this also. Very bullish.

    And he claims to have refined his “often early” historical timing errors such that the time is right now.

  • TB

    Tim B.

    6 12 2017 15:56

    11       3

    A compelling, thoughtful thesis. Another great RV video.

    But there is one element to the risk profile on which I want to nitpick. You talked about China's push to expand its nuclear fleet. If I understand correctly, this expansion is also a key element to your thesis. Generally speaking, China is well-known for being able to push forward complex engineering projects quickly, but there may be a flip side here that is relevant. That flip side, is that in pushing to complete complex engineering projects, certain quality controls or implementations can be less than desired. I don't know about anything about China's nuclear industry. But if I look to other areas where China quickly implemented large scale engineering projects, some would argue that quick implementation came at the price of quality control. For example, China pushed to create a high speed rail system. In the main, they have done a great job. But in one incident that I am aware of, two high speed trains slammed into each other (Wenzhou, China in 2011). So aside from the general tail risk of a nuclear incident a la Fukushima, I wonder if there is an additional tail-risk endemic to the future Chinese nuclear fleet.

    Cheers

  • EH

    Eric H.

    6 12 2017 15:06

    8       0

    Been doing a lot of work on this lately. Hard to find a lot of downside and still a lot of negativity in the space. Great interview!

  • EH

    Ellen H.

    6 12 2017 14:33

    10       0

    I hope you meant to say McArthure River had lowest cost not lowest grade

  • EF

    E F.

    6 12 2017 13:57

    7       1

    basic question but as I see uranium futures exist out to 2022 why aren't consumers in the know using this opportunity to secure supply if the price is such a bargain?

  • BD

    Bruce D.

    6 12 2017 13:54

    14       0

    This video was done before this Monday's news from Kazatomprom, which is another major decrease in supply!

  • KC

    Klendathu C.

    6 12 2017 13:23

    15       13

    Good interview, but he excludes some of the biggest drivers of the uranium price outside of supply and demand. Uranium is an fuel resource so it trades with other fuel resources like oil and natural gas. What have natural gas and oil done the past 3 years? They've been in massive bear markets which has helped further suppress the price of uranium. Looking at oil now at a 2 year high and likely headed much higher once the market realizes US shale is not the revolution it's priced to be. Natural gas is still lagging but the USD looks weak here and should provide a positive tail wind to all energy prices.

  • OM

    Omar M.

    6 12 2017 13:11

    0       0

    Great presentation - it seems too easy to believe?

  • MR

    Marten R.

    6 12 2017 12:51

    6       1

    Adam - spot on.
    A symmetric.
    A matter of when. Not if.
    When = very soon.
    Back the truck up.

  • TM

    Tony10 M.

    6 12 2017 12:41

    4       1

    Predictable price inelastic demand X Predictable limited supply = A lovely investment
    Low prices might not be over yet. A company with a strong balance sheet that can ride out these low prices will be key to risk reduction. The eft does sound appealing.
    How to size this position ......