The uranium spot price shed another 50 cents, TradeTech reported, “primarily driven by a lack of buying interest.” The bleak short-term outlook continues, with sellers being forced to accept lower prices in a market dominated by well-supplied buyers content to sit on the sidelines and wait for prices to stabilize.
The news that China has lifted its ban on new nuclear power stations should have lent support to an optimistic long-term outlook. However, the decree only pertains to nuclear plants in coastal areas, and China’s State Council has said the country has reduced its 2015 nuclear energy capacity target from 50 to 40 gigawatts — “[leaving] the market feeling less optimistic about the potential for a surge in near-term uranium demand from China,” commented TradeTech.
Yet China would still need to more than triple its current installed capacity of 12.54 gigawatts to meet that target. And the number of nuclear reactors under construction near coastal areas is 27, according to the World Nuclear Association.
India is also keen to expand its civilian nuclear power program, and Australia’s pro-mining government is making a strong push to supply that expansion with uranium mined in Australia. Last week, Queensland, under pressure from the Federal Labor government, lifted a 23-year ban on uranium mining in the state. The land Down Under boasts 40 percent of global known uranium reserves.
Last week, Paladin Energy (TSX:PDN;ASX:PDN) announced that Électricité de France (EdF), France’s main electricity generation and distribution company and the world’s largest nuclear utility, is the previously-undisclosed utility that entered into a long-term offtake agreement with the uranium miner. EdF, which manages 58 nuclear power plants in France, has agreed to a deal that includes a prepayment of $200 million by early next year and the delivery of 13.73 million pounds of yellowcake over six years, starting in 2019. Paladin first announced the deal in August.
On Wednesday, shares of Paladin were trading at $1.19 on the TSX.
Also last week, Strathmore Minerals (TSX:STM;OTCQX:STHJF) announced a favorable preliminary economic assessment (PEA) as well as an updated NI 43-101 compliant resource estimate for its Roca Honda uranium project in New Mexico. The project is a joint venture between Strathmore (60 percent) and the Sumitomo Corporation of Japan (40 percent).
Using a cut-off grade of 0.13 percent U3O8, the updated NI 43-101 resource estimate shows combined measured and indicated resources of 2,077,000 tons containing 16,783,000 pounds of U3O8 at a grade of 0.404 percent. An additional inferred resource of 1,448,000 tons contains 11,894,000 pounds of U3O8 at a grade of 0.411 percent.
On Wednesday, shares of Strathmore were trading at 0.215 cents on the TSX.
On Monday, Quasar Resources, an affiliate of Heathgate Resources, announced its stakeholders have voted to restart operations at the Four Mile uranium project in South Australia. The company is planning an in-situ recovery operation that will commence at Four Mile East in the second quarter of 2013 and at Four Mile West in the fourth quarter of 2013, with uranium sales beginning in 2013′s third quarter. The mine is expected to produce 2.1 million pounds of U3O8 over 16 months as part of a staged start prior to construction of full-scale production facilities. Cash expenditures of A$97.8 million to the end of 2013 are expected, with operating costs estimated at between $25.46/lb and $40.33/lb. The company expects sales prices to reach $62.58/lb in 2013.
On Wednesday, shares of Alliance were trading at 0.245 cents on the ASX.
This week, word hit the African newswires that uranium giant AREVA (EPA:AREVA) had informed the Namibian government that it will be shipping the first 250 tonnes of uranium produced at the Trekkopje mine. The uranium will be transported in the form of dried sodium diuranate (SDU) from Walvis Bay to the company’s uranium treatment subsidiary in France.
The news followed AREVA’s announcement earlier this month that it would be placing Trekkopje on care and maintenance in light of poor market conditions. The 250 tonnes of SDU come from uranium ore extracted via the project’s pilot plant in July of this year.
On Wednesday, shares of AREVA were trading at $13.52 on the EPA.
Wednesday, Ur-Energy (TSX:URE;AMEX:URG) announced that construction of a processing plant and other infrastructure has begun at its wholly-owned Lost Creek ISR uranium project in Sweetwater County, Wyoming. “Thanks to the advanced preparation of the Ur-Energy team, we have been able to initiate construction without delay following receipt of our final regulatory approval earlier this month,” stated Wayne Heili, the company’s president and CEO. “We anticipate that the mine will play an important role in south-central Wyoming’s economic development and employment opportunities throughout the next several years and are pleased to have the opportunity to utilize well qualified Wyoming-based contractors and sub-contractors.” Over the next six to nine months, Ur-Energy plans to invest $30 million to $40 million toward making Lost Creek production-ready by the summer of 2013.
On Wednesday, shares of Ur-Energy were trading at 90 cents on the TSX.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.