Australia’s Uranium Future
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By Melissa Pistilli-Exclusive to Uranium Investing News
Last week, Citigroup analysts released a report on the Australian uranium mining sector forecasting a new wave of growth ushered in by a mounting deficit in the global uranium market.
A deficit after 2012 is likely, said analysts, because the worldwide economic crisis has delayed new mine start-ups and expansion projects; in addition, amounts of uranium from secondary sources, such as the “megawatts for megatons” program, is decreasing.
Citigroup also predicts the uranium spot price will advance to $60 per pound, or higher depending upon further supply problems, in the next two years. As prices move and remain above $50 per pound, Citi expects new mine development and expansion projects to become more feasible for miners.
More Uranium Mines to Come On-Line in Australia
This week, the government of South Australia gave the go-ahead for Alliance Resources‘ [ASX: AGS] Four Mile deposit. In the last 20 years, only two other uranium mines in Australia have received approval.
But that is soon to change. As it stands now, there are no bans on uranium mining in South Australia, the Northern Territory or Western Australia, which lifted its ban in November of 2008. “Up to five uranium mines could be operating in Australia next year,” reports Sarah-Jane Tasker for The Australian.
Scott Perkins, chief executive of the Northern Territory Resources Council, said Australia’s next commissioned uranium mine will most likely be in Western Australia. “We think that there will probably be a mine in Western Australia open up next and then it’s a race between four or five sites, including a couple in Western Australia.”
One of the miners vying to have Western Australia’s first uranium mine is Mega Uranium [TSX: MGA]. Mega hopes to have a mine up and running on its Lake Maitland property by the end of 2011.
The Canadian miner completed a scoping study on the site in 2008 and determined that developing a mine with an annual production capacity of 1.65 million pounds of uranium over 10 years would cost about US$85.1 million. According to Mega, the project could have a net present value of $181.4 million and returns of 43.4 per cent based on a uranium price of $75 per pound.
In June, Mega signed agreements with the Japan Australia Uranium Resources Development Company Ltd (JAURD) and Itochu Corp for a $49 million farm-in deal that would allow the Japanese companies to acquire a combined 35 per cent interest in the property. The deal is still awaiting Foreign Investment Review Board approval.
Last week, Mega announced revisions to its resource estimate on the Lake Maitland deposit, increasing the amount of contained uranium and upgrading of 90 per cent of the resource from inferred to indicated.
A total of 25.2 million pounds U308, based on a 100 parts-per-million (ppm) cut off rate, of indicated and inferred resource was reported by Mega. At a 200ppm cut-off, the new resource estimate is 21.5 million pounds of indicated and inferred. At a 500ppm cut-off, the resource estimate is 12.1 million pounds of indicated and inferred.
“The increase and upgrade at Lake Maitland confirm the quality of the resource and enhance the project economics,” said Mega Chairman and CEO Sheldon Inwentash. “With the support of our Japanese partners, JAURD and ITOCHU, Mega is well on schedule to meet our target of bringing Lake Maitland into production in late 2011.”
On Wednesday, shares of Mega on the TSX closed up 5.74 per cent to $1.29.
Nuclear Power in Australia?
With the growing global demand for yellowcake, many Australian officials feel the nation should get more serious about its uranium mining sector. Mitch Hooke, the chief executive of Minerals Council of Australia, believes Australia could play a substantial role in the global nuclear power production. “This is one area where Australia is a significant producer,” said Hooke.
The Australian Bureau of Agricultural and Resource Economics (ABARE) has said that approximately 64 nuclear power plants around the world will be brought on-line over the next six years. China alone is expected to construct around 20 plants in the next ten years.
As demand for nuclear power heats up, Australia’s uranium exports are likely to generate significant income for the nation. But what about the use of nuclear fuel in Australia, itself? All of the uranium mined in Australia is exported for use somewhere else.
Some are asking, “why not here?”
Officials have been calling for Australia to consider nuclear power for energy production as many other nations turn away from carbon dependency and pollution. “We consider it’s really ironic that the present government is very happy to export uranium to overseas countries for nuclear power but it just won’t consider it in Australia,” said Clarence Hardy, the secretary of the Australian Nuclear Association. “It’s what I call hypocritical.”
Ian Duncan, former chief of the organization now called the World Nuclear Association, also supports nuclear power generation in Australia. “I believe it is now time to seriously think about nuclear power as part of the base load electricity generation,” said Duncan, who lives in South Australia. “It’s time that we moved along from the caveman attitude of just picking it up and burning things. We should move to a higher order of source of energy.”
Tags: Australia, Mega Uranium, Northern Territory, nucelar power, nuclear, nuclear energy, nuclear power plant, South Australia, u308, Uranium, uranium investing, uranium market, uranium mine, uranium miner, uranium mining, uranium price, uranium resource, uranium spot price, Uranium Stocks, urnaium industry, Western Australia, yellowcake
July 17th, 2009 at 4:16 am
where is china going to get the uranium it needs for the power plants it is building? i would guess they will look to mega uranium for one, as korea signed up with dennison for 20% of future production.