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Mailbox: Suggestions for lower risk uranium plays and no compensation from companies

From the Maven Letter: February 20, 2022
By Gwen Preston

Can you offer your suggestion for a lower-risk uranium play?

- Reader MC

Uranium has historically been a volatile space, with long periods of depressed prices punctuated by dramatic price spikes. If I thought the future would play out as the past has done, my answer would be: there’s no such thing as a low-risk uranium stock!

However, I think this market could play out differently in that I think the main fuel is a realization across the space that prices have to go higher and stay there to incentivize the building of the new mines needed to keep the lights on (feed the supply gap).

That doesn’t mean the spot price won’t shoot up, but I think the drop back will leave the price strong.

With that foundation, I think uranium stocks will provide some of the crazy volatility they have in past bull markets but I also think that investors won’t need to watch closely and exit as soon as things appear to turn down. That kind of attention and trading was needed in past markets or else one’s gains would evaporate. This time, I think close attention and trading might give one the chance to capitalize on spikes but a buy-and-hold approach will also work.

Since that’s my thesis, then any operating uranium miner or developer with a Tier One asset would be a low-risk play. To see my specific stock suggestions, subscribe here.

In a recent statement, you said you receive no compensation from any of the companies you represent. Does that mean no flights no hotel rooms no meals no free shirts or hats no nothing??? Can you please make this crystal clear??? Thank you.

- Reader TG

The only way companies pay Resource Maven directly is if they want to buy reprint rights to an article that I already wrote. To be crystal clear - I never get paid to write about a company. But once an article exists, if the company wants to share it (send to shareholders or hand it out at a conference, for example) the company has to buy reprint rights. That has to be the structure (1) to protect paying subscribers from my content being shared willy nilly and (2) as part of legally establishing that my content is protected (should I ever have to go after someone for sharing my content without rights, a record of others paying for rights would be important).

As for site visits, I don’t pay all costs myself. Sometimes companies pay for flights; sometimes I do. TO be honest, I don’t really stress about that because (1) I have to be pretty interested in, or already invested in, a deal to go through the effort visiting and (2) often it would be impossible to pay for one’s own costs anyway, such as when a company charters a plane. I also don’t go on that many site visits anymore; the frequency declined significantly when my daughter was born and of course has been at zero since COVID. There is still merit in site visits but the bar of what I think I'll get out of the trip is much much higher than it used to be! (Learn about a jurisdiction with which I am unfamiliar, get to know a management team by spending some real time together, understand the physical lay of the land and access, etc. at a mountainous property, etc.).

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