Four months ago I warned my readers that the uranium price could breakout due to the rise of terrorism and radical extremism in West Africa. This past week there was a suicide car bombing on a French uranium mine in Niger. Twenty people were killed.

This latest terrorist attack comes just a few months after terrorists violently took control of a natural gas plant in Algeria. Thirty eight hostages were killed in that standoff.

This latest incident was at the Somair uranium mine owned and operated by France's Areva (ARVCF.PK). The explosion has forced the closure of the uranium plant. Do not forget this is not the first terrorist attack against Areva. Four French citizens are still being held hostage by Al Qaeda.

It must be remembered Areva is the world's leading nuclear company and more than a third of its uranium is supplied by Niger. They have been working there for over four decades. French Special Forces have been sent in. There is just too much uncertainty about the security of supply from West Africa right now.

Instead, uranium investors must continue to look for additional supply in stable jurisdictions such as the Powder River Basin in Wyoming where both Cameco (CCJ) and Uranium One (SXRZF.PK) operate.

Cameco just announced that they have begun production on a new mine in the Powder River Basin. North Butte is a satellite facility to the Smith-Highland Ranch and resin will be shipped there to be processed. Cameco is planning to ramp up U.S. uranium production especially in Wyoming.

Keep a close eye on other juniors in the Powder River Basin, especially the ones that may already have a processing deal with Cameco. There are some discounted juniors with long term sales contracts with large utilities that have great land positions.

Cameco is one of the world's largest uranium producers. They recently came out with earnings below analysts' estimates as the price of uranium continues to base at the $40 mark. Look for a possible bullish reversal despite the negative news. Remember earnings reports are lagging indicators and do not show the potential growth in the uranium sector.

The uranium price is down 40% percent since the Fukushima disaster in March of 2011 as Japan and Germany made a political, knee-jerk reaction to shut down reactors and rely heavily on natural gas. Many investors continue to look backwards, contrarians like myself look forward.

Natural gas (UNG) is above $4.25 and rising. It has doubled over the past year. The Fukushima reaction may have been a boom to natural gas in the short term, but utilities are passing on the high costs to consumers. Japan and Germany who have relied on importing natural gas now have some of the highest electricity costs in the world and this is causing a major backlash from domestic industries.

Consumers are being crippled by these high rates. Voters have already elected for a pro-nuclear government in Japan. Do not be surprised if backlash is growing politically in Germany as well to restart additional reactors as carbon emissions increase exponentially.

More than two years ago a once in a millennium earthquake and tsunami devastated Japan and their nuclear industry. In addition, at that time a huge inventory of natural gas hit the market and prices for natural gas fell to all time lows.

This was two formidable uppercuts to the sector which could've sent the industry to the canvas for a 10 count. The uranium stocks are showing they have a good chin and have not violated either the Fukushima lows or the 2008 lows despite a very low short term spot price around $40.

Investors over the past few years may have believed natural gas would be our long term energy solution. Since natural gas hit a low at $2 in 2012, it has doubled and is no longer an affordable option. It has broken above the critical $4.25 mark which will influence utilities to look at cheaper alternative sources.

The uranium price at $40 will see an increase in demand from global utilities to replenish their stockpiles. Utilities may increasingly look at cleaner and cheaper uranium which is near major, bargain basement lows at $40 per pound.

Some investors panicked out of the sector due to media scare tactics and sold their uranium miners (URA) at major lows. Analysts claimed the sector would never come back after Fukushima. I disagreed and they should be proven wrong. By looking at Cameco , the largest publicly traded uranium miner, the price has not violated 2008 lows despite a 1-2 combo to the chin. Clearly the long term uptrend is intact.

Germany and Japan who at first wanted to shut down their nuclear plants have realized that the economic costs are just too great. Next generation nuclear technologies are safer and more efficient than the fossilized plants like Fukushima which were built in the 1970's. These nuclear fossils should've been expired years ago, but they were cash cows supplying tons of cheap and clean energy.

In addition, countries like China and India are dealing with debilitating air pollution from dirty fossil fuels. They need to increase energy capacity and bring air pollution down. The only solution is to invest in nuclear.

Japan elected a pro nuclear Prime Minister. China is constructing new nuclear plants. The U.S. is building plants in South Carolina and Georgia. Europe is building several in addition to Vietnam, Saudi Arabia, Argentina, Russia, United Arab Emirates, Ukraine, Slovakia, Canada, South Korea and the list goes on and on.

Mark my words, over the next two decades there will be more nuclear plants built to combat air pollution and to provide affordable base-load power. This comes at a time when supply is very limited. Most mines can't operate at prices below $85 a pound.

Majors are in search for lower cost, higher grade uranium mines. Increasing takeovers should become more common as we witnessed with Uranium One being taken over by the Russians and Denison (DNN) buying a junior for their Athabasca Basin assets.

This past week two junior uranium miners in the U.S. announced a consolidation to create a competitive entity focused on U.S. uranium production. One company owns the White Mesa Uranium Mill while the other one owns one of the largest and highest grade undeveloped uranium projects called Roca Honda.

This new entity should be one to follow as the U.S. is the largest consumer of uranium in the World. Surprisingly, over ninety percent of uranium is imported. There could be a real uranium supply crisis in the United States and will either boost domestic production or the lights could go out.

Remember the Russian HEU agreement which expires at the end of this year, where a large amount of U.S. uranium supply originated. It should be noted at this low uranium price the converting of uranium from warheads is too expensive. The major producers will need to look for low cost production in either high grade uranium assets or in-situ projects with low cash costs.

Don't forget Europe is the largest per capita user of nuclear power and nuclear plants are being built throughout Europe as I write this. Europe only has one uranium mine currently in production despite having 160 nuclear reactors in operation.

Demand will need additional safe and secure supply to come online from Mother Earth. High quality and advanced uranium miners should soon breakout.

Disclosure: Author is long Denison.