Over the last two years, Uranium Energy Corp. (NYSE AM: UEC) has taken advantage of the downturn and acquired uranium projects in the Powder River Basin of Wyoming, Canada’s Athabasca Basin, and Paraguay.

“When prices are falling you can pull your horns in and sit on your hands, but we’ve been very active,” says Scott Melbye, UEC’s vice president corporate development.

At the same time it was picking up new assets and consolidating land packages, it shut down its Palangana ISR mine and Hobson ISR processing plant in Texas, a strategy it says is prudent at a time when the uranium industry is so troubled.

“We feel it’s a waste of resources, both financial and mineral, to try to produce in a market that is giving signals it doesn’t need production,” Melbye says. “It was a market-driven decision to ramp down production and preserve the assets in the ground for a better market when the production is not adding to oversupply and valued more appropriately.”

A historic headframe at Uranium Energy's Slick Rock uranium project in Colorado. Credit: Uranium Energy.

A historic headframe at Uranium Energy’s Slick Rock uranium project in Colorado. Credit: Uranium Energy.

Now, he says, signs are beginning to emerge that a better market may be just around the corner, with production cuts at Cameco (TSX: CC; NYSE: CC) and in Kazakhstan helping to rebalance the industry after a seven-year bear market following the Fukushima nuclear disaster in Japan in 2011.

“We’re seeing early innings of a price recovery,” he says optimistically. “We’re up 34% on the spot market from a low of US$17.75 per lb. in November 2016 … and it’s really happening on the market fundamentals, and that’s just demand.”

Despite all the challenges Fukushima presented the industry, he says, “we are building more reactors around the world than we ever have and generation from nuclear energy has reached a nice threshold, where we’re now producing more electricity from nuclear energy than we were at the time of Fukushima.”

Positive catalysts for the sector he says include a new procurement cycle for utilities, as many of the eight-to-ten year contracts that have met their needs since the last bull cycle are starting to roll-off.

For now, many utilities in the U.S. are waiting to see what happens with the U.S. Department of Commerce’s Section 232 investigation into uranium imports.

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