Uranium Mining: Is it Worth Investing in?
Investing in mining should be for only one purpose: for the differential between the risk-adjusted value that an investor sees in a company’s projects and its market capitalization. This valuation should be based on the lower of the spot and futures prices.
Investing in mining should never be for the purpose of speculating in commodities. Speculating in commodities is akin to astrology, but if you must speculate it is best to just buy commodities in physical or futures form. Of course, investing for leverage should never even be in the thought of a mining investor.
Alas, most investors in mining speculate in commodities, and then greedily look for leverage. They as a group lose a huge amount of money. I explain my thoughts in the linked article.
One of the worst sector to invest in today is in those uranium mining companies whose “investors” are building into their valuations expectation of a much higher uranium price.
Ascot Resources (AOT; C$0.78) recently acquired IDM Mining. As often happens with such mergers, those who could, short-sold AOT and bought an equivalent number of IDM shares, covering themselves and effectively booking an arbitrage profit. Such an action in the market takes investors’ eyes away from valuation and focuses them on trading, the reason why I think AOT fell. Based on my valuation, at the current share price, it offers a 50% upside.
Finally, I will soon have an article on the recent, brief war that happened between India and Pakistan, but for now, linked is a discussion I had with Maurice Jackson on the subject.
Associate: Rajni Bala
Disclaimer: All information found here, including any ideas, opinions, views, predictions, forecasts, commentaries, suggestions, or stock picks, expressed or implied herein, are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. While the information provided is believed to be accurate, it may include errors or inaccuracies. The sole purpose of these musings is to show my thinking process when analyzing a stock, not to provide any recommendation. I will not and cannot be held liable for any actions you take as a result of anything you read here. Conduct your own due diligence, or consult a licensed financial advisor or broker before making any and all investment decisions. Any investments, trades, speculations, or decisions made on the basis of any information found on this site, expressed or implied herein, are committed at your own risk, financial or otherwise.