MicroCapMayhem: Uranium Exposed: How to Make Radioactive Profits in the Athabasca Basin

Uranium isotope U-235 is isolated to be used in nuclear reactors all over the world – and nuclear weapons when used in high concentrations.

It’s pretty simple actually; U-235 is fissile, meaning its atoms can be split under the right conditions. Leave it to the scientific geniuses of the world to come up with reactors that arrange the Uranium fuel in such a way, so that a fission chain reaction occurs. This reaction creates heat, which makes steam, the steam powers a turbine, which in turn drives a generator and delivers electricity to millions of happy citizens. Its bi-product, the less radioactive isotope U-238 referred to as depleted uranium, is used in many other applications like tank armor, radiation shielding, counter-weights for large planes, an alloy in steel and even to produce plutonium.

Well, to avoid sounding like a mad scientist, let’s get to the heart of the situation – how’s we goin’ to make some money from this radioactive super metal?

As quickly as uranium atoms split in a nuclear reactor, uranium juniors are popping up claiming to hold the next ultra deposit. Well, I’m only going to focus on one company right now, which I feel holds some real potential and exhibits traits of a high-quality company, with great growth potential. I’ve only recently become aware of this company, so I am only skimming the surface in this report. Going over its fundamentals with a fine-toothed comb would be advised, but let me clue you into why I think its share price could see some rapid appreciation in the near future.

The company is Purepoint Uranium Group Inc. (PTU-TSXv) $0.88 +23.94%

Purepoint is a uranium junior exploring Saskatchewan’s Athabasca Basin. If you’re not familiar with the Basin, many of Cameco’s projects like Cigar Lake and Macarthur River are located there. In fact, Purepoint’s 100% owned Turnor Lake uranium deposit is located 12 km east of Cameco’s La Roque Lake Project. Other majors in the area include Cogema and Denison Mines.

A uranium mine can be economical at grades as low as .03%, with mines grading on average .15%. Well, in the Basin, grades are a little more economical, like, say, Cameco’s Cigar Lake and Macarthur River projects, which grade 17-18% going as high as 80% in some pockets. The average ore grade in the region is 3%, well above the norm.

Purepoint conducted a 3,400 meter summer drill program on its 100% owned Turnor Lake property, for which the results are still pending. Today PTU rallied $0.17 or 23.94% on heavy volume and interestingly with no news release. In my experience, when a company makes a nice move on heavy volume for seemingly no reason, a positive news release is imminent. Putting two and two together, one would gather that summer drill results for PTU’s Turnor Lake project will be released soon and be favorable.

PTU’s chart looks good with periods of consolidation followed by periods of explosive growth.

MACD - is in bullish territory. Negative divergence in the histogram, but only because of today’s abnormal trading.

CMF - shows good sentiment and that PTU is under accumulation.

MA - 50 day SMA is about to cross 200 day SMA

RSI - is good for now, above the 70 line, but should be watched for a bearish crossover.

The November issue of the Northern Prospector contained an article entitled “Who’s Leading the Race for the Next Uranium Super Deposit?” This article went over the Athabasca Basin, uranium and miners in the basin and created criteria for which the uranium companies in the area were rated on and given a score based on their potential at discovering the next uranium super deposit in the Basin. Purepoint Uranium topped the pack, coming in the lead, just above Nuinsco/Trend’s Diabase Peninsula Project.

It’s still anyone’s race, but Purepoint Uranium seems to have something to it. I’m going to monitor tomorrow’s price action and possibly buy on a pullback, unless we see news released by PTU illustrating favorable drill results, in which case I may buy at the ask and try to ride it as a trade. Depending on where PTU ends up, it may turn into a “CORE HOLDING” and be featured periodically on MicroCapMayhem.

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