What happened
Shares of uranium mining companies Denison Mines (DNN), Energy Fuels (UUUU), and Uranium Energy (UEC 0.60%) all crashed in Tuesday trading, falling 7%, 8.6%, and a disheartening 11.9%, respectively, through 1:25 p.m. ET.
It's not hard to figure out why.
Image source: Getty Images.
So what
I pointed out a couple of weeks ago that prices for nuclear fuel were repeatedly bumping up against a low ceiling, and failing repeatedly to reach the $60-a-pound uranium target that is seen as a goal for making uranium mining profitable enough to spur new production.
That pattern continues through today.
Since hitting its recent high of roughly $48 a pound on Nov. 15, uranium prices have twice more tried to break that barrier and resume their march toward $60 -- and twice failed, according to data from TradingEconomics.com. Today, uranium prices sit at just $47.25 a pound, which, granted, is about 50% higher than their lows of mid-August, but also still a far way away from $60.
Now what
For uranium investors, it has to be starting to feel like the uranium rally -- which was sparked by news in September that Sprott Physical Uranium Trust Fund (SRUU.F -0.48%) was buying yellowcake for a commodity fund that buys and holds physical uranium -- also peaked in that month. Subsequent months have featured nothing but lower and lower "highs" as the price of uranium cycles downward.
This has to feel particularly disappointing given that, less than a week ago, Kazakhstan's national nuclear company Kazatomprom announced that it is investing in yet another physical uranium fund, as well as buying back some of its own uranium previously sold to Yellow Cake plc. The fact that this news wasn't enough to shake uranium prices out of their doldrums, like the Sprott news did a few months ago, suggests that enthusiasm for physical uranium as an investment has waned.
In the absence of such momentum, investors in Denison Mines, in Energy Fuels, and in Uranium Energy, too, are left owning nothing more than a trio of unprofitable mining stocks. Given this, it's really no mystery why their stocks are going down.
