Ride the Uranium Bull with a stake in the Denison Mines
If you’re looking for a pure uranium deposit that won’t cost you an arm and a leg, check out the Canadian Exploration and Development Company. Denison Mines (NYSEAMERICAN:DNN). It looks like DNN stock has been in breakout mode for the past few months and could be headed higher.
Denison focuses on what is known as the Athabasca Basin, an area in northern Saskatchewan and Alberta. He gives “about 20% of the world’s uranium. ”
The company is actively advancing its operations in this region. In addition, investors in the uranium sector should appreciate Denison’s extensive portfolio of projects, which covers some 280,000 hectares.
What Makes Denison Mines Relatively Low Risk in Uranium Mining? Investors have a right to know, so we will definitely explore this topic. However, first of all, we should look at recent developments in stock prices.
DNN Stock at a glance
If you want to see a manual example of what a breakout looks like, just take a look at the DNN action.
For five long years, the stock just couldn’t seem to stay above the crucial $ 1 level. There have been many attempts along the way, but no real success.
However, starting in late 2020, a big moment happened for Denison. As the old saying goes, be right and stand firm. This sit-tight strategy finally paid off when DNN started climbing in December.
During that month, the share price has fallen from 38 cents to 65 cents. Was it just another false head that was doomed to fail? Not at all – the momentum quickly continued into 2021.
On February 17, DNN stock hit a 52-week high at $ 1.81. It was a race and inevitably some profit taking caused the share price to fall. Today it is trading at $ 1.17.
Is another stock price surge possible in the near future? Only time will tell, but you might want to position yourself ahead of time if you like the business and the uranium market in general.
Low risk thanks to low costs
One criterion to look for in any raw material miner is low cost. This is a key element in reducing investment risks.
90% owned by Denison flagship uranium development project is known as the Wheeler River. The Phoenix deposit on this property is, according to the company, “estimated to have potentially the lowest costs of any undeveloped uranium deposit.”
It’s a big claim to make, but Denison has the numbers to back it up. Specifically, Phoenix offers all-inclusive costs of $ 8.90 per pound of U3O8. (This compound is also known as uranium concentrate powder called yellowcake.) Additionally, Phoenix has operating costs of $ 3.33 per pound of U3O8 for Denison Mines.
No matter how you look at it, it’s extremely inexpensive. At the time of this writing, the uranium spot price is between $ 27 and $ 28 per pound.
In addition to this, another deposit at the Wheeler River site is called Gryphon. There, Denison’s all-inclusive costs are $ 22.82 per pound of U3O8. The running costs are $ 11.70 per pound. Not a world record, but still relatively inexpensive, too.
Focus on finances
We have therefore established that Denison Mines can extract uranium from the ground relatively inexpensively. However, this is not the only way for the company to reduce its risks.
For example, the President and CEO of Denison Mines, David Cates, pointed out recent improvements in the company’s overall budget table:
“[Denison Mines has] has completed a crucial fundraiser over the past 12 months that has positioned the company with approximately $ 85 million in cash and investments, while remaining debt free. ”
Of course, not all commodity miners can claim to be free from debt. At the same time, Cates pointed to the “gradual improvement” of the larger uranium market. In the area of defense, Cates highlighted “the growing calls for a re-emergence of nuclear energy as an advanced technology” which will be “important for a sustainable global energy transition”.
Obviously, this is a veiled reference to President Joe Biden and the new administration’s pressure for cleaner energy sources. With this, uranium could be recognized as a viable alternative to fossil fuels in the coming years.
If that happens, then that would certainly be optimistic for Denison Mines and DNN.
There will always be some level of risk when investing in commodity miners.
Still, investors can mitigate these risks by checking out the low operating costs. In this regard, Denison Mines obtains very high marks.
Overall, DNN stock presents a solid entry point for investment in the uranium industry. Stocks are cheap, but soon enough they could escalate to the upside.
As of the publication date, neither Louis Navellier nor the InvestorPlace research staff member primarily responsible for this article has held (directly or indirectly) a position in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a graduate student who accidentally built a market-beating stock system – with returns competing even with Warren Buffett. In his latest feat, Louis discovered the “master key” to take advantage of the biggest technological revolution of this generation (or any other).
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