Metals/Energy - MGAModel Forecast for Mega Uranium Ltd.:
- Model has produced a Line of Least Resistance.
- Mega Uranium Ltd. is a uranium mining and development company which explores for prospective properties primarily in Australia and Canada.
- This is a second wave "junior" that has been in existence since 1990 with a promising balance sheet.
- We believe that a macro turn is upon us and we are extremely bullish on uranium, renewable, and nuclear energy. There is a non-trivial probability that uranium juniors will yield the greatest gains out of all stocks in this full cycle.
- With a shift toward renewable energy solutions, we expect a global interest toward nuclear energy, causing a boom in the sector.
- With the level of stimulus projected by 2030, and the global direction until 2050, we expect necessary funds to be raised capital expenditures in the sector to be spent aggressively, with the backing of national interests.
- Should the company acquire a mining project, the stock will yield outsized gains.
- Price is technically breaking out of a Cup & Handle, and is likely to test the top of a channel established since the 2010's.
"For the juniors, there are three possible fates:
1. Most common is a failure, which leaves a hole in everyone's pocket, including that of the banks and investors.
2. The second fate occurs when a junior has enough success to justify a major paying a decent premium to gobble it up, leading to decent returns all around.
3. In the third and most rare fate, a junior finds a large deposit of a mineral that the market wants a lot of – it is a magical combination of the right deposit at the right time. When this happens, juniors can return more in a few days than a major will return in years." - Investopedia
- Interestingly, the company sold its assets in Canada to NexGen Energy (NXN.V) for a 40%~ equity interest in NexGen.
- We believe that a time is approaching such that companies in all sectors, especially in the mining sector to relentlessly undergo mergers & acquisitions, in a race to become "Too Big To Fail" and obtain the blessing of government subsidization.
- MGA may be giving signals for a potential M&A with NexGen, and in such case, investors will benefit greatly, as NexGen is also a very appealing company.
- In the case that MGA finds a new deposit, investors will again benefit. Investors must simply be patient, as global interest will sustain promising juniors until they succeed during a boom.
- We speculate that the lumber squeeze that is currently occurring is only a small teaser for the supply squeeze in energy commodities to come.
GLHF,
DPT
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