Coal stocks shine on Uranium woes
As the threat of meltdown continues to escalate at several nuclear power plants in earthquake-ravaged Japan sending uranium stocks and spot prices lower on renewed concerns about nuclear energy, investors may be turning their interests toward more traditional forms of energy production, such as coal.
Matthew Zylstra, analyst with Northern Securities, noted major uranium producing companies such as Cameco Corp. (CCO/TSX) (-12.7%), Uranium One Inc. (UUU/TSX) (-27.7%) and Denison Mines Corp. (DML/TSX) (-22.3%) all took major hits in trading on Monday.
"With the general decline in most commodity stocks, which has brought down valuations, we think there might be an opportunity in some of the coal names as investors shift out of 'risky' sources of energy and into coal," he said in a note.
Mr. Zylstra highlights venture company Compliance Energy Corp. (CEC/TSX-V), which saw its stock rise on Monday after Prophecy Resource Corp. (PCY/TSX-V) picked up $1.75-million worth of Compliance shares (about an 8% interest) through a private placement.
"Prophecy may be looking at Compliance as a way to get into the metallurgical coal market (Compliance has semi-soft coking coal and high-grade thermal coal resources) to complement its substantial 100%-owned open-pittable thermal coal resource in Mongolia," his note says.
Compliance's twin coal projects in the Comox Coal Basin in British Columbia have been developed with major partners Itochu of Japan and LG International of South Korea, suggesting solid backing for the company.
Compliance also holds a $14-million position in Copper Mountain Mining Corp. (CUM/TSX), which operates in British Columbia as well.
Matthew Zylstra, analyst with Northern Securities, noted major uranium producing companies such as Cameco Corp. (CCO/TSX) (-12.7%), Uranium One Inc. (UUU/TSX) (-27.7%) and Denison Mines Corp. (DML/TSX) (-22.3%) all took major hits in trading on Monday.
"With the general decline in most commodity stocks, which has brought down valuations, we think there might be an opportunity in some of the coal names as investors shift out of 'risky' sources of energy and into coal," he said in a note.
Mr. Zylstra highlights venture company Compliance Energy Corp. (CEC/TSX-V), which saw its stock rise on Monday after Prophecy Resource Corp. (PCY/TSX-V) picked up $1.75-million worth of Compliance shares (about an 8% interest) through a private placement.
"Prophecy may be looking at Compliance as a way to get into the metallurgical coal market (Compliance has semi-soft coking coal and high-grade thermal coal resources) to complement its substantial 100%-owned open-pittable thermal coal resource in Mongolia," his note says.
Compliance's twin coal projects in the Comox Coal Basin in British Columbia have been developed with major partners Itochu of Japan and LG International of South Korea, suggesting solid backing for the company.
Compliance also holds a $14-million position in Copper Mountain Mining Corp. (CUM/TSX), which operates in British Columbia as well.
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