This Uranium Miner on Sale

							                       This Uranium Miner on Sale

With all of the volatility in the commodity space, one market that has held its own is
the uranium sector. While the uranium sector has seen a dramatic contraction following
the Japanese nuclear disaster, things appear to be shifting. As horrific as that was,
Japan has already re-started its nuclear program. Uranium demand is set to increase
over the next decade as many nations, particularly the emerging markets, are set to
increase their nuclear programs. With this demand comes the need for uranium supply,
which will have positive implications for certain mining stocks in the sector.

Investors in mining stocks always look to the future. With the energy crisis unfolding, the
U.S. is now proceeding with building the first nuclear power plant in over 30 years. The
truth is that the world needs more energy and that will come from uranium. For the time
being, there just isn’t a way to harness all of the wind and sun effectively to compete with
uranium.

Of the uranium mining stocks out there, an interesting one is Denison Mines Corp.
(NYSE/DNN, AMEX/DNN). This company explores for and extracts uranium mainly in
Canada and the U.S. Unlike some of the smaller mining stocks, Denison also has some
exploration properties in Mongolia and Zambia. The more exploration properties a firm
has, the better the potential upside when looking at uranium penny stocks

A big asset for Denison is its 22.5% ownership in the McClean Lake uranium mill.
Located in Saskatchewan, Canada, this is one of the largest processing facilities for
uranium. If uranium prices do move up substantially, considering the area that has
several other large international mining stocks, there is the potential for Denison to be
acquired.

The company trades at just over one times book value, which is quite a low multiple for
uranium mining stocks. Several peers trade at multiples of over two times book value,
and if one of the larger uranium mining stocks were to make an offer, it would have to
pay a large premium. At just over one times book value, this uranium miner appears to
offer great value.




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This uranium miner has had a volatile year. With the assets it has under control, I think it
is highly probable that Denison Mines’ stock will break the small downward resistance
and move up to attain a similar valuation as its peers. With demand for uranium set to
increase over time, mining stocks with prime assets like Denison should do very well.
Any upswing in uranium prices will have a positive impact on Denison’s share price. A
break above the 200-day moving average should lead the stock to re-test the highs of
the year.




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