By: Tomas Ronolski - AllPennyStocks.com News

Monday, February 2, 2015

Although uranium prices remain 50% below the level they traded at prior to the Fukushima nuclear power plant disaster in Japan nearly four years ago, the outlook is slowly but surely turning positive. Indeed, last year, uranium prices gathered some momentum towards the end of the year before seeing a pullback. The rally was the result of the restart of a couple of nuclear reactors in Japan. Following the Fukushima disaster, Japan had shut down all of its nuclear reactors. The restart highlighted the Japanese government’s commitment to nuclear energy despite the risk it poses. Another factor that contributed positively to the uranium market was increasing investment from China in nuclear power plants. The world’s second largest economy has been looking to cut its reliance on coal as it looks to tackle pollution. Nuclear energy will play a major part in securing China’s energy needs and the country has been investing heavily in the sector.

To add to these factors on the demand side, miners have also been cutting production. These developments will certainly lead to a fundamentally balanced uranium market although it may take a few years before we reach that point. Recently, Uranium Energy Corp. (NYSE MKT:UEC) issued a letter to its shareholders. In the letter, the company’s CEO noted that for the first time in four years, the uranium market is seeing fundamental shifts in the supply/demand picture.

The improving outlook augurs well for Makena Resources Inc. (TSX-Venture:MKN), a Vancouver-based exploration-stage company engaged in the acquisition, exploration, and development of mineral properties in Canada and the U.S.

This morning MKN said that it has begun operations on the next phase on the Patterson Uranium project, which is located in the prolific Athabasca Basin of Saskatchewan. The project is in close proximity to Fission Energy Corp.’s property in the area.

Negar Adam, President of Makena, said this morning that the Patterson project is bordering one of the most exciting new uranium discoveries anywhere in the world in recent years. Adam said that management at MKN is optimistic that the next phase of work on the project may validate the property. The fact that it is located in one of the most prolific uranium districts in the world makes the chances of success very high.

Due to Patterson’s proximity to such an important discovery in the region, Makena has been getting some coverage lately. This month Negar Adam was interviewed by the Financial Press. Fission’s discovery has made it a takeover target, given the interest among major miners in the Athabasca Basin. Adam believes that many investors who would profit if a buyout occurs are likely going to look in the Patterson district again.

Given these developments and the ongoing improvement in the uranium market, Makena could be an interesting stock to follow over the next few months, especially if rumors of Fission’s buyout turn out to be true.

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