Over the past two years all the conditions for higher Uranium prices have been falling into place.

1. Mined supply of Uranium is falling: In 2016 Cameco closed its Rabbit Lake facility permanently. In 2016 Cameco closed its Crowe Butte in situ leaching facility in Nebraska and is looking to sell it. In 2016 Cameco closed its Smith Ranch-Highland joint in situ leaching facility in Wyoming and is looking to sell that asset also. In 2014 Paladin closed its facility in Malawi (Kayalakera) and put it into care and maintenance. Cameco is the second largest Uranium producer in the world. In Kazakhstan, Kazatomprom...the largest Uranium producer in the world announced a production cut of 10%. Also in 2017 Kazatomprom announced a further production cut of 20% over the next three years...the bulk of that cut to occur in fiscal year 2018. The mined supply of Uranium is on a downward trend.

2. Consumption of Uranium is increasing: The Japanese have restarted 5 reactors with another 4 slated to restart in early 2018. There are 59 new reactors under construction. 17 of them are due to start up in 2018. These are almost all over 1000MW in size. New reactors consume between two and three times the average steady state amount of Uranium so in the initial years these plants are the equivalent of 120 to 180 reactors at steady state. Reactor lifespans are being extended to 60 and in some cases 80 years. All new reactors are slated to operate for at least 80 years. Future demand is built in.

3. Spot market is changing: Kazatomprom has been the primary supplier of Uranium into the spot market and is the main reason spot prices have been depressed. However even the Kazakhs have realised that leaving the Uranium in the ground is a better bet. To make the changes to spot market supply the Kazakhs...smart folks that they are...have set up a Swiss trading arm so that direct sales into the spot market will dry up.

4. The investing world thinks nuclear power is done. Smart folks know that is not the case. There are more reactors under construction now than at any time since the mid 70's......hardly a sign of a failing industry. This is a contrarians dream investment.

5. The price of Uranium is well below its cost of production: It is not profitable for Uranium miners to sell material at these prices. Cameco is fulfilling its contracts from already mined inventories and from spot market purchase with the balance from Cigar Lake. Inventories are falling.

6. There is no development of new mines. To meet the future demand for Uranium (remember nuclear reactors cannot run on any other fuel) mines should be under development now to meet future demand. The only mine that has come into production in the last few years is the Husab mine in Namibia which is owned by the Chinese and whose output ONLY goes to China.

7. Many countries are turning to nuclear power: Saudi Arabia has plans to build 16 plants. UAE another 4 beyond Barakah. Egypt is building 4 with plans for another in Indonesia, Phillipines are considering it to end their use of fossil fuels for power production. Even Bangladesh just started to build its first nuclear power plant. therefore not only is current demand increasing but future demand is increasing even faster.

So if you follow the trajectories of these developments (which are fundamental to understanding price moves) you will see that falling production and rising demand will lead to shortages. There is no other outcome. When that will happen is anybody's guess. The slow pace of Japanese reactor restarts is certainly a factor that delays the inevitable but it is inevitable.

Each day, over one reactor years worth of Uranium is consumed by the worlds nuclear power plants. If it is not coming from mines it must be coming from already mined supply. That means above ground inventories are dropping quickly.

In previous years when much the same conditions have arisen the price of Uranium has experienced a rapid upswing...not parabolic at all...almost vertically straight up is a better description. However a comparison of the previous two occasions reveals that the supply constraints are going to be much more severe this time around. I expect this coming Uranium bull market to be more sustained in duration rather than the previous price spikes. All of the conditions are already in place for this to occur just as it has before. All you need is some patience and the fortitude to wait through all the inevitable ups and downs of stock prices.

I know that the big price moves are not produced by small investors but multi billion dollar pension funds, mutual funds and hedge funds. They have almost universally shunned Uranium stocks...but that will not last and when the big institutional investors get into the game all stocks (of which there are very few) will benefit.