Good Morning Traders,
Thank you to all of you who have written in the last week to send prayers for, and even asking where to send money to our friends and readers in Japan.
We suggest that any of you who want to donate assistance do so through the International Red Cross, you can contact them here http://www.google.com/crisisresponse/japanquake2011.html there are several other good sources for donation there too. God Bless.
Alternative Realities
The crisis in Japan has renewed the debate about the future and safety of nuclear energy, and for good reason. Meanwhile almost all of the uranium companies share prices imploded on the disaster, dropping 20%+, some may never recover. Even so, the fact remains that as a world, we desperately need a viable domestic uranium industry and while some countries may curtail their nuclear programs for now, others like the US, will certainly have to push ahead.
I will have a much more detailed analysis in this weeks full update, but for now, we need to look at picking up a couple of key strategic uranium producers.
One of my favorite companies in domestic uranium space is Uranium Energy Corp (UEC.NYSE) who recently opened a new ISR mine in South Texas.
UEC has ambitious plans to gradually increase production to one million pounds per year thru several satellite operations feeding a central processing plant.
The UEC Advantage
The company’s initial operating costs at the Palangana mine are a very low $18/lb. It has 12 million pounds of historic and 43-101 qualified resources in all categories in South Texas. Additionally, it controls another 23 million pounds of historic resources in past-producing districts of New Mexico, Wyoming, and Colorado.
Uranium Energy Corp has solid workers and specialists, all highly skilled, a tightly held share structure, and $33 million in cash and working capital. More on UEC and how we plan to move on it and others, in this weeks CC trading update.
Also, I have an update about one of our Dragon Metals holdings, Lynas Corp. If you don’t have our Dragon Metals Report go to www.dragonmetalsreport.com and get your copy now! Only $49.95 while supplies last.
DM Portfolio Holding: Lynas Corp (LYC)
Kevin & Jason’s Trading Note:
For the record, we expect a reverse stock split from Lynas sometime in the next 12-18 months as the company goes towards its full production capacity goals from mining and processing of REOs and also if it decides to uplist to the NYSE or NASDAQ. If Lynas decides not to uplist on a major American exchange, a reverse stock split would be much less likely.
Lynas has a high share count, but as I explained to a few of you here and elsewhere, that can be changed very quickly by a reverse stock split. What matters most is market cap and what the market values the company at regardless of shares.
Reverse splits with rising earnings work.
That’s a good reverse stock split. A bad reverse stock split is one where a company has no earnings and does so to further dilute the shareholders and buy time from possible bankruptcy or to avoid being delisted from a major exchange.
If Lynas does do a reverse stock split I would expect a 1:10 reverse stock split to get down to around 100 million shares. The market cap stays the same and only the share count changes.
So if you have at least 1,000 shares and the reverse split takes your position down to only 100 shares but at a much higher share price, you would be able to use options to hedge your Lynas position if they do indeed uplist.
Just some further chess moves for you to consider. I’m always trying to think a few moves ahead on the chessboard.
P.S. Lynas also exercised its contractual option to purchase a deposit in Malawi, Africa. Good grade REOs at the deposit.
http://www.lynascorp.com/page.asp?category_id=8&page_id=27
Stay safe out there this week. Look for your regular update and as always stay sharp for Urgent Trading Alerts!
Yours for Resource Profits,
Kevin Kerr, Editor & Trader
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