Penny Stocks To Watch If Mining Is A Focus
Mining and commodity penny stocks have become increasingly popular over the past year. Analyst Myles Allsop stated that the backdrop for commodity demand is still excellent right now.
He states that “we see 2021 as the top of the cycle for most major commodities.” While most mining companies engage in different industries such as precious metals, resource mining, and others, they can have their own unique value.
For example, certain mining companies are working on the extraction of materials used in batteries. These companies have seen a rise in value due to the bullishness surrounding the EV market. Additionally, some mining companies extracting raw building materials could see a post-covid boom as industrialization picks back up.
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Also, the demand base for raw materials has increased greatly in the past decade, led mostly by China. And while China’s demand for mined materials is decreased right now from Covid, some analysts expect it to pick back up.
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While it’s easy to categorize all mining penny stocks in one partition, they are all very different. Because of this, it’s important to understand exactly what a company does before investing in it. Historically, mining stocks have remained relatively low in volatility when compared to non-mining counterparts.
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Stability can be hard to come by these days. But certain mining penny stocks could be worth giving a first or second look. With this in mind, here are three to watch right now.
- Denison Mines Corp. (NYSE: DNN)
- Harmony Gold Mining Co. (NYSE: HMY)
- Uranium Energy Corp. (NYSE: UEC)
Denison Mines Corp.
While Denison Mines is considered a mining penny stock, it is also an alternative energy penny stock. As a miner of uranium ore, Denison has a unique position in both of these markets. Uranium is used in nuclear energy production, which has increased greatly in popularity in the past few years.
Denison has several properties around Canada, including the Wheeler River Project located in the Athabasca Basin region of Saskatchewan. Denison has seen some solid gains in the past year. One reason for this could be the rise in the price of uranium over that time. This could also be due to President Biden’s demands for alternative energy and the high efficiency of nuclear power overall.
A few days ago, Denison filed its annual Form 40-F with the U.S. Securities and Exchange Commission. In this filing is its audited financial statements for the 2020 year and management comments and analysis on its business. Shares of DNN stock have risen significantly in the days following this announcement.
Denison has also announced a major financing deal worth 78,430,000 units sold at $1.10 per share. This should bring in roughly $86.3 million in capital. These proceeds will be used for the funding of uranium concentrate purchasing, as well as for investments in the longer term. One of the investments is in the financing and construction of its Wheeler River project.
With nuclear energy on the docket right now, uranium miners are the first step in the supply chain and could be worth watching.
Harmony Gold Mining Co.
Another mining stock that has seen substantial gains in the past year is Harmony Gold Mining Co. While HMY stock is hovering under $5, it is still considered a penny stock for now. So, what has driven the price of HMY up to this high? One of the most obvious reasons for this has been the increased price of gold during the past twelve months.
In addition to this, Harmony Gold had very positive financials in its most recent report, even reaching record highs compared to its previous quarter’s numbers. Over the past week, the volume for HMY stock has been much higher than in prior weeks.
Harmony Gold is based in South Africa, but it has mining projects in several locations worldwide. This includes both its home country of South Africa as well as Papua New Guinea. In its project pipeline is the Wafi-Golpu copper/gold project based in Papua New Guinea. This project only received an environmental permit late last year, which means that progress has only just begun.
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In the short term, Harmony Gold is working to reduce its outstanding debt. For this reason, Zacks puts a fiscal 2021 earnings approximation for HMY at $1.23 per share. This would be a major turnaround from its $0.10 EPS loss in the prior year.
With the way the dollar has been trading, the door was opened for gold bulls to come in. After months of pause, it’s refreshing to see gold penny stocks finally start to move. The big question is will that continue, or will yield concerns randomly pop up again in April?
Uranium Energy Corp.
Similar to DNN, Uranium Energy Corp. is a U.S. uranium ore mining company. Some investors consider it to be one of the more prominent uranium penny stocks due to its length of operation and market position. Uranium Energy states that it engaged in both low-cost and environmentally mining practices. This includes in-situ recovery or “ISR” uranium mining. Uranium energy holds claim to the famed Reno Creek Project.
This is considered the largest permitted pre-construction ISR uranium project in all of America. Because of this, many investors could view UEC for the longer term. In addition to this, UEC has several other assets that together make up its large portfolio of mining properties. It holds an equity stake in several sizable uranium businesses in both North and South America.
Last week, Uranium Energy announced a sizable fundraising deal. This should bring in gross proceeds of $30.5 million through a registered direct offering. Proceeds were earmarked for the purchase of uranium ore as well as for working capital to continue operations. Currently, UEC has a resource reserve of 1.4 million pounds of uranium.
In May of this year, UEC expects to have another 1.4 million pounds delivered. While uranium may seem like a niche market, nuclear provides power to 20% of U.S. homes. Scott Melbye, EVP of UEC, stated that “nuclear power can work hand in hand with other green technologies, like wind and solar, to help advance the American clean energy revolution.”
