CCJ’s 2012 revenue attributable to shareholders plummeted 41% from last year. The 4th quarter was an absolute bloodbath, with revenue off 83%. Most of the carnage is from a massive write down the company took on a project called Kintyre. The rest is from uranium prices being cut down mercilessly.
However, you should have known this was going to be ugly, if only from the most recent sales prices of uranium-308.
When prices go into free fall like that, it means one thing: no actual sales are occurring.
The end of 2012 was horrible for uranium sales. Because reactors don’t require a continuous feed of fuel, there exist periods where their operators may elect to sit back and not come to market. So really, almost nothing was done at the end of the year. This makes sense – with two major elections (Japan and the US), global uncertainty, looming recession, and no imminent need for uranium, producers were in the uncomfortable position of having no buyers. If you were a lowly player, desperate for some sales to keep the doors open, the last three months were not a good time for you.
But that’s all drawing to an end soon. Japan and the US have reaffirmed nuclear energy. Emerging markets are going full bore. Russia is done flooding the market with cheap HEU stock.
We are preparing for an epic resurgence of nuclear fuel prices.
Would you care for a second opinion?
I’ve been hammering on this point since the Fukushima reactor was still busy melting down. I’ve mentioned all the points myself – expectations of the ability of countries to drop nuclear power are unrealistic. One does not simply drop 30% of their grid. And with the immense competition for power sources globally, ignoring such a potent fuel is madness.
Now, slowly, all of my predictions, as laid out literally in the middle of the tsunami crisis, are playing out. Japan is backtracking. The US has confirmed they intend to move forward with construction of the first reactors built in this country is 30 years. The emerging markets are embracing nuclear to diversify their grids. Environmentalists have even begun marginalizing the anti-nuclear activists in their ranks – crushing their ability to be heard; mocking them openly.
Next up, Europe starts caving, led by Germany; which has no choice but to acknowledge that there is no way they can replace their nuclear facilities with windmills and solar panels.
And as these realizations hit, the price for nuclear fuel is going to skyrocket. With it, CCJ’s earnings will go from the worst in its history, to the very best.
Bring it, kids. I have your numbers. It’s time to pay up.
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As an aside, if any companies you hold plan to report earnings on a Friday after market close…you’re 99% guaranteed it’s going to be a terrible set of figures.
It seems to me the Japanese are using the earthquake to hoodwink the uranium market participants. They have shut down their reactors causing a decline in demand and speculation in uranium, but at the same time they are pouring billions into safety upgrades at their plants, they are still buying uranium at depressed price levels and building a stockpile of cheap uranium which they will use once reactors go back online again.
How are they able to survive this long without nuclear power? Do their citizens have electricity?