Continued Upward Momentum
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By Luke Brocki – Exclusive to Uranium Investing News and U3O8.biz
Uranium’s upward momentum continues. This week, that’s made evident by yet another uptick of the metal’ spot price and by rising global enthusiasm about nuclear power. Price publisher Tradetech reported negative news from uranium producers helped motivate sellers to further raise their offer prices. And buyers, lately shy of price increases, were seemingly willing to pay more for the metal.
Tradetech’s spot price indicator jumped US$1.25 to settle at US$64.50 a pound U3O8, a price the company expects to mark the level of compromise between willing buyers and willing sellers. According to Tradetech, spot demand is no longer discretionary. In fact, it is strong, with nine buyers still seeking nearly three million pounds U3O8 equivalent. These come from all fields in the sector, including investors, financial firms, traders, and, much to the delight of analysts, utilities.
On Monday, London-listed Nufcor Uranium Ltd., one of the world’s largest uranium-holding funds, confirmed it was buying 620,532 pounds of uranium from a major international player for fourth-quarter delivery at a price of US$59.03 a pound.
The transaction was a source of much speculation in recent weeks, and helped push the spot price of uranium above US$60. According to Reuters, earlier this month traders suggested Nufcor could buy as much one million pounds U3O8 equivalent, after raising about US$75 million in share issues. Just the same, some 600,000 pounds still represent a large chunk in a market with very little liquidity, and is certainly enough to keep market bulls excited.
Junior explorers had a decent showing on the TSX on Tuesday, with many recording gains in the 10-per-cent range:
Purepoint Uranium Group gained 3.5 cents, or 17.1%, to close at 24 cents, after announcing the start of summer drilling activities at the Hook Lake joint venture project on the southwest edge of Canada’s Athabasca basin. Purepoint operates the Hook Lake project under agreement with UEM Inc—a company owned by Areva Resources Canada and Cameco Corp—that allows Purepoint to acquire up to 50-per-cent interest in the project.
Red Hill Energy continued to make gains, showing a nine-cent rise, or one of 10.2%, to close Tuesday at 97 cents, after granting 550,000 incentive stock options to various directors, employees and consultants at a price of 88 cents per share for five years. The company traded at 65 cents earlier this month.
International Montoro Resources gained 2.5 cents, or 16.7 %, to 17.5 cents, after reporting its phase 1 drilling at its Crackingstone property in the historic Uranium City mining camp in Saskatchewan hit 0.4 meters of 0.37% U3O8 mineralization.
Unor Inc. was up four cents, or 28.6%, to 18 cents, with no news to report since the company released its annual reports and audited annual financial statements last week. It wasn’t alone. Other juniors also gained without much activity in their pressrooms: Global Minerals gained 12 cents, or 2.5%, to close at 12 cents; Ucore Uranium gained 3.5 cents, or 11.1 per cent, to 35 cents; Uranium Power Corp. gained five cents, or 11.1 per cent, to 50 cents a share; and Wescan Goldfields Inc. gained 11 cents, or 29.7%, to close at 48 cents.
In global nuclear news, Kazakhstan, the world’s third-biggest uranium miner, continues to voice its ambitions to overtake Canada and Australia next year by producing nearly 13,000 metric tons of the metal. Bloomberg reported that country’s state-run uranium producer Kazatomprom plans to produce in excess of 9,000 tons of uranium this year. The country is also looking to have a hand in the entire nuclear cycle, not just mining, as was shown last year by its purchase of a stake in Westinghouse Electric from Toshiba.
Over in Russia, that country’s leading uranium miner Atomredmetzoloto, a subsidiary of state nuclear power corporation Atomenergoprom, just announced its plans for a joint venture for uranium prospecting and mining with French nuclear giant Areva. Atomredmetzoloto produced 3,413 metric tons of uranium in 2007. It plans to mine 3,880 tons this year.
In Asia, Malaysian utility Tenaga is proposing the construction of that country’s first nuclear power plant, following government suggestions to look into nuclear power. The proposed plant would cost roughly US$3.1 billion dollars. At this stage, plans are preliminary and, according to Singaporean newspaper Today, the company is expecting a backlash from the public.
Finally, support for the construction of more nuclear power plants in California has grown over the past twenty years, according to a recent poll conducted by Field Research Corp. Among other queries, the July poll asked 809 registered California voters whether the building of more nuclear power plants should be allowed in California, and found 50% of respondents said yes.
According to World Nuclear News, a similar Field poll conducted in 1990 found just 38% of Californians were in favour of more nuclear power plants. As it stands, California has a moratorium on nuclear power plant construction, but nuclear supporters, including that state’s assemblyman Chuck DeVore, are fighting to have the ban lifted.
Tags: drilling, exploration, investing, momentum, resource, spot price, tradetech, Uranium
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July 28th, 2008 at 12:09 pm
[...] global demand weakness underscored by concerns about the impact of the U.S. housing slump. Uranium pushed ahead on positive sentiment for the nuclear industry, including a 20 year study which [...]
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