Uranium Mining Costs Are Understated
The costs of uranium mining are typically understated as they only take into account operating expenditures and ignore the huge capital expenditures. Actual 'all in costs' are much higher than reported and mining executives are giving the market the wrong impression.
Kevin Bambrough
Retired Investment Professional on the side of truth and fairness. Tweets are just my opinions and not advice or recommendations. Looking for 10x in 10yr stuff
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The ratio of capital expenditures (capex) to operating expenditures (opex) for major mining projects can vary significantly depending on various factors such as the type of #mining operation, location, scale, commodity being mined, technology used, and project-specific…
— Kevin Bambrough (@BambroughKevin) April 7, 2023 -
So when the world talks about #uranium mining costs being $30/lb they are typically taking about opex only and ignoring the fact that there is huge capex. Actual ‘all in costs’ are so ridiculous understated it’s crazy.
— Kevin Bambrough (@BambroughKevin) April 7, 2023 -
The mining executives that are currently jockeying companies love to give the impression to the market they their company is profitable, has been well managed and such. But the reality is most major mining projects have the benefit of decades of past investment write offs
— Kevin Bambrough (@BambroughKevin) April 7, 2023 -
First off I’m just talking about the mining projects that end up producing. If you actually considered the historical investment that’s been made and inflation adjusted it while also demanding even a moderate low rate return on those past investments…
— Kevin Bambrough (@BambroughKevin) April 7, 2023 -
The full capex cost picture would explode higher. Exploration drilling, mining engineering, permitting and lobbying, development and reclamation over the full cycle when you give a time value to the money invested reveals how shitty the industry actually is.
— Kevin Bambrough (@BambroughKevin) April 7, 2023 -
I would bet when if you considered the economics on the whole and the decades it typically takes (a few cycles) to get a project from exploration to production the true capex to opex investment ratio is more like 90:10 or even 95:5
— Kevin Bambrough (@BambroughKevin) April 7, 2023 -
When you also consider that only 1 in 10,000 prospects that are staked ever becomes a mine the over all investment picture for the industry is revealed in full.
— Kevin Bambrough (@BambroughKevin) April 7, 2023
The junior space is full of money burning shitco’s and populated with a combo of bullshit artists and… -
Kids who never got enough of playing with Lego and now are obsessed with being able to build a big project with other peoples money.
— Kevin Bambrough (@BambroughKevin) April 7, 2023
Still, I’m a resource investor..why? -
Because it’s hugely cyclical and rather predictable for those that are willing to invest with a 10 year time horizon.
— Kevin Bambrough (@BambroughKevin) April 7, 2023
The key is to realize how shit the industry and how irresponsible it’s leadership is. They all want to act like hero’s and get huge bonuses and ride options -
So, yes. Know the better projects and diversify across commodities, countries and project stages. But, just remember timing is of utmost importance. Ya have to buy when things are being thrown away and the world is talking about deflation and depression.
— Kevin Bambrough (@BambroughKevin) April 7, 2023 -
And when inflation is running high and everyone is bitching about the cost of raw goods. Take some profits and rotate into another commodity sector that appears to be set to move upward
— Kevin Bambrough (@BambroughKevin) April 7, 2023 -
And on the subject of inflation. I can only imagine what the real cost of commodities would be if the world wasn’t always full of terrible investors that have been willing to throw away so much money trying to advance mining projects.
— Kevin Bambrough (@BambroughKevin) April 7, 2023