The uranium spot price slipped further last week, dropping below the $50 mark for the first time in nearly a year as sellers gave in to lower bids. This week, TradeTech is reporting a spot price of $49.50 per pound, down 25 cents from the previous week. “Several utilities are evaluating ‘buy and hold’ strategies — stepping into the market to take advantage of the recent drop in price and holding the material in inventory until the material is actually needed — but few have yet to formally request offers,” said TradeTech.
The consulting firm said transaction activity in the spot market remains “exceptionally weak,” with transaction volume at less than 500,000 pounds of U3O8 over the past two months. Even with ConverDyn’s Metropolis Works conversion facility looking at a possible 15-month shutdown for safety upgrades, “the market is at a standstill.”
In other market news, Reuters reported that Japan’s total nuclear power plant utilization, at zero in June, rose to an average of 2.9 percent for July following the restart of two reactors at Kansai Electric Power’s Ohi plant. Last year’s run rate for July was an average of 33.9 percent.
More positively, the new Red Book report, published jointly by the Organisation for Economic Cooperation and Development Nuclear Energy Agency and the International Atomic Energy Agency, forecasts that uranium demand will rise “for the foreseeable future.” While the report’s writers concede that the current global defined resource base is enough to meet demand, “timely investment” in production facilities is needed.
Energy Resources of Australia (ASX:ERA), a subsidiary of mining giant Rio Tinto (LSE:RIO,ASX:RIO,NYSE:RIO), is cutting jobs at its Ranger uranium mine in order to return to a profit position as it shifts focus from mining to underground exploration at the end of this year. ERA recently reported a loss of $51.5 million for the first half of 2012 and a drop in U3O8 sales to $148 million from $235.6 million in the last half of 2011.
Last week, junior exploration company Rockgate Capital (TSX:RGT) announced assay results from recent drilling at the company’s wholly-owned Falea project, located in Mali near the Guinea border. Highlights from the results include two holes assaying at 0.19% U3O8, 83.6 g/t Ag, and 0.24% Cu over 9.5 meters and 0.07% U3O8, 95.7 g/t Ag, and 0.17% Cu over 6.5 meters.
Nuinsco Resources (TSX:NWI) also reported drill results last week. Speaking of the ongoing exploration work at the company’s Diabase Peninsula uranium property in Saskatchewan’s Athabasca Basin, Paul Jones, president, said, “[g]reater than 10ppm uranium in sandstone is evidence of a mineralised system and proximity to concentrations of high-grade mineralization. Nuinsco has now drilled 42 holes totalling 17,356m. Of these, a remarkable 33% have returned samples with uranium content exceeding 50ppm and 67% have returned values greater than 10ppm uranium — serving to further reinforce and highlight the outstanding scale of anomalous mineralization at Diabase.”
Forte Energy NL, previously Murchison United NL, (ASX:FTE) recently reported a 68 percent increase in the inferred resource estimate at its Firawa project. The updated inferred resource estimate is 19.5 million pounds of contained U3O8 at an average grade of 295 ppm U3O8.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.