Mark Bunting Host, RCTV
Those were the words six years ago of Warren Irwin, President, and Chief Investment Officer of hedge fund Rosseau Asset Management. I thought of him now that I am partnering with Red Cloud Financial Services and noticed that NexGen, the uranium development company, is a client. I authored an article in 2016 on NexGen (TSX: NXE; NYSE: NXE; ASX: NXG), based on a conversation with Irwin, who, years earlier, had made a fortune going long Bre-X Minerals, and then shorting it after getting a tip from a geologist who lived in his condominium building that the company was a fraud. Great call.
Irwin also made a great call on NexGen, which is developing one of the world’s largest-ever discoveries of uranium in the Athabasca Basin in northwestern Saskatchewan. Irwin conducted his usual deep research on NexGen, including a visit to the site, and came away convinced that “these things come around once in a generation.”
NexGen was trading around $2 CDN per share when I spoke to Irwin in 2016, and it eventually peaked close to $7.80 in April of this year, albeit by way of a dip below $1 a share in the early days of the pandemic. In a recent RCTV interview, Irwin told me he has made $100 million on NexGen after first “hoovering it up” around $0.60 a share. He said he used to hold about 10 per cent of NexGen before taking some profit. Irwin is still bullish on NexGen, uranium, and nuclear in general but warns investors there is a narrative that is being pushed hard, especially in the U.S., that there is a uranium deficit, which will eventually send the price of uranium, and related stocks soaring.
Irwin said that was the same narrative he heard six or seven years ago and that that deficit got filled over time, adding “there’s lots of uranium” in the world. If there is a big ramp in uranium stocks, Irwin believes it will come not from fundamentals but a few big hedge funds looking to make some money. If that run-up occurs, Irwin will be selling into it, and recommends investors follow his lead. Uranium, you have heard, is having a moment again now that Japan has reversed its anti-nuclear stance, which stemmed from the Fukushima disaster in 2011.
Germany, which had shut down nuclear plants after Fukushima, is also planning to develop new nuclear reactors in part because it realized its strategy of relying on Russian natural gas was a colossal mistake. Governments and energy corporations are also realizing the path to a green future is not a straight line, now that Russia has upended the energy sector with its invasion of Ukraine, and that uranium could be part of the solution. In addition, the anti-ESG movement may be putting a dent into various plans to develop wind, solar, hydroelectric, and other types of renewable projects, especially in Republican-leaning U.S. states.
Despite the latest headwinds, the world is inexorably shifting to a greener future and critical minerals such as uranium, lithium, and copper are at the heart of that transition. As I partner with Red Cloud Financial Services to host many of their RCTV interviews with junior mining executives, it has me wondering where the next “huge winners” will come from across the metals and minerals junior mining complex. In curating for investors, the latest news, industry trends, and investment ideas, Red Cloud will undoubtedly be at the forefront of identifying the next NexGen Energy
