One Step Back, Two Steps Forward
SXRuraniumone stock has been hammered this week as Rio Tinto backed out of a deal to sell its remaining American assetts to SXR. This transaction would have potentially given control to half of all the US uranium mills currently permitted. Now SXR is left with the possibility of purchasing one and receiving some land in anther separate deal which they have extended. We are scratching our heads as to why the drop has been this profound, and are left to guess that people just do not understand how monumental this is.
Let's review: One of the world's largest miners who had decided to sell their uranium assets in a country where most of the world's demand comes from changed their mind. They stated that there had been a dramatic change in the uranium market and would like to further explore their options. I highly doubt that Rio is going to reconsider selling at a higher price, because it would take billions of dollars to grab their attention. This company has, in our opinion, realized that uranium is going to be the comodity of the future and therefor they must not sell at what will be perceived as dirt cheap prices in the future. Rio is going to stay the course with their properties, and if they should decide to divest them, it will in the form of a merger (they merge their assets into an existing company, and take a large number of shares in exchange).
Honestly, I believe that not only will Rio stay the course with their properties and keep them in-house, but they are going to stay have to play catch-up with everyone else. Luckily for them, if they start now it will be more expensive than had they started last year or the year before, but it will surely beat the prices that shall be paid later on in what we expect to be a magnificent bull market. This company will not be phased by a few billion dollars and would probably even be interested in buying Cameco if it were not for their ultimate poison pill (it requires that Cameco, or the controlling company to keep the headquarters in Saskatoon , Saskatchewan). Usually when a big company enters into (in this case stays in) a new field by starting slowly, it gives a boost to the potential takeout targets. Not so here, and we feel that the companies with great properties around their mill and project areas could be the first to be taken out. Mining is a funny business, because no matter how big and great your company is, if you miss the writing on the wall and do not claim the land needed to explore, then your only option is to buy from outside because you sure cannot grow organically!
This is one of those great buying opportunities in SXR, as it is an oversold security at this point. We would like to believe that we saw the bottom today shortly after we increased our position by 50% in the company because it had a very nice rebound. This stock is going to be a $30 stock this year and adding to any holdings in this area will be key due to Dominion opening up very soon. Keep in mind that SXR has a wild card in Pitchstone (who we believe to have some of the best uranium properties in the Athabascan Basin) and could increase dramatically should uranium be hit this drilling season. The stock has too many good events coming up in the next year to keep it weighted down, and we fully expect it to shed those extra pounds and begin racing ahead (we hope to do this after every holiday season as well, it just appears that SXR may do it before we have even had a chance to start!).
Overall, the uraniums should spend the next week or two trading in a 10% up/down range, then resume their movement in one direction or another. We fully expect to see strength across the board until at March and hopefully through April. Most likely this run will end sometime in early May, at which time we shall inform you as to our decision to move some money around as stated in the end of year newsletter sent out earlier this week.
We have also added news links to our website (theinvestar.com) and begun to archive our articles there as well. Within the month we will begin posting interviews with key figures at many of the companies that are popular among retail investors. As drilling season has begun, it is of utmost importance to remember to keep patient and hold through the storms, because smooth sailing should be just ahead.
Let's review: One of the world's largest miners who had decided to sell their uranium assets in a country where most of the world's demand comes from changed their mind. They stated that there had been a dramatic change in the uranium market and would like to further explore their options. I highly doubt that Rio is going to reconsider selling at a higher price, because it would take billions of dollars to grab their attention. This company has, in our opinion, realized that uranium is going to be the comodity of the future and therefor they must not sell at what will be perceived as dirt cheap prices in the future. Rio is going to stay the course with their properties, and if they should decide to divest them, it will in the form of a merger (they merge their assets into an existing company, and take a large number of shares in exchange).
Honestly, I believe that not only will Rio stay the course with their properties and keep them in-house, but they are going to stay have to play catch-up with everyone else. Luckily for them, if they start now it will be more expensive than had they started last year or the year before, but it will surely beat the prices that shall be paid later on in what we expect to be a magnificent bull market. This company will not be phased by a few billion dollars and would probably even be interested in buying Cameco if it were not for their ultimate poison pill (it requires that Cameco, or the controlling company to keep the headquarters in Saskatoon , Saskatchewan). Usually when a big company enters into (in this case stays in) a new field by starting slowly, it gives a boost to the potential takeout targets. Not so here, and we feel that the companies with great properties around their mill and project areas could be the first to be taken out. Mining is a funny business, because no matter how big and great your company is, if you miss the writing on the wall and do not claim the land needed to explore, then your only option is to buy from outside because you sure cannot grow organically!
This is one of those great buying opportunities in SXR, as it is an oversold security at this point. We would like to believe that we saw the bottom today shortly after we increased our position by 50% in the company because it had a very nice rebound. This stock is going to be a $30 stock this year and adding to any holdings in this area will be key due to Dominion opening up very soon. Keep in mind that SXR has a wild card in Pitchstone (who we believe to have some of the best uranium properties in the Athabascan Basin) and could increase dramatically should uranium be hit this drilling season. The stock has too many good events coming up in the next year to keep it weighted down, and we fully expect it to shed those extra pounds and begin racing ahead (we hope to do this after every holiday season as well, it just appears that SXR may do it before we have even had a chance to start!).
Overall, the uraniums should spend the next week or two trading in a 10% up/down range, then resume their movement in one direction or another. We fully expect to see strength across the board until at March and hopefully through April. Most likely this run will end sometime in early May, at which time we shall inform you as to our decision to move some money around as stated in the end of year newsletter sent out earlier this week.
We have also added news links to our website (theinvestar.com) and begun to archive our articles there as well. Within the month we will begin posting interviews with key figures at many of the companies that are popular among retail investors. As drilling season has begun, it is of utmost importance to remember to keep patient and hold through the storms, because smooth sailing should be just ahead.
posted by -theinvestar @ 1/09/2007 11:19:00 PM
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