Market analysts remain positive about the long-term outlook for uranium despite the ongoing southward creep in its spot price. Spot uranium was selling for $48/lb on Monday, according to consulting firm UxC. Go-to uranium market analysis firm TradeTech has yet to update its spot price indicator, which as of August 24 sat unchanged from the previous week at $49/lb.
Long-time investment researcher and current executive vice president of CHF Investor Relations, Mark Lackey, recently pointed out that Japan, which looks to nuclear power for 15 percent of its energy needs, is actively working to bring its reactors back online and may have three-quarters of them operational in the next year.
“Japan’s economy really can’t function without some nuclear power in order to meet demand; its manufacturing sector requires an ongoing, inexpensive, stable power supply,” said Lackey. On top of that, he reminds us that “there are 60 other reactors around the world under construction and about another 240 planned over the next 5-10 years.”
In a bold show of optimism about the future of the uranium market, Cameco (TSX:CCO,NYSE:CCJ) is scouring the globe for opportunities following its $430 million bid for BHP Billiton’s (NYSE:BHP,ASX:BHP,LSE:BLT) Yeelirrie project in Australia. Cameco’s stance, at a time when big names like BHP and France’s AREVA (EPA:AREVA) are downsizing their uranium holdings, is being held up by analysts as a beacon of hope for the flagging uranium sector. Already the world’s third-largest uranium producer, Cameco wants to nearly double its production to 40 million pounds a year by 2018 in anticipation of rising demand.
The uranium market is full of good and bad news of late and that holds true for company news as well. Mid-tier producer Paladin Energy (ASX:PDN,TSX:PDN) announced the release of its annual financial report, which includes a net loss of US$172 million. That’s an increase of over 100 percent from the $82.3 million loss the company reported last year, mainly due to the $133 million write-down and impairment of its Kayelekera assets in Malawi.
However, Paladin also reported a 37 percent increase in sales revenue to $365.8 million for the year and has signed new contracts for the delivery of 2.8 million pounds of U3O8 in a price range of $60 to $65 per pound over the next four years. The average price the company sold at this year was $55/lb.
On Wednesday, shares of Paladin were trading at $1.25 on the TSX.
“This transaction positions URI as one of the largest uranium development companies based in the U.S. with more than 154 million pounds of in place mineralized uranium material,” said Don Ewigleben, president and CEO of URI. “With this acquisition, we gain operational synergies for the development of our combined in situ and conventional resources in New Mexico, as well as add a previously permitted conventional mill site to our asset base. Consolidating uranium assets in New Mexico is a key strategic objective as we believe this state will once again be a vital source of uranium to fuel both existing and planned nuclear energy facilities globally at a critical point in time as the supply of uranium over the next several years diminishes and demand expands.”
On Wednesday, shares of Uranium Resources were trading at 0.417 cents on the NASDAQ.
Strathmore Minerals (TSX:STM,OTCQX:STHJF) announced that it has filed a new NI 43-101 Technical Report with an updated resource estimate for its Gas Hills uranium properties in Wyoming. The report includes an inferred resource estimate for the Day Loma property of 4.7 million pounds eU3O8 (equivalent U3O8) based on 1.6 million tons at an average grade of 0.15 percent eU3O8 and using a cutoff of 0.035 percent eU3O8. The Rock Hill property’s inferred resource estimate totals 900,000 lbs eU3O8 based on 600,000 tons at an average grade of 0.07 percent eU3O8 and using the same cutoff of 0.035 percent eU3O8.
On Wednesday, shares of Strathmore Minerals were trading at 0.26 cents on the TSX.
Uranerz Energy (TSX:URZ,AMEX:URZ) reported more good uranium grades in wells drilled during the Nichols Ranch production well-field installation. The company has drilled and cased 205 recovery and injection production wells in Production Area #1 of the Nichols Ranch ISR mine in the Powder River Basin of Wyoming. URZ says nearly a quarter of the installed production wells have resulted in a grade thickness near or above two. Grade thickness is the product of the grade and the thickness of the mineralization.
“A hole with a GT of 1 is usually considered good in the ISR uranium mining industry thus we are very encouraged to see that we have been receiving GT’s as high as 4.7 in these most recent drill results,” said Kurtis Brown, senior vice president of geology and development at URZ.
On Wednesday, shares of Uranerz were trading at $1.45 on the TSX.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.