The Mercenary Geologist Warming Up to Uranium

I’ve conducted a number of interviews with, “The Mercenary Geologist,” Mickey Fulp, M.Sc., C.P.G. he’s a Certified Professional Geologist with a B.Sc. Earth Sciences with honor from the University of Tulsa, and M.Sc. Geology from the University of New Mexico. Mickey has 35 years experience as an exploration geologist and analyst searching for economic deposits of base and precious metals, industrial minerals, coal, uranium, oil and gas, and water in North and South America, Europe, and Asia. 

Mickey worked for junior explorers, major mining companies, private companies, and investors as a consulting economic geologist for over 20 years, specializing in geological mapping, property evaluation, and business development. In addition to his professional credentials and experience, Mickey is high-altitude proficient and is bilingual in English and Spanish. From 2003 to 2006, he made four outcrop ore discoveries in Peru, Nevada, Chile, and British Columbia. Mickey is well-known and highly respected throughout the mining and exploration community for his ongoing work as an analyst, writer, and speaker.

Mickey, how would you describe what you do?

I am an exploration and mining analyst with a somewhat unique approach attributable to my 30 years of experience as a practicing field geologist. I evaluate companies for investment and write a free subscription newsletter covering my views and ideas on equity markets, commodities, macroeconomics, and libertarianism. I currently have 6,400 subscribers (www.MercenaryGeologist.com) and over 50,000 twitter followers (@mercenarygeo). In addition, I make numerous appearances on television, radio, and webcasts and as a speaker at investment conferences and libertarian events.

You now cover mostly uranium companies: A USA producer, Energy Fuels Inc (UUUU.MKT) / (EFR.TO); a USA developer, Uranium Resources Inc (URRE.NASDAQ); and a junior Athabasca Basin explorer, CanAlaska Uranium Ltd (CVV.TSXV). Why now for uranium and uranium companies?

Of the compendium of industrial metals, precious metals, and energy resources, I consider uranium the only one that has likely bottomed in the current commodities bear market. The mid- to long-term supply and demand fundamentals for uranium are compelling because of the ongoing nuclear energy build-out in numerous emerging market and developed countries. Nuclear power is the world’s obvious and only green solution to continually increasing base-load electrical demand. I am a contrarian investor and speculator and in my opinion, now is an opportune time to position for the next bull market run.

Could you provide readers with a paragraph on each of the above mentioned companies?

Energy Fuels Inc. (UUUU.MMKT) and (EFR.TO) is the United States’ only conventional and ISR uranium miner accounting for about 20% of annual domestic production with mines, operations, and properties in Arizona, Colorado, New Mexico, Utah, and Wyoming. It is arguably the most leveraged domestic producer to a higher uranium price with its White Mesa mill in southeastern Utah having a capacity of eight million pounds per year and a growing ISR production profile in the Powder River Basin in Wyoming.

Uranium Resources Inc, (URRE.NASDAQ) is a uranium development company focused on the in-situ recovery process in prolific districts of the United States, and the pending acquisition of Anatolia Energy Ltd, an Australian-based company with an ISR uranium development project in Central Turkey. It is well-positioned for low-cost uranium production via its various development properties in the near- (Turkey), mid- (South Texas), and long-terms (New Mexico).

CanAlaska Uranium Ltd. (CVV.TSXV) is a prospect generator with early to advanced stage uranium properties in the Athabasca Basin of Saskatchewan and Manitoba. Current partners include a Korean consortium, Mitsubishi, Makena Resources, Northern Uranium, and the Fond de Lac Denesuline Nation. It also holds 14 uranium, and two base metals, and numerous diamond properties available for option, purchase, or joint venture.

Why not more of a focus on other commodities that you’re known to be bullish on, most notably copper?

Although I maintain a long-term bullish view on the growth curve for copper demand, I have not found any copper explorers, developers, or producers that currently meet my four key criteria for speculation: share structure, people, projects, and cash. That said, I am always on the lookout for candidates and solicit any and all ideas from your readers.

Do you believe that ten or fifty baggers are possible in a market filled with day traders and liquidity seekers?

Let me preface my remarks with this disclaimer: I have no belief in anything, anywhere, anytime, anyhow and subscribe to Mark Twain’s adage: “Faith is believin’ what you know ain’t so.”

Now in answer to your question:  Absolutely; they are not only possible but they are probable. Exponential returns will always occur in speculative markets that are liquid and volatile. Bear markets are opportune times when stock positions can be taken with potential to become the proverbial ten baggers once cyclical markets inevitably turn to the upside.

Are you surprised by the relatively low number of Mergers & Acquisitions we’ve seen over the past few years?

Not at all; M&A activity ramps up at or near the topping of bull markets. During bear markets and times of financial duress, mining companies focus on cutting costs, tightening up operations, shuttering non-profitable mines, downsizing personnel, and disposing of marginal assets. What we have seen over the past year is consolidation of viable juniors and small to mid-tier miners into combinations that can attract larger, mostly private financial support. I expect that trend to continue unabated.

I’m compelled to ask the obligatory question. How does the current bloodbath in natural resource stocks compare to previous downturns?

At this juncture, it is merely an average downturn and not even close in depth and longevity to the “mother of all bear markets” post Bre-X from April 1997 to June 2003. In the latter stages of that bust and upon the demise of the old Vancouver Stock Exchange, a viable junior resource sector was nonexistent. The major problem with this market is there are many more hundreds of failed companies that the Toronto Stock Exchange refuses to delist despite their own regulations requiring them to do just that.

Many good companies continue to advance, develop, and finance meritorious projects via smart money speculators. That said, we are now 4 ½ years into this cycle, commodity prices have recently taken yet another down leg, and there is no catalyst on the horizon that indicates the end is in sight. This $64,000 question can only be answered in hindsight: When was the bottom put in?

Typically, capitulation is only apparent after the fact. Having said that, are you seeing anything that suggests that the bottom might be in on select sectors?

Nothing is evident except the aforementioned uranium spot price at $28/lb a year ago and its 30% gain since then. Note that uranium equities have not followed suit; ergo, my contrarian plays on them.

What is your latest view on Nevada Sunrise Gold (NEV.TSXV)?

My opinions have not changed since I last wrote about Nevada Sunrise Gold in mid-May. Assay results have been extraordinarily slow coming in plus the summer doldrums and usual seasonal fall in the price of gold have all contributed to the stock’s weak performance over the past three months. In my opinion, the Kinsley Mountain discovery has the requisite geological potential to be the next big gold deposit in northeastern Nevada. Only the old truth tool, the drill, can provide an answer to my speculations.

Disclaimer: Mickey Fulp owns shares in the four companies mentioned herein and they are paying sponsors of his website, www.MercenaryGeologist.com.

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