The Nuclear Waste Issue
Nuclear waste is not an easy substance to remove and efforts to create permanent waste disposal facilities in the U.S. have gone awry. The Federal government is responsible for dealing with the waste produced from light water reactors and as more nuclear plants are approved, the need for an effective plan only increases. Groups opposing new nuclear plants have a much stronger case when they point out that any new nuclear plant will only increase the nation’s waste challenges.
MSRs that recycle waste will help to clean nuclear’s image and deal with the waste issue. Transatomic’s MSR continues to be developed and its MIT trained scientists are encouraged with their overall progress. The emerging market is a major growth area for nuclear energy and there are a number of policy makers considering the use of nuclear energy. The deployment of traditional light water reactors alongside newer MSRs could deal with a large portion of a nation’s nuclear waste issue, meet energy needs, and support the overall demand for uranium.
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The Best Uranium Investment
Cameco Corporation (USA) (NYSE:CCJ) is a well-known uranium producer with high yield mines in Canada. It is expanding its operation and its cigar lake facility will further boost the firm’s earnings. The company is profitable even in the light of recent difficulties in the industry. It has a total debt to equity ratio of 0.31 but its margins are strong enough that it is easily able to support some debt.
The recent difficulties in the industry have affected the company and helped to push down its return on investment to 4.2% and return on assets to 3.2%. In the long run the world needs more power and Cameco Corporation (USA) (NYSE:CCJ) is in a great position to help fuel Asia’s energy needs. The Chinese continue to build new nuclear reactors and Cameco Corporation (USA) (NYSE:CCJ) is ready to support the increased demand that these plants will cause.
Other Possible Investments
Global X Uranium ETF (URA) offers a more diversified exposure to the uranium industry. The fund’s biggest position is in Cameco with a 21.68% weighting. The fund has positions in a number of uranium juniors. These smaller companies are very volatile and help to explain the ETF’s large fall over the past year. Currently the fund looks cheap with an average price to book ratio of 0.70.
With a 0.69% management fee, the fund is on the expensive side of the ETF realm. For investors that really understand the industry this ETF offers a good way to play the violent swings in investor sentiment. Long term energy investors looking to diversify their exposure to the world’s energy sources would probably find a better fit in Cameco Corporation (USA) (NYSE:CCJ) due it is already profitable operations and low cost structure.
Denison Mines Corp (USA) (NYSEMKT:DNN) is an up and coming nuclear miner. It is drilling in a number of areas next to Cameco’s facilities. Denison Mines Corp (USA) (NYSEMKT:DNN) also owns a 22.5% interest in the Mclean Lake mill that is currently the only mill designed to process the high grade ore found in the region. The company also has interests in Mongolia and Zambia. This diversified resource mix is slowly being developed and Denison Mines Corp (USA) (NYSEMKT:DNN) is setting itself up nicely to become an important player in the industry.
Denison Mines Corp (USA) (NYSEMKT:DNN) is not profitable and the process of bringing a new mine online is not quick or easy. The company is expected to post an EPS loss of -$0.06 in 2013 with continued exploration costs. Even with $38 million in cash and equivalents, the most prudent action is to hold off for the time being.
Conclusions
Molten salt reactors offer a great way to help remove nuclear waste and improve the image of the industry. Overall this will help to support the demand for nuclear power and low cost producers like Cameco Corporation (USA) (NYSE:CCJ) are in a great place to benefit. The Global X Uranium ETF and Denison Mines Corp (USA) (NYSEMKT:DNN) mines have a number of projects that are still waiting to come online and this makes these investments rather unstable. Long term energy investors looking for a slice of uranium would find a better match in Cameco Corporation (USA) (NYSE:CCJ).
The article Eventually Molten Salt Reactors Will Boost Uranium Miners originally appeared on Fool.com and is written by Joshua Bondy.
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