Cameco Corp., the world's largest producer, hit a nine-month low of $39.25 on the Toronto Stock Exchange Friday, a full 34% off its peak of $59.90 reached in June, though it rebounded later in the session.
Uranium One, which hopes to challenge Cameco's dominance over the next six years, touched a 10-month low of $9.85, while Denison Mines fell to a nine-month low of $9.12, down 45% from a record high in May.
While the most recent leg of the slide has been partly due to the broader market's sell-off over worries about credit markets, the retreat by uranium players has outdistanced peers both in the broader market and among Canadian resource stocks.
Cameco has also been hit by a series negative events - most notably the flooding of its Cigar Lake mine - but analysts say the sector's gloom can largely be attributed to fears that uranium's rapid climb as the market's hottest commodity may have run its course.
"I would say the damage so far is mostly the falloff in the price," said analyst John Redstone of Desjardins Securities, pointing to spot prices that have fallen to US$110 a pound, after a nearly unbroken run to a peak of US$136 in June.
Prices were below US$10 as recently as 2002.
"It's come as a shock to some people that the uranium price can actually go down, because all it's done is go up for the last couple of years."
On a recent conference call to discuss earnings, Cameco executives placed some of the blame for the price retreat on sluggish summer market volumes that should eventually pick up.
But recent events have convinced some investors that the supply-demand factors for the commodity may not be as skewed towards the demand side as previously thought, prompting some to play it safe by cutting their losses, analysts say.
They point to recent reports that Niger, one of the world's leading uranium producers, aims to more than double its output over the next four years, while a radioactive leak at a Japanese nuclear plant following an earthquake has soured some on the sector.
For Cameco, the stock retreat has knocked about $6-billion from its market capitalization, as the impact of the price slide has been exacerbated by a cascade of other problems hitting the company.
In July, subsidiary Centerra Gold cut its output forecast due to problems at its Kumtor gold mine in Kyrgyzstan, while Cameco announced more delays in overhauling Cigar Lake in Saskatchewan, which flooded in 2006.
As well, the company has suspended production at its Port Hope, Ontario, nuclear fuel plant after finding uranium-contaminated soil at the site.
In its most recent earnings report, Cameco also said it would realize lower prices on uranium sales than previously thought in coming years.
"There's concerns about the market, and there's some concern still about Cameco and its operations," said National Bank's Ian Howat.
However, with uranium prices still historically high, and Cameco sitting on billions of dollar's worth of high-grade uranium, he said the recent weakness will likely be seen in retrospect as a good buying opportunity. He has a 12-month target of $55.50 on Cameco shares.
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