The share price of Uranium Energy, the No. 2 uranium company in North America after Cameco, has risen tenfold since its low in 2020, from 50 cents to over $5. Investors are currently taking profits at this level. CEO Amir Adnani is brimming with self-confidence and told investors in Frankfurt that the share price could still rise to "over twenty dollars".
An extremely cyclical shareNo question: Uranium Energy ($5.64 | $UEX) is an extremely cyclical share that could make - or lose - a lot of money. The share price is extremely volatile and essentially follows the price of uranium. The sector has been in crisis mode since 2011, because the price of uranium oxide was usually far below the high production costs of western industrialized countries. It was often cheaper to mothball mines and processing plants than to produce the radioactive material. The supply of uranium came from republics of the former Soviet Union. The damage to the industry's image caused by the Fukushima disaster was huge anyway.
Uranium Energy's share price performance is not for investors with weak nerves. After crashing from its interim high at the end of 2010, the share price fluctuated around the one US dollar mark for seven years. From 2021, stock market turnover suddenly exploded. Hard-nosed speculators had obviously come to the realization that uranium could only go up again. They drove Uranium Energy's share price upwards amid wild fluctuations. The company's market capitalization now stands at an impressive $2 billion.
Brought back to life"The uranium price only came back to life 45 days ago, after eleven years of decline," said Amir Adnani during the interview in Frankfurt. An interesting statement. He was referring to the fact that it has only been worthwhile mining and processing uranium in North America again for about six weeks. He continued: "73 dollars per pound is a good price to get into production." His company's break-even point is $40, he explained when asked. However, the uranium price would have to be constantly much higher to really make money.
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