Why PennyQueen Loves This Energy Stock
PennyQueen explains why she thinks this uranium explorer is a great choice and why the metal should have a particularly auspicious season.
The drills are in place and getting ready to start the season. So I thought this would be a good time to explain why I think Agincourt Energy Corp. (AAZ:TSX.V; AZURF:OTC) is an excellent choice and why this season is particularly auspicious.
In its entire history, the uranium explorer was able to drill 17 holes in three seasons. They encountered typical setbacks like late funding and early springs and exercised caution with shareholder money and the environment by not continuing to drill last spring when the ice bridges began to deteriorate.
How is this year different? What was a needle in a haystack becomes easier with a positive factors metaphorical metal detector. We are set up early with a massive 73 kilometer road built and expecting 30-35 drill holes.
If we hit all 35 holes, we’ll basically have done six seasons of work. (I only say we, because I like to remember that as a shareholder, it’s my money out to make money; I am not and will in no way be paid for this report. )
They have built in efficiency this year; instead of going to the sites, they build a camp for their employees. They also have not one, but two drilling rigs that will operate full time, as well as a contracted company to maintain the road and provide supplies.
The primary zones are already marked with the G zone to be drilled first. If you remember the drill results from last year, they had high background radiation levels, somewhere between three and five times the average. This, along with an increase in scout elements, is a good sign that they are looking in the right area. I should also note that they did an airborne radiometric survey this summer to refine their drill sites. They are still working with Fobi AI Inc. (FOBI:TSX) to refine and guide their drilling.
The area they are working in has minimal overburden and they expect each drill hole to be 100 to 200 meters deep. Thus, the total drilling for the season is expected to exceed 6,000 meters. That sounds like a lot, but with two drills running two 12-hour shifts a day and a well-thought-out plan, it should be easily achievable.
The spot price of uranium is sitting at $45.50. For that same day a year ago, it was sitting at $30.35. Our needle now has about 50% more value! I expect the price of uranium to continue to rise, the Sprott Physical Uranium Trust has continued to gobble up uranium supplies. Meanwhile, non-utility buyers began to enter the market.
Many believe that uranium is at the start of a bull cycle, and anyone who remembers its 2007 run at $140 a pound knows it can make a quick ascent. A critical thing to watch right now for the overall uranium market is the turmoil in Kazakhstan. Kazatomprom, the Khazak National Atomic Company, provides 23% of the nuclear fuel and a halt or slowdown in their operations would cause an immediate spike in the price of uranium. Yesterday they indicated that their operations had not been greatly affected. Hopefully the tension will continue to decrease in the region.
There are 440 nuclear reactors in operation around the world. There are 55 more under construction, 100 planned and 300 proposed, and we know demand is growing. Remember that as the price of uranium increases, the stock prices of uranium exploration companies also increase. The biggest change for an exploration company, of course, comes from a successful discovery and Azincourt has taken all the necessary steps to increase our chances as shareholders exponentially. At less than 6 cents a share, I like our odds.
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PennyQueen Disclosure: I own shares of Agincourt Energy Corp. I have not and will in no way be compensated for this report. I write reports on my favorite picks; this is meant to be educational and not investment advice as i am not an investment advisor, just a mom on a mission to make the world a better place and make money along the way.
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