Robert Baillieul of Motley Fool fame, whose purpose is to help the world invest, reports that Billionaire George Soros Bought 45 Million US Dollars of Cameco Corporation.The company is Cameco Corporation, the largest uranium producer on Earth. Its key asset, McArthur River, is one of the largest and highest-grade mines in the world. It alone accounts for more than 10 per cent of the industry yellowcake output.
Uranium prices collapsed between 2007 and 2010, where spot rates fell as low as US Dollars 40 per lb. Then Japanese Fukushima nuclear disaster hit in early 2011. Prices took a second leg down as the country scrapped its atomic energy program. Only a few months ago, prices hit a nine-year low. But that is about to change. Today, uranium trades at US Dollars 36 per lb. However, the average cost to produce one pound of uranium is more than twice that of about US Dollars 75 per lb. Miners are hemorrhaging money, that cannot last. Large players will curb operations. Small miners will go bust. Eventually, prices will rise to meet the cost of production.
And despite critics, uranium demand is still growing. Nuclear power currently produces nearly a fifth of U.S. electricity. Developing countries like China and India need atomic energy to power their economic growth. As supplies tighten and demand grows, common sense says that uranium prices will go up. Of course, we do not know exactly when that will happen. But because the situation cannot get much worse, the downside risk here is low.
Apparently, Soros is also bullish on uranium miners. According to recent SEC filings, the billionaire investor disclosed that he owned 2.3 million Cameco shares. As of June, that represented an investment stake of US Dollars 44.7 million.
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