USDJPY Forex Trading Pivot Point Levels for 2014.04.30

2014.04.30 12:30 6:30AM ET | USDJPY Currency Pair

SC USDJPY 2014.04.30

Here are the Pivot Points Levels with Support (S) and Resistance (R) for the USDJPY currency pair today. Price action is currently trading under the daily pivot point at the 102.514 price level, according to data at 6:30 AM ET. The USDJPY high for the day has been 102.646 while the low of day has reached to 102.274. The pair earlier today opened the Asian trading session above the daily pivot and has trended lower today with prices finding support at the S2 support area at 102.27.

Daily Pivot Point: 102.611
— S1 – 102.450
— S2 – 102.275
— S3 – 102.114
— R1 – 102.786
— R2 – 102.947
— R3 – 103.122


Weekly Pivot Points: USDJPY

SC USDJPY 2014.04.30

Prices are currently trading over the weekly pivot point at time of writing. The USDJPY has been on an overall bullish trend this week after opening the trading week below the weekly pivot.

Weekly Pivot Point: 102.281
— S1 – 101.845
— S2 – 101.516
— S3 – 101.080
— R1 – 102.610
— R2 – 103.046
— R3 – 103.375

 


By CountingPips.comForex Trading Apps & Currency Trade Tools

Disclaimer: Foreign Currency trading and trading on margin carries a high level of risk and volatility and can result in loss of part or all of your investment. All information and opinions contained do not constitute investment advice and accuracy of prices, charts, calculations cannot be guaranteed.

 

 

USDCHF Forex Trading Pivot Point Levels for 2014.04.30

2014.04.30 12:30 6:30AM ET | USDCHF Currency Pair

SC USDCHF 2014.04.30

Here are the Pivot Points Levels with Support (S) and Resistance (R) for the USDCHF currency pair today. Price action is currently trading right on the daily pivot point at the 0.88211 price level, according to data at 6:30 AM ET. The USDCHF high for the day has been 0.88499 while the low of day has reached to 0.88163. The pair earlier today opened the Asian trading session above the daily pivot and has trended lower over so far today.

Daily Pivot Point: 0.88212
— S1 – 0.87974
— S2 – 0.87616
— S3 – 0.87378
— R1 – 0.88570
— R2 – 0.88808
— R3 – 0.89166


Weekly Pivot Points: USDCHF

SC USDCHF 2014.04.30

Prices are currently trading under the weekly pivot point at time of writing. The USDCHF has been on an overall slightly bullish trend this week after opening the trading week below the weekly pivot.

Weekly Pivot Point: 0.88254
— S1 – 0.87898
— S2 – 0.87652
— S3 – 0.87296
— R1 – 0.88500
— R2 – 0.88856
— R3 – 0.89102


By CountingPips.com – Forex Trading Apps & Currency Trade Tools

Disclaimer: Foreign Currency trading and trading on margin carries a high level of risk and volatility and can result in loss of part or all of your investment. All information and opinions contained do not constitute investment advice and accuracy of prices, charts, calculations cannot be guaranteed.

 

 

 

 

Silver Finds Temporary Support; Downside Risk Still Present

Technical Sentiment: Bearish

Key Takeaways

  • Buyers failed to capitalize on the Bullish Engulfing Bar from April 24th;
  • Trend configuration remains bearish ;
  • Fibonacci 61.8% – priced at $19.30 – is the current support level.

Last week Silver tested the support trendline dating back to June 2013 and immediately went on a 97 cents rally, forming a bullish engulfing bar on the daily chart. As traders preferred to take profit rather than follow through with the bullish signal, silver slipped back into a bearish lower low – lower high configuration on the hourly timeframe. If the $19.30 support level holds, buying momentum might pick in the coming sessions.

 

Technical Analysis

Silver 30th April

The double test of the 61.8% Fibonacci retracement level between $18.93 and $19.90 is a small clue that Silver might have completed the pull-back on last week’s rally. Price remains below the main moving averages on all timeframes, with a bearish trend configuration of lower highs and lower lows trend, consequently there is always risk for more downside.

While the support at $19.30 holds, the first resistance is located around $19.53 (most recent lower high in the short term configuration and the 200 Simple Moving Average on 1H). A rally above $19.53 will open the way towards $19.90, and only on a break above this level will Silver completely switch to a technically bullish trend.

Stochastic is in oversold territory on 1H and 4H, bringing up the possibility that the bearish cycle is complete, yet price action has to confirm the reversal with more bullish bars.

If Silver clears below $19.30 and the previous two lows in the $19.22/24 area, the sell-off will continue in similar fashion towards $18.93 in order to test the major support once again.

*********
Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets

 

 

 

 

 

 

Monthly Wave Analysis for May, 2014 (EUR/USD, GBP/USD, USD/CHF, USD/JPY)

By RoboForex.com

Forecast for May, 2014

EUR USD, “Euro vs US Dollar”

Probably, Euro is still forming a large ascending zigzag [A]-[B]-[C] of V of (a) and is about to finish its correction [B] of V in the form of horizontal running triangle.

One of the possible scenarios at weekly chart implies that Euro is completing ascending zigzag (D) of [B] of triangle [B]. If this assumption is correct, then later price is expected to start final descending zigzag (E) of [B].

One of the possible scenarios at daily chart implies that price is finishing diagonal triangle [v] of C of (D) of the second “leg” C of [D] of ascending zigzag (D) of [B]. Right now, pair is completing horizontal correction (iv) of [v] of C of (D). Considering that wave (iii) of [v] was shorter than wave (i) of [v], price is expected to complete diagonal triangle [v] of C and make reverse downwards not higher than level of 1.43.

GBP USD, “Great Britain Pound vs US Dollar”

Probably, descending “leg” [A] of b of large zigzag b was completed, and at the moment pair is forming large ascending correction [B] of b, which may take the form of zigzag. Right now, price is completing descending correction (B) of [B] in the form of skewed triangle.

Probably, ascending correction [B] is taking the form of zigzag with skewed triangle (B) of [B] being completed inside it. If this assumption is correct, then right now pair is finishing ascending zigzag D of (B), which may be followed by final descending zigzag E of (B).

Probably, pair is finishing final wedge [c] of D of ascending zigzag D of (B). which may be followed by final descending zigzag E of (B). Considering that wave (iii) of [c] was shorter than wave (i) of [c], price is expected to complete wedge [c] of D and make reverse downwards not higher than level of 1.7050.

USD CHF, “US Dollar vs Swiss Franc”

Probably, Swiss Franc is finishing global descending trend in the form of triangle (a). Right now, pair is completing its zigzag [A]-[B]-[C] of V of (a) with diagonal triangle [C] of V of (a) as its second “leg”. It may be confirmed by the fact that internal wave structure of this diagonal triangle looks completely formed.

Probably, right now price is completing ascending correction (4) of [C] in the form of skewed triangle, which may be followed by final descending movement inside zigzag (5) of [C].

Possibly, pair is finishing diagonal triangle (v) of [c] of D of the second “leg” [c] of D of (4) of descending zigzag D of (4).  If this assumption is confirmed, then later pair is expected to form final ascending zigzag E of (4).

USD JPY, “US Dollar vs Japanese Yen”

One of the possible scenarios implies that pair is forming final descending diagonal triangle V of (a). Right now, price is forming its ascending correction [4] of V of (a), may be in the form of zigzag.

Probably, ascending correction [4] may take the form of zigzag; price is completing its first “leg” (A) of [4] in the form of impulse.

Possibly, descending correction 4 of (A) of ascending impulse (A) was completed in form of skewed triangle. If this assumption is correct, then later pair is expected to make final ascending movement inside wave 5 of (A).

RoboForex Analytical Department

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

 

 

 

 

Fibonacci Retracements Analysis 30.04.2014 (EUR/USD, USD/CHF)

Article By RoboForex.com

Analysis for April 30th, 2014

EUR USD, “Euro vs US Dollar”

Eurodollar rebounded from local level of 78.6% (1.3879) and continued falling down. Most likely, price will break minimum during the day. Main target is the group of fibo levels at 61.8% (1.3760).

As we can see at H1 chart, lower target area is formed by four fibo levels. According to analysis of temporary fibo-zones, predicted targets may be reached during the next couple of days.

USD CHF, “US Dollar vs Swiss Franc”

After rebounding from local level of 78.6% (0.8768), Franc started moving upwards. Main target for the next several days is the group of upper fibo levels at 0.8885 – 0.8880. If price rebounds from them, market may start deeper correction.

As we can see at H1 chart, Franc is consolidating. Possibly, price may reach new maximum on Wednesday. According to analysis of temporary fibo-zones, upper target levels may be reached until the end of this week.

RoboForex Analytical Department

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

 

 

 

 

 

USD Up Against Euro With Weak German Inflation Report

By HY Markets Forex Blog

Forex options traders should continuously follow economic indicators in the euro zone and U.S., as these reports can provide valuable information on the direction of market movement.

With weaker than expected German inflation data, speculation in the currency markets is that the European Central Bank may loosen monetary policy, according to Reuters. As a result, the dollar rose against the euro in late April. The dollar was also up against the Japanese yen.

“If inflation comes in too low, that raises expectations the ECB will lower rates or take other steps that will hurt the currency,” Eric Viloria, currency strategist at Wells Fargo Securities in New York, told Reuters. “Germany is Europe’s biggest economy, and we will be watching what happens.”

However, weak German inflation doesn’t mean the euro zone isn’t going to make progress in the near future. Therefore, forex options traders shouldn’t think it is a sure thing that the dollar is going to continue to climb against the euro.

In fact, ECB Vice President Vitor Constancio said the euro zone has made progress recently, as banks are repaying long-term loans and rebuilding investor confidence, according to the Wall Street Journal.

“Given where we stood barely two years ago – on the edge of redenomination risks – such progress is encouraging,” he said. “However, it does not mean we are entirely out of the danger zone.”

With the potential for future improvement, investors will want to keep a close eye on euro zone economic indicators. For example, future inflation reports could signal momentum that could push the euro in a positive direction against the dollar – important information for binary options traders.

The post USD Up Against Euro With Weak German Inflation Report appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

What America’s Energy Blunder Means for Oil

By MoneyMorning.com.au

Here’s a quiz for you.

Can you name the top three countries by proven oil reserves?

The top spot may surprise you. It’s Venezuela.

The number two spot is more obvious. It’s Saudi Arabia.

What about number three?

You won’t get this one. But don’t feel bad about it. The energy industry has gone through big changes in recent years, and even bigger changes are on the way…

It may surprise you to know that the country with the third largest proven oil reserves is Canada.

That’s an impressive feat for a country often disparaged as being the 51st US state, and for its people’s fondness for putting bacon on pancakes.

But it turns out there’s more to Canada than meets the eye. With 10.4% of the world’s proven oil reserves, Canada is ahead of Iran and Iraq, which have 9.4% and 9% respectively of the world’s proven reserves.

So just how did Canada quietly go about achieving this top three position?

Canada’s oil ‘miners’

Canada derives its strong oil position from the Alberta Oil Sands.

Put simply the Alberta Oil Sands (also known as the Athabasca Oil Sands) covers around 141,000 square kilometres in Canada’s Alberta province.

The oil sands themselves are a thick bitumen located near the Earth’s surface. In fact, due to the density of the oil sands, the most effective way of ‘mining’ the resource is to dig for it in the way a mining company would dig for coal, copper or iron ore.

Once they have dug up the oil sands, they transport it to a processing plant where they separate the oil content from the rest of the oil sands, and send it for refining.

The current and future development of Canada’s oil sands and the US’s shale gas resources creates an interesting prospect for the world’s energy supply.

It’s not so long ago that North America — the US especially — was facing an impending energy crisis.

The US was at the mercy of oil cartel OPEC. The cartel controlled the supply of oil and played a big part in setting the oil price. During the 1990s and most of the 2000s the market closely watched these meetings.

Today, does anyone pay attention to OPEC? Not really. Can you remember the last time you read a news story about an OPEC meeting? We can’t.

(By the way, the last OPEC meeting was on 4th December last year. The next meeting is on 11th June this year. You can expect today’s Money Morning to be the last time you read about the OPEC meeting in June, as nobody cares anymore.)

Thanks to the oil sands and shale gas, the North American energy market is starting to look a lot more stable. Or it would, except the US doesn’t appear to be in any hurry to secure its energy future.

If the US doesn’t want it, China will take it

The US has huge potential and proven reserves of natural gas due to its shale gas industry. The reserves of shale gas are so huge that the US could become energy independent within 20 years.

That’s providing the shale gas reserves prove to be as lucrative and economical as expected. However, while the US may become energy independent on paper, it still needs an oil supply. It can get oil domestically from onshore and offshore rigs.

But it will still need to rely on OPEC producers for the balance of supply. That’s what makes the US government’s decision not to prioritise the Keystone XL pipeline from the Alberta Oil Sands fields to refineries in Texas all the more surprising.

Legal challenges have held up the proposed pipeline due to its path through key farmland in Nebraska. In the old days, the Canadians may have just bided their time, not wanting to annoy their powerful neighbour to the south.

But things are different today. Today the US isn’t the only big energy buyer. That’s why the Canadian government is considering an alternative proposal. Rather than a north to south pipeline, the Northern Gateway Pipeline would stretch from Bruderheim in east-central Alberta to Kitimat on the coast of northern British Columbia, some 1,178 kilometres away.

The expected buyer of the crude oil will be growing Asian economies, in particular China.

Canada’s pain could be an oil investor’s gain

It’s not hard to see why the Canadians are so keen to monetise this huge proven resource. As we said at the top of this letter, the scale of the Alberta Oil Sands means that Canada has the world’s third biggest proven oil resource.

Estimates are that the Oil Sands contain 168 billion barrels of heavy crude oil. In dollar terms, according to Bloomberg News, failure to monetise this resource in one way or another could cost the Canadian economy CA$632 billion in foregone growth.

And seeing as the US currently accounts for 97% of Canada’s oil exports, any delays by the US will only make the Canadians more keen to sign a deal elsewhere…perhaps with China, which currently only takes 1% of Canada’s oil exports.

So, where are we going with this?

Well, it just goes to show how quickly markets can change. There’s a huge ‘stash’ of oil in Canada waiting to find someone willing to refine it and use it. But it needs the pipeline.

At first glance that may seem to be bad news. But it also creates opportunities elsewhere. For instance, in areas which don’t have infrastructure problems. That’s something resource analyst Jason Stevenson is closely looking at now. Already this year he has looked at several Aussie and overseas energy opportunities.

The bottom line is that regardless of what’s going on in the world of macro-economics and politics there will always be a demand for energy. That means there will always be the need for energy explorers and producers to find and finance new projects.

With the fall of OPEC’s influence, and new technologies making oil exploration possible in previously inaccessible places, other markets are looking to take up the slack. You can rest assured that if Canada drops the ball on its attempt to become an oil exporting giant, there are plenty of other markets primed to take Canada’s place.

The oil sector looks set to be one of the key resource opportunities for investors this year.

Cheers,
Kris+

From the Port Phillip Publishing Library

Special Report: Secure and Protect Family Wealth for Generations

Join Money Morning on Google+


By MoneyMorning.com.au

Everyone Has the Argentine Economy Wrong

By MoneyMorning.com.au

They lead the chants, manage the supporters, unfold the flags and sell the choripán sandwiches. But the Barras Bravas — tough gangs — aren’t your average football fan club. They’re the reason why violence, perpetrated by an army of barra soldiers pumped up on drugs and cheap beers, has become an integral part of Argentine football.

The first time I worked in Argentina, I had a football column for a local English-language paper. At the time football violence was getting out of hand, so I was asked to write a piece on the Barra Brava gangs that were causing the trouble. What I discovered was a powerful football mafia network. Why would they want to control football clubs? Because of the chance to launder money, or make more from selling star players — a market worth $228 million in the first half of 2013 alone.

Many people believe that the rest of the Argentine economy is just as corrupt and risky as its football business. Bill Bonner, the founder of Agora inc. (the company which publishes Money Morning), for one, is famously bearish on Argentina.

Disagreeing with your boss is never a particularly smart career move — but sometimes you have no choice. While I respect Bill for carving out a huge international media empire — and making very many prescient investment calls along the way — I think he’s got this one wrong. On average, my Argentine tips are up by around 20% since I first started writing about them, and I think that brave investors, who are prepared to go against the consensus, could stand to make more in the future.

Argentina’s ‘century of decline’

Bill’s not the only one beating up on Argentina at the moment. A recent cover story from The Economist asked what other countries could learn from a ‘century of decline’, while most other mainstream financial media have a similarly bearish view on the place. And to be fair, when you have lived and worked in Argentina like I have, you can understand why it has so many critics.

I’ve already mentioned corruption in football but in my various spells in Argentina, I came across plenty more examples of the corruption that plagues the country and stops it fulfilling its true potential. I always remember when a friend of mine, who’d just graduated from a top university in Buenos Aires, found that he’d landed his dream political job. The post was his but only if he agreed to give the guy who was fixing it for him 10% of his wage for the rest of his career. ‘Don’t worry’, said his fixer, ‘you can make it back in the future when you help someone get a job.’ When idealistic young graduates are forced to accept corruption at that stage of their working lives, it doesn’t bode well for the rest of the system.

But the corruption doesn’t just concern politics; it pervades almost everything else.

These are just anecdotal examples of course. But they’re backed up by more comprehensive evidence. Transparency International ranks the country 106th out of 177 in its Corruptions Perceptions Index, while the World Bank scores it 126 out of 188 when it comes to the ease of doing business. Corruption happens everywhere but the fact that it is so endemic in Argentina is one reason that the country hasn’t always made the most of its incredible natural resources.

Another problem has been erratic swings in policymaking that have discouraged investment. In just two decades, investors in the country went from the ‘privatise everything that moves’ era of Argentine President Carlos Menem, to the more recent wave of nationalisations, import taxes and price controls. Ultimately, the Argentines are free to choose whatever system they like — and both can deliver prosperity. Moreover, large institutional investors or multinationals aren’t afraid of risk. Many are invested in countries that are far less appealing than Argentina. But the one thing they really dislike is uncertainty. And in recent years, there has been way too much of that in Argentina.

In a later spell in the country, when I worked for an oil magazine out there, I used to speak to oilmen that were fuming with the government. They had gone out and made investments under one set of conditions but then the rules of the game had been changed completely. As they pointed out, it ended up being a lose-lose situation because when the investments dried up, neither the government nor the energy firms were making any money.

Oil, gas and debt markets: the road to recovery

If you’ve read this far you’ll be wondering why I still see an opportunity. Well, I’ll be honest. I don’t see the corruption issue being solved anytime soon. Yet, as I’ve been writing for a while now, there are signs of a shift in policy.

One of Argentina’s biggest problems is its energy deficit. It spends around $10 billion on importing energy each year, which is then provided at subsidised prices to domestic users. But in the last year, the government has been taking concrete steps to correct this. A recent ruling allows producers to sell 20% of their oil and gas abroad at international rates, as long as they have invested $1 billion in the country, while local gas prices have also been raised. Crucially the government is planning to cut subsidies, which currently stand at 5% of GDP, in half to 2.5%. The government has also settled with Repsol — the Spanish oil firm that lost out when the government expropriated its share of the huge YPF oil company — and is looking to attract other international investors. For example, Chevron has signed a big shale gas deal out there. Meanwhile the newly nationalised YPF has started to boost output. These are all signs that Argentina will increase oil and gas production.

Given that the country has the world’s second-biggest shale gas deposits and fourth-biggest shale oil reserves, a change in policy could create an energy boom. This would also benefit the rest of the economy, as the government would have less need to control capital flight; it would have more money for infrastructure investment; and consumer spending would receive a boost. Indeed economic consultant firm, Capital Economics, believes that it could lift Argentina’s growth to around 5%.

Argentina’s other problem is international — that is to say its terrible relationship with the global financial community. Ever since its default in 2001, the country has been locked out of international debt markets. While the commodity boom was in full flow that didn’t seem to matter but now Argentina’s export earnings are falling, the government realises that being able to borrow has its advantages. But again, we can see signs of some improvement here. Economy Minister, Axel Kicillof, recently presented a repayment plan to the Paris Club — a group of rich country creditors — and is due to begin formal negotiations in May. The government has also improved its inflation statistics, a major bone of contention with the IMF.

People will tell you that Argentina has underperformed for ages. Perhaps, but the current energy crisis and international pariah status are actually anomalies in the country’s recent history. And when they are resolved, they will give a massive boost to the economy.

Don’t get me wrong, these firms could get hit in the short term as Argentina faces any number of risks. The country’s lack of access to dollars is slowly pushing it towards a balance of payments crisis and a bad soy harvest, Chinese slowdown or government-spending spree ahead of the 2015 elections could easily tip it into recession. It’s also possible that we could see a wave of strikes that would disrupt the economy. But in the medium term, if Argentina can solve its energy crisis and re-enter the global financial system, it looks likely to enjoy a solid recovery.

Some people might want to wait for the short-term risks to play out and hold out for the chance to buy into these stocks at a lower price. It’s a nice idea but timing these things is never easy. That’s why I think it makes sense to buy in now, sit back and wait for Argentina’s fortunes to improve.

James McKeigue,
Contributing Editor, Money Morning

Ed Note: The above article was originally published in MoneyWeek.

Join Money Morning on Google+


By MoneyMorning.com.au

Ed Sterck: Russian Sanctions May Have Utilities Squeezing Less Juice from Uranium Supply

Source: Tom Armistead of The Mining Report (4/29/14)

http://www.theenergyreport.com/pub/na/ed-sterck-russian-sanctions-may-have-utilities-squeezing-less-juice-from-uranium-supply

Russia is a commodities giant, but supply isn’t the major issue—enrichment is. With a 44% global market share, Russia’s enrichment industry allows utilities around the world to squeeze more juice out of fewer lemons. In other words, Russian sanctions could mean utilities may have to use more natural uranium to make lemonade. That’s how Edward Sterck sees it, and the uranium mining analyst for BMO Capital Markets predicts a supply deficit by 2018. In this interview with The Mining Report, Sterck delivers a comprehensive uranium market overview and shares uranium names that can juice profits in lean times.

The Mining Report: Edward, welcome. Russia is facing international sanctions. How will all this affect the uranium market?

Edward Sterck: It hasn’t yet had any impact. Sanctions haven’t been brought in that are affecting the Russian nuclear industry, but there is the potential for that to occur. Indeed Rosatom, which is the Russian state umbrella company that covers Russian nuclear activities, has made a statement to the effect that business is continuing as normal, including the delivery of nuclear fuel to Ukrainian reactors, but sanctions could affect its ability to make deliveries under current contracts to Western utilities and Western customers in general.

If that occurs, it isn’t likely to have an impact on the supply of natural uranium to the market, but Russia is the world’s biggest supplier of enrichment, and it has a number of western customers for that enrichment.

The potential for reduced availability of enrichment capacity to the West could have a knock-on effect on uranium prices. The way in which this could occur is a little complicated, but effectively if you’ve got reduced enrichment availability to make a required amount of nuclear fuel, you can compensate by using more natural uranium and then less enrichment. The analogy is that to make orange juice, you can either squeeze a given number of oranges to get a given amount of juice or you can use fewer oranges and squeeze them harder to get the same amount of juice. Effectively, if sanctions are brought in against Russia and they do encompass the nuclear industry there, we could eventually see a knock-on effect and an increased demand for natural uranium from western utilities.

TMR: And what about Japan’s restart?

ES: At the moment there are 17 reactors that have been put forward for the restart process. Two of them have been shortlisted for restart. Those two reactors are going through the final rounds of safety checks and public consultations, but unfortunately at this point we still don’t have a clear idea of what the timing would be. Prime Minister Shinzo Abe’s government is keen to see the first restarts before the summer, which is the period of peak electricity demand in Japan. If that occurs, we could see the first reactors restart around the middle of the year. Hopefully some further reactors restart after that.

In terms of what reactor restarts in Japan mean for the market, it’s more of a derisking event for the equities and probably won’t have an immediate effect on the uranium price. Since Fukushima, Japanese utilities have by and large continued to take deliveries of their contractual commitments, so they have accumulated quite significant levels of excess inventories. Their engagement in the market and their need for new material beyond what they’re already contracted to take will probably remain fairly suppressed for quite a few years to come, even after restarts have commenced.

TMR: Given the long-depressed uranium price, is that going to extend the doldrums for the price?

ES: Not necessarily. One of the impacts of the low price is that producers are beginning to shut down production. Some of the higher-cost operations, such as Paladin Energy Ltd.’s (PDN:TSX; PDN:ASX) Kayelekera project in Malawi, are being put onto care and maintenance. No new significant projects are being pushed forward at the moment for production. In this case, the knock-on effect of low prices is a reduced supply outlook.

Despite Japan, we do still have a nuclear industry that’s growing, driven mainly by China, but also by some of the Middle Eastern countries and a handful of other places. That does lead to future demand growth for natural uranium. On my estimates we end up in a situation where supply is insufficient to meet demand in 2018, and it enters a fairly deep and sustained deficit thereafter.

There are some positive price indicators. Last year the long-term contracting market was extremely quiet. Normally you’d see around 170 million pounds (170 Mlb) of uranium signed into long-term contracts, but the volume was only about 20 Mlb last year. Utilities appear to be pretty well covered for near-term requirements, and they were putting off signing contracts as a result. This year, the amount of contracting activity has picked up. A number of U.S. utilities in particular are coming to the market looking for long-term contracts, which suggests that they are beginning to feel that they are less well covered than they perhaps were at this time last year. It’s interesting to note that they are typically looking for new contracts on a fixed-price basis, which suggests that utilities think that prices probably have to rise at some point in the future as well.

TMR: Since you spoke with The Energy Report nearly two years ago, the uranium price has continued to trend lower. What has kept you interested in the uranium space?

ES: One of the reasons I’m interested in the uranium space, and also quite a number of investors are, is that when the uranium price moves, it tends to move quite dramatically. That also translates into movement in the share prices of the uranium mining equities. It’s a subsector of the mining space that’s worth keeping an eye on because there’s an opportunity there when it does begin to move.

TMR: What is the significance of Denison Mines Corp.’s (DML:TSX; DNN:NYSE.MKT) discovery at Wheeler River?

ES: It’s probably the best exploration project that Denison has. It’s a typical Athabasca-style deposit consisting of high-grade mineralization in quite a small area, which makes defining it quite tricky. It requires a lot of precision drilling. At the moment I’d say that the defined resource isn’t substantial enough for it to be a candidate for a development decision, but Denison has had some recent drilling results in a separate zone about 3 kilometers away from the existing resource that has returned some interesting hits that it plans to follow up on in the summer drilling program.

If Denison manages to expand the mineralization it has identified in that separate zone, it’s possible that it could get to the point where Wheeler River reaches a critical mass. I think it would probably also require higher uranium prices than what we see today, but to be completely honest, that’s probably the same as any uranium exploration project right now. I can’t see anyone pushing ahead with development decisions at $35/lb U3O8. Given mining costs, you’d have to have a very special project indeed to make that sort of decision.

TMR: What is Denison after in acquiring International Enexco Ltd. (IEC:TSX.V; IEXCF:OTCQX; I6E:FSE)?

ES: Denison has made a few acquisitions over the last 18 months or so. I think that International Enexco falls into its strategy of building a substantial land package in the Athabasca. It’s about controlling acreage and building up an interesting exploration portfolio. Denison has also acquired some companies with assets in Africa. The company has said that its plan is to become an Athabasca-focused exploration company and then potentially spin out its African assets as a Denison Africa stock play.

TMR: What’s the thinking behind your market perform recommendation on Paladin Energy Ltd. (PDN:TSX; PDN:ASX)?

ES: Paladin is in an interesting but slightly tricky place right now. It’s got two producing assets, one of which, as I mentioned earlier, is being put on care and maintenance, but operationally it has made some significant improvements at both its cornerstone projects, Langer Heinrich and Kayelekera. It has been driving down operating costs. Langer Heinrich, the operating mine, is still the focus. Paladin recently sold a minority stake in that to raise some cash.

Paladin’s balance sheet is somewhat stretched at the moment. It took on a lot of debt during the uranium boom to build these mines, and the cash flows in this uranium price environment have not allowed Paladin to meaningfully pay down that debt. That’s the rationale behind the market perform.

The projects look interesting, albeit that Kayelekera is on care and maintenance at the moment, and certainly have a long-term strategic value. If we see the uranium price go up, you’ve got a ready-built mine with a 3 Mlb capacity at Kayelekera, and Langer Henrich has several decades of resource life. The challenge is that leveraged balance sheet, so the market perform reflects the two conflicting attributes of Paladin: the positive attributes and then the negative attributes of the balance sheet.

TMR: What is the significance of Cameco Corp.’s (CCO:TSX; CCJ:NYSE) startup of its Cigar Lake mine?

ES: It’s a pretty significant project, almost on par with its biggest operation, McArthur River. It should be a relatively low-cost operation, coming into the first quartile of the cost curve once it’s at full steam. Cigar Lake is an important project for Cameco for future cash flows. It replaces the material that Cameco benefitted from through the Megatons to Megawatts deal between the U.S. and Russia, where Russian warheads were being downblended and sold to western utilities. Cameco was one of the conduits for that uranium to reach the market. The company is now working through the last of the inventory from that. Cigar Lake is a pretty key project for Cameco, and for nuclear utilities of the world.

TMR: AREVA SA (AREVA:EPA) has the McClean Lake mill near the Cigar Lake startup. Is CIgar Lake going to significantly increase the value of that mill?

ES: I think the value of McClean Lake is one that will benefit from Cigar Lake material going through it, but it also benefits more from a strategic value, which is quite hard to put a dollar figure on. It’s one of only two mills up in that part of Athabasca; the Rabbit Lake mill is not too far away from there. I think permitting a new mill today in that area with a new tailing facility would probably be challenging. If we look at the other projects that might be developed in that region, the likelihood is that you’d probably have to toll treat material through one of the existing mills. That’s really where the strategic value of McClean Lake comes in.

TMR: Are there any other companies in your uranium coverage universe that you see as attractive takeover prospects?

ES: At the moment, not really. I think most companies have their heads a bit below the parapet. We are seeing a bit of consolidation in the mid- to small-cap space, but it’s mainly Denison taking over smaller companies. Within the larger caps, I would expect the status quo to continue. If we saw uranium prices fall further and Paladin was looking more and more distressed due to the balance sheet, then someone could make a low bid for them. I’m not sure we’re there just yet. I think that would require a lower share price than where we stand today.

TMR: Do you see any really exciting companies in your coverage universe that we haven’t discussed?

ES: I think if the uranium price goes up, most of the uranium equities should benefit. It just comes down to everything being somewhat hinged on the uranium price at the moment. I’m waiting for that turnaround to occur.

TMR: I’m impressed with what we’ve covered today. Thanks for your time.

ES: You’re welcome. Thank you.

Edward Sterck covers uranium, diamond, platinum group metal and European copper mining companies for BMO Capital Markets. He joined BMO in 2007, prior to which he was a mining analyst at Hargreave Hale. Before working in mining research, he spent more than four years trading government bond futures on a proprietary basis. Edward holds a Bachelor of Science in geology with honors from the Royal School of Mines, Imperial College London.

Want to read more Mining Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To view recent interviews with industry analysts and commentators, visit The Mining Report homepage.

DISCLOSURE:

1) Tom Armistead conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services.

3) Edward Sterck: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. Full company disclosures are available online. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.

5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.

6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

Streetwise – The Minig Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

Participating companies provide the logos used in The Mining Report. These logos are trademarks and are the property of the individual companies.

101 Second St., Suite 110

Petaluma, CA 94952

Tel.: (707) 981-8999

Fax: (707) 981-8998

Email: [email protected]