Opinions
Keith Richards
Denison Mines Corp
DML-T
COMMENT
Dec 30, 2016
Stock price when the opinion was issued
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Unique because using in situ recovery methods for uranium using chemicals and water. Technology is well proven globally, and really brings down the capital and operating costs. Very strong economics. Newest project is almost fully financed. Prime takeout candidate. No dividend.
(Analysts’ price target is $3.46)He bought this three years ago when investors hated uranium, but he has since made his money back. DML is trying proven recovery methods but at a deeper depth that could work. If it does, shares go higher, but fears this method could be challenging on a commercial scale. Swo, he feels of two minds about DML. DML is the most important junior in the Athabasca basin. Their edge is operating a permitted mill there.
The question asked for his preference between Cameco and Denison. Uranium is up and momentum is with them but he wouldn't buy them. New nuclear projects are ten years away for development. Denison has a new mine in Saskatchewan but it is a 10 year project. Cameco trades at 30 times revenue.
Focused on uranium, where seasonality is strong from September-January. Lots of volatility. Performed well, then pulled back, did well. Doing better than others in the space. Favourable in medium- and long-term.
Lots of positive announcements in the sector, but the stocks have not responded because all the focus is still on tech, not on commodities.
Expects the uranium market to do extremely well for next 5 years. Has a permitted mill, which is hard to obtain. Second-best asset in the Athabasca Basin, after CCO. Only reservation is that its project is deep, rather than on surface, using technology he's not familiar enough with to be confident of the outcome. Extremely speculative, he owns a bit.
There is a fair amount of seasonality to metals. Lower priced stocks are not traded by the bigger players, and therefore you have less crowd behaviour involved. Penny stocks can be whippy, because they are traded by less traders with less money. The chart shows a long downtrend that was broken, and the stock has found some support at around $.50, and is bouncing off of that right now. There is a little bit of technical resistance at around $.70. If he were to trade this, he would be waiting for a break out through $.70, and would wait for a bare, bare minimum of one week before he bought it, to make sure it is not a head fake.