Uranium Spot Prices Dip, but Outlook Strong

Uranium Spot Prices Dip, but Outlook Strong

The uranium spot price fell 50 cents, to $43 per pound U3O8, this week; however, according to TradeTech, deals involving delivery later in the year concluded higher than those involving immediate delivery, which means that the market should see higher prices later down the road.

A number of major producers have reported increased production levels for 2012. Total uranium output from AREVA’s (EPA:AREVA) operations reached a record high of 9,760 tonnes in 2012, a company press release notes. Rio Tinto (NYSE:RIO,ASX:RIO,LSE:RIO) also posted positive production results for the year, according to TradeTech. Total uranium production from its operations in 2012 increased 38 percent over 2011, reaching nearly 9.8 million pounds U3O8. Paladin Energy (TSX:PDN,ASX:PDN) reported H2 2012 output of 4.12 million pounds U3O8 — an increase of 34 percent compared to the same period in 2011, stated Energy Business Review.

The US Department of Energy (DOE) is set to release a draft environmental impact statement this March concerning 31 uranium mining leases covering 25,000 acres between Naturita and Moab, Utah, reported the Telluride Daily Planet. The federal agency is hoping to overturn an October 2011 federal court ruling dictating that it cease mining-related activities through its leasing program due to a number of environmental concerns. Energy Fuels (TSX:EFR), which operates the Piñon Ridge mill, owns some of the 31 DOE leases, which could supply ore for the mill.

In May, International Atomic Energy Agency (IAEA) officials will be visiting Tanzania to assess preparations for uranium exploration at the Mkuju River uranium project, reported local Tanzanian publication The Citizen. The Tanzanian government is expected to sign a Mining Development Agreement with the project’s developer prior to issuing mining licenses. The project would make the East African nation one of the top 10 uranium mining countries on the African continent.

Hongyanhe, China’s first nuclear plant post-Fukushima came online this week, reported United Press International. One generating unit is now operational and construction of the entire plant, which will consist of four power-generating units, is expected to be completed by the end of 2015. Two additional power-generating units will follow in 2016. Once completed, Hongyanhe will generate 45 billion kilowatts of electricity per year. China has a goal of 70 gigawatts of installed capacity by 2020 and is expected to reach 42 gigawatts by 2015.

Russian and Jordanian leaders are meeting this week to discuss Russian aid in uranium mining as well as in building the Middle Eastern nation’s first nuclear power plant and the necessary infrastructural development, according to the Azeri-Press Agency. Russia’s Rosatom is a contender for a potential contract to build the plant.

The Japan Atomic Power Company and Marubeni Utility Services signed a memorandum of understanding with the National Nuclear Center of the Republic of Kazakhstan for cooperation in building the first nuclear power plant in the Central Asian nation. “Areas covered by the latest MOU include cooperation on project development, human resources development, feasibility studies, and the construction and operation of a nuclear power plant,” a World Nuclear News report states. The agreement follows earlier deals, signed in 2007 and 2010, which arranged for cooperative studies to determine the feasibility of constructing nuclear power plants in Kazakhstan.

South African government officials announced this week that the country, which currently obtains about 90 percent of its energy from coal, intends to construct additional power plants. South Africa is home to the continent of Africa’s only nuclear power station. Speaking at the Africa Energy Indaba conference in Johannesburg, Energy Minister Dipuo Peters said his country cannot underestimate “the role that natural gas and nuclear power can play in the realization of that 2030 low carbon energy vision,” the Global Times reported.

Company news

Uranium Resources (NASDAQ:URRErestructured its financial surety bonding for reclamation activities at its South Texas projects. Under the new arrangement, the company has secured $9 million in new surety bonds that require only $4.5 million in cash collateral compared to the existing $9 million in fully collateralized bonds. That will allow the company to return $4.5 million to its treasury.

“The restructuring of the bonding on our South Texas properties is a meaningful step forward as we continue to work on recapitalizing the Company, while simultaneously lowering our cost structure,” stated Terence J. Cryan, interim president and CEO of Uranium Resources, in a press release. “The additional capital provides added flexibility to advance our near-term priorities, which are focused on developing our significant New Mexico uranium assets, as well as maintaining our restoration activities in Texas so as to be positioned to restart uranium production in South Texas in the future.”

Alpha Minerals (TSXV:AMW) and its joint venture partner Fission Energy (TSXV:FIS) released additional results from the drill program on the Patterson Lake uranium project in Saskatchewan. “The highest point reading of the high grade was 76,233 cps. The high grade section within the Upper Zone includes: 20 meters from 87-107 meters down hole greater than 10,000 cps [including] 9 meters from 96-105 meters down hole greater than 45,000 cps,” states the press release. Further results will be released when data compiling is completed.

Macusani Yellowcake (TSXV:YEL) announced the first drill results from its campaign on the Tupuramani property in Peru. “The results to date are similar to the drilling intersections obtained within Colibri 2 & 3 with multiple wide intersections of up to 60m thick, from surface, with uranium grades ranging from 0.3 to 0.6 lbs/ton within the first 100-110m from surface,” states the news release. The company is currently operating two drills on the property.

“These new uranium assays from drilling at Tupuramani demonstrate the real economic potential of the Colibri 2 & 3 sector of the Macusani plateau,” commented Dr. Laurence Stefan, president and CEO of Macusani. “If positively confirmed by drilling this mineralization style has the potential to become a significant open pit mining resource,” he added.

 

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.