Namibia Has Nuclear Ambitions

Published on Tuesday November 30 2010
 

Namibia aims to build a nuclear power plant to fuel economic development in the world's fourth-largest uranium producer.

"It is the expressed decision of the Namibian government to seriously consider the development of nuclear power in order to complete the national energy mix and provide sufficient energy for our development," Mining Minister Isak Katali said yesterday.

"The uranium and nuclear energy policy to be developed will cover the entire nuclear-fuel cycle," Katali said at the country's first stakeholder meeting on plans for a policy on uranium mining and nuclear energy, convened with the help of Finland's nuclear authority.

The policy document and draft legislation were expected to be finalised by the middle of next year, said mining commissioner Erasmus Shivolo. "Nuclear waste will have to be stored in Namibia."

Finding a "convenient storage site" would be part of policy development.

Namibia has previously floated the idea of building a nuclear power plant by 2018 but analysts said it would be hard for it to finish a reactor by then, given the long time it takes to build a plant and the massive investment required.

The government first tabled plans for a nuclear plant in 2007.

Shivolo presented a rough outline of the new nuclear policy with sections on a nuclear-waste management fund, increasing black Namibians' participation in the uranium sector and limiting the use of the country's uranium to peaceful purposes.

Namibia produced 4626t of uranium last year, according to the World Nuclear Association. The government put a moratorium on issuing uranium exploration licences in 2007 because it did not have a nuclear policy.

Four companies hold uranium-mining licences, two mines are operational and two mines are under construction, including one being developed by French energy giant Areva, which plans to start production next year.

Namibia's uranium deposits have drawn increasing interest from France, Russia and other countries as global enthusiasm for nuclear power revives.

Namibia has no nuclear power of its own and relies on South Africa for about half its electricity.

Visit my other site Australian Uranium Investing

Uranium Stocks Are Hot

Published on Sunday November 28 2010

Uranium stocks have suddenly turned red-hot and we have one of the best of them on our Canada Report Recommended List.

Cameco Corp. (NYSE:CCJ) is the largest uranium producer in the world. It operates out of Saskatchewan, which is a rich storehouse of commodities that are in high demand right now, including potash and oil.

We first recommended Cameco to Canada Report readers in August 2008 when the shares were trading at $32.66. Within weeks, Lehman Brothers collapsed and the world was plunged into the worst financial crisis since the Great Depression. Cameco stock fell to a low of $12.95 in February 2009 as the price of uranium tumbled.

But all that is history. Cameco shares have moved sharply higher in recent weeks thanks to a surge in world uranium prices. After hovering in the low $40s per pound range for the first half of the year, the price began to move up in August and reached $48 a pound in September. Since then, it has spiked dramatically, trading this week at more than $60 a pound.

TD Securities says the price jump is due to new demand from China and has raised its 2011 forecast to $62.50 a pound with a $75 target in 2012.

The big price move has prompted renewed investor interest in Cameco. As recently as July, you could have purchased the stock for around $21. Now it is trading in the $37 range and is poised to move a lot higher.

The price run-up happened despite a 43% drop in third-quarter net earnings compared to 2009. On Nov. 8, the company reported a profit of $98 million (25c a share) down from $172 million (44c a share) last year (figures in Canadian currency). For the first nine months of the 2010 fiscal year, earnings were $308 million (78c a share) compared to $501 million ($1.29 a share) last year.

However, CEO Jerry Grandey put a positive spin on the results in his comments. “Production volumes are 17% higher than in 2009, while production costs are lower,” he said. “Our U.S. dollar realized prices have also risen, illustrating the strength of our contract portfolio.

“As we advised earlier this year, revenues were lower in the third quarter due to the timing of uranium deliveries. We expect about one-third of our uranium sales will be delivered in the fourth quarter.

“We are on track to double our annual uranium production from existing assets by 2018. Our growth strategy is in place to ensure we remain among the world’s leading uranium suppliers to those who choose to use safe, clean and reliable nuclear power.”

The stock has already made a big move but is still at a level where I consider it to be a buy for those who want exposure to what is shaping up to be a new bull market in uranium.

Visit my other site Australian Uranium Investing

Uranium - Your Guide To The Next Triple-Digit Commodity Trend

Published on Wednesday Nov 24 2010
 

For the last 15 years, Russian missiles have powered one out of every 10 televisions in the United States.

It was done through the "Megatons for Megawatts" program, a 15-year-old deal where Russian nuclear missiles became fuel for U.S. nuclear power plants.

The thing is, that deal will expire in 2013. And that's one reason uranium will likely be the next big commodity story... like oil's 250% run from 2005 to 2008 and gold's 180% gain from 2006 to 2010.

Investors who get in position now will see returns that good or better. Here's why...

We can't produce enough today to meet everyone's needs. Mines supply only about 80% of worldwide uranium demand. So we have to turn to old, outdated Cold War weapons. Once they're gone, we're going to need a whole lot more mine production. That's going to take years to come online.

As a result, we're likely to see a run on uranium supplies over the next couple years. The uranium market has already begun pricing in the coming shortage. Take a look.

That's just the beginning. You see, while we're running out of our marginal supply of uranium... we also have a massive nuclear renaissance underway.

Over the next 12 years, Russia will build 26 new nuclear power plants, doubling its current uranium demand. We're seeing similar moves in China and India.

According to the International Atomic Energy Agency, world demand for uranium was 135.8 million pounds in 2009. That will likely rise to 201.1 million pounds by 2020. To meet that demand, we'd need to almost double the amount of uranium mined worldwide in just 10 years.

That's a tall order... So nuclear power companies and uranium miners alike are jostling for control of existing supply. The Russian state-owned nuclear group, Rosatom, recently bought 17% of Canadian uranium miner Uranium One. The deal gives Rosatom the right to purchase up to 20% of Uranium One's global uranium production.

In a similar move to grab future production, Korea Electric Power (KEPCO) agreed to buy 20% of junior uranium company Denison Mines' production.

The Chinese aren't sitting idly by, either. China Nuclear Energy Industry Corporation, a subsidiary of China's largest nuclear generator, signed a deal with Cameco, the world's biggest uranium miner by production, to buy 23 million pounds of uranium through 2020.

And China Guangdong Nuclear Power, which is building more nuclear power plants than any other company in the world, is negotiating long-term supplies with Cameco as well.

Also, China National Nuclear Corporation, which oversees China's nuclear industry, recently announced an agreement with French uranium miner AREVA to buy 440 million pounds of uranium over the next 10 years for $3.5 billion. That's $79.55 per pound… a 34% premium to the current price of uranium.

Nuclear power companies can afford to pay those kinds of premiums to lock in fuel supplies. The cost of fuel makes up less than 4% of the cost to generate electricity. That means power companies are not all that "price sensitive." It won't make much difference to them if they pay $60 a pound or $150.

In other words, the sky is the limit for uranium prices.

There are several ways to invest. You can buy the biggest, most liquid name in the space, Cameco (CCJ). You could also buy the Global X Uranium Fund (URA), made up of 23 uranium stocks. Or you could do what I did in my S&A Resource Report, and buy a handful of the best small-cap uranium miners.

Regardless of the method, you need to be on board the new uranium bull market. It's a large-scale, global trend that will propel us to triple digit gains over the next few years.

By Matt Badiali, editor, S&A Resource Report

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Mega Uranium Completes Diamond Drilling Program At Kintyre Rocks Project

Published on Wednesday Nov 24 2010
 

Mega Uranium Ltd. (MGA.TO: News ) said Tuesday that it has completed a 1831 meter, eight hole diamond core drilling program at its wholly owned Kintyre Rocks project

in Western Australia.

Drilling was on a tenement adjoining the lease containing the Cameco-Mitsubishi joint venture's 79 million pounds U3O8 Kintyre resource, which is currently in prefeasibility.

The diamond drilling follows up on Mega's two previous reconnaissance drilling programs on the tenement which contributed to the identification of three buried uranium targets, all within a six kilometer radius of the Kintyre deposit.

According to the company, the drilling program has tested two of the targets, Area 1 and Gleneagles. Drilling of the third target, Southern Cross, was deferred to 2011 after problems were encountered in accessing the site.

Mega said its next phase of drilling in Area 1 will be based on the results of detailed structural and lithological logging of core. This information will be combined with geochemical vectors from all holes and a detailed interpretation of both ground electromagnetic and airborne magnetic surveys to optimize the selection of drill targets. 

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Uranium Seen As The Next Big Thing

Published on Monday Nov 22 2010

 
SAN FRANCISCO – After booming in the middle part of the decade, busting in late 2007 into 2008 and being flat and out of favor until early this year, uranium is now the “Next Big Thing,” attendees at the San Francisco Hard Assets Investment Conference 2010 have been told.

Michael S. “Mickey” Fulp,who runs the MercenaryGeologist.com and works as a consulting economic geologist, used the phrase as title for his presentations to the conference and several other speakers also pointed to changing fortunes for the metal in meeting rising global energy demand.

Fulp described uranium as “the canary in the coal mine” for the world economy when the previous boom collapsed but said trends for the metal have now changed. “This, I think, is a sector that is going to boom over the next two years,” he said.

Nuclear energy, he noted, now accounts for 13% of electricity with 439 working nuclear power plants around the world, including 104 in the United States. But another 57 nuclear plants are now under construction with an additional 200 being planned. This will increase the demand for yellowcake and 4% growth in that demand is projected year over year.

But while the United States has demand for 52 million pounds of supply, it currently produces only 4 million pounds and ranks eighth in supply volumes behind such countries as Kazakhstan, Russia and Niger. Four of the five largest producing nations are unstable or “not exactly friendly” to the US, Fulp said.

Fulp said he was following uranium developers and advanced explorers with projects in New Mexico, Wyoming and Finland and also forecast that additional future US production would come from projects in South Texas, Utah and Colorado.

Visit my other site Australian Uranium Investing

Uranium Set To Out Perform Gold

Published on Monday Nov 22 2010

If global media reports are to be believed, uranium is all set to beat gold this year as far as price rise is concerned.

According to a report appeared in the new York Times, when Global X Funds of New York announced plans for two exchange-traded funds — one for gold stocks, the other, uranium, the one which got the maximum attraction was the uranium fund not the much-hyped gold.

Global X’s Uranium ETF — with holdings in companies like the Cameco Corporation, Paladin Energy and Uranium One — was a hit as soon as it went on sale on November 9, with early trading volume outpacing Global X’s gold ETF by five to one.

Again uranium industry insiders were caught off guard by a deep run-up in spot market prices, which are now about $58 a pound, up sharply from the low $40s in the summer.

It appears that the character of the spot market has changed markedly over the past few months from one that was heavily oversupplied with weak demand to one that has high levels of demand with very little supply, said a report in New York Times.

The price surge hints at a confluence of significant changes — a perfect storm now sweeping through the global nuclear power industry, especially in Asia. With China recently moving to accelerate sharply its nuclear building program by 2020 — the showpiece is the 3,300-megawatt Taishan plant in Guangdong Province, due to come online in 2013 — the country’s nuclear utilities are now trying to secure fuel supplies for years to come.

On November 1, China’s long-term planning agency announced that by 2020 it intended to raise nuclear power’s share of the country’s total energy production to 112 gigawatts, or 7 percent, up from the previous target of 70 gigawatts. That translates into an additional 82 million pounds of uranium.

Just as Global X’s uranium ETF went on sale, the French nuclear giant Areva signed a 10-year, $3.5 billion deal to supply 20,000 tons of uranium fuel to the China Guangdong Nuclear Power Corporation. Areva is a minority partner in the Taishan plant, described as the largest civil nuclear project ever. Cameco signed a similar deal earlier this year.

Russia, South Korea and Pakistan are also developing reactors and preparing to stockpile long-term inventories. The activity isn’t just domestic: China is reported to be helping Pakistan build five reactors, while South Korea recently won a large reactor project in the United Arab Emirates.

These moves contrast sharply with the situation in North America, where many nuclear projects are stalled because of economic uncertainty and a lack of government financing. Still, many analysts anticipate the Asian nuclear program will drive uranium prices to $70 to $80 a pound in the next several years — a level that will set off a new wave of exploration and mine development.

Lacking domestic uranium sources, China and companies like Paladin are also beginning to develop uranium mines in African countries including Namibia and Niger.

These latest developments are welcome news for uranium producers, some of which struggled in recent years after a mid-2000s boom was followed by a price collapse.

Over the last decade, Kazakhstan rapidly became the world’s largest uranium producer, overtaking Canada with vast increases in production.

Further complicating the picture was the fact that many nuclear utilities were acquiring fuel on the so-called secondary market — reprocessed uranium from decommissioned warheads, uranium tailings and spent reactor fuel.

Indeed, as 2010 draws to a tumultuous close, many uranium industry insiders are thinking ahead to the state of the market circa 2014 and beyond.

Visit my other site Australian Uranium Investing

Uranium Energy Corp Launches First New ISR Uranium Mine in U.S. in 5 years

Published on Saturday Nov 20 2010

Palangana is the first new ISR uranium mine to achieve production in the U.S. in over 5 years.

Uranium Energy Corp is pleased to announce that the Company has started uranium production using in-situ recovery (ISR) methods at the Palangana Project in South Texas.

Phase I of three separate development phases of the wellfield at Production Area 1 (PAA-1) is 100% complete, with more than 45 injection wells and production wells drilled, cased and tested. The Company is very pleased with the water volume that each well has yielded during the testing phase. Now, gaseous oxygen and carbon dioxide are being added to the circulating ground water, which has activated the mining process of dissolving the uranium from surrounding sandstones.

Amir Adnani, President and CEO, stated, "We are exceedingly proud that Palangana is the first new ISR uranium mine to achieve production in the U.S. in over 5 years. Kudos are due to our many professionals who have been working very hard to reach this important milestone. Palangana is one of the Company's four projects in South Texas. This initial production is really just the first step in the Company's regional strategy of greatly expanding resources and production in the re-emerging South Texas Uranium Belt, with the next project, the nearby Goliad ISR project, anticipated to join Palangana as a producing asset next year."

Harry Anthony, Chief Operating Officer, added, "The next milestone will be the start of regular deliveries of uranium-loaded resin beads to our Hobson processing plant, scheduled to commence before month-end. Shortly thereafter, we will be marketing and delivering yellowcake, the Company's valuable final product. Hobson is a newly refurbished, state-of-the-art processing plant, and anchors the Company's South Texas regional strategy with up to 3.0 million pounds of annual capacity."

Phase 1 of the PAA-1 wellfield is in operation with 30 injection wells and 15 production wells on-line, with each being brought gradually up to maximum flow rates of approximately 50 gallons per minute.

Phases II and III of the PAA-1 wellfield each will contain 45 production and injection wells. All Phase II wells have been completed, and are targeted to commence mining in the first quarter of 2011. Installation of Phase III wells is underway with three rigs actively casing and then completing each well. The Company is scheduling these wells to come on-line and to start production during the second quarter of 2011. The average depth of wells throughout the PAA-1 wellfield is 450 feet.

Visit my other site Australian Uranium Investing

Uranium Spot Price Surges 46% To $59.50 Per Lb.

Published on Thursday Nov 18 2010

The spot price is up 46% to $59.50 per pound of uranium U3O8 and term price is up 7% to $62 per pound since lows in late June 2010 according to Ux Consulting. Both prices are now at their year highs. This is the highest spot uranium price that we have seen since Sept. 15, 2008, and the credit crunch.

Applying higher prices typically had a positive impact to our net asset values and target prices. We leave our 2011 spot and term price assumptions at $65 per pound of U3O8 but are increasing our 2012 and 2013 forecasts to $70 per pound and $75 per pound, respectively, up from $65 per pound and $60 per pound.

Our 2014 assumption has increased to $67 per pound from $60 per pound and our long-term price has increased to $65 per pound from $60 per pound. We maintain our "pounds in the ground" value for unmodeled resources at $1 per pound of U3O8 for most companies under coverage, but conceded that we do use from $2 per pound to $8 per pound to value some stocks depending on the deposit's production status, grade or proximity to existing uranium mills. Currently producers trade at an average enterprise value per pound of $6.64, while the developers trade at $4.12.

Investors and utilities are quickly realizing that China's reactor-build program is for real. China expects 70 gigawatt-electric (GWe) of nuclear power by 2020 and perhaps as high as 80 GWe. The World Nuclear Association continues to assume 63 GWe in its well-known uranium supply-demand model. In just the past four months China has signed long-term contracts worth about 133 million pounds with Cameco (ticker: CCJ), [France's] Areva and Kazakhstan, and has an memorandum of understanding with [Australia-based] Paladin Energy. As China's annual requirements approach 40 million to 50 million pounds annually by 2020 -- this amount of fuel might not last three years. Spot market purchases continue -- some industry insiders speculate that about 30 million pounds were purchased since 2009. China has 13 reactors in operation, 23 under construction and 39 planned (not including the 120 proposed). We expect further demand -- well in advance of the expected 2013-2014 supply deficit coincident with the Russian HEU (highly enriched uranium) agreement expiry.

Timing and security of supply are of utmost importance. We remind investors that it's not just the production-demand graph they should be considering. It takes some time to convert U3O8 to UF6 [uranium hexafluoride], enrich the UF6, fabricate fuel pellets and manufacture zirconium alloy fuel bundles before shipping the fuel to nuclear reactors around the world.

Purchases must be done well in advance of delivery of U3O8, which in turn must be well ahead of requirements. And competition for security of supply is getting tighter very quickly. The Chinese are buying aggressively from the producers; Russians are attempting to take over various companie;, Korean, Japanese and French nuclear concerns are becoming fully vertically integrated and are actively seeking fuel by any means (joint ventures, off-take, exploration) for end-users that buy their reactors. India has barely gotten started. And the U.S. who has 104 of the world's 441 reactors, uses 50 million pounds of U3O8 annually, and is essentially nowhere to be seen during what we believe are the early days of this buying frenzy.

Speculators are re-entering the uranium market. Goldman Sachs (GS) owns the commodity. Hedge funds are getting back in. Along with supply disruptions, investor demand was a main driver behind the spectacular spot price run of 2007 -- but this time we expect uranium prices to behave a little more rational. The spot market is larger now, both in terms of volume (44.8 million pounds traded year-to-date versus 20 million pounds in 2007) and market share (20% of total volume year-to-date compared to 8% in 2007).

We have been pounding the table since June 29, 2010. Uranium stocks started moving on July 5, 2010, following the 23 million-pound Cameco-Chinese contract announcement. Now most uranium stocks have more than doubled as producers and developers are up 123% and developers are up 120%.

This report was designed to be less of a uranium supply-demand report and more to provide a guiding hand to what uranium stocks investors should be buying. We have 15 uranium stocks under full coverage and another four in our Mineral Exploration Watch List. In the past two weeks we have seen new money flow into the sector and these generalists are concentrating largely on the producers.

During the first week of November, trading volumes of the producers had already matched the total from October. Some have a rising tide lifts all boats approach -- but we believe that investors should continue to focus on companies with production or good projects and near-term milestones.

Commodity: Uranium Participation [traded over-the-counter] remains an easy way to get quick exposure to the uranium spot price.

Producers: Paladin remains a preference over Uranium One [traded in Toronto], although the latter provides near-term incentive.

Visit my other site Australian Uranium Investing

Uranium Demand Rising as China `Piles Up' Contracts, Paladin Energy Says

Published on Tuesday Nov 16 2010
 

Australia's Uranium Miner Paladin Energy, expects prices to keep rising as China drives demand for nuclear fuel.

China has “piled up” contracts to import uranium, Paladin Chief Executive Officer John Borshoff told analysts on a call today. “Although they have sucked a chunk out of new production, they are nowhere near their target of acquiring in the vicinity of 45 to 50 million pounds per annum by 2020.”

Paladin, which operates the Langer Heinrich mine in Namibia and the Kayelekera project in Malawi, forecasts increasing uranium demand as countries such as China expand the use of nuclear power to curb emissions from burning coal. The Perth- based company aims to double uranium oxide output to almost 14 million pounds by 2016 from a projected 7 million pounds in the year ending June 30, 2011.

Paladin’s uranium production rose 83 percent to 1.36 million pounds in the three months through September from a year earlier, it said last month.

Uranium oxide prices have rallied in the past month to about $59 a pound, compared with $40 in the second quarter of the year, Macquarie Group Ltd. said in a report today. Chinese imports have increased, particularly between June and September, according to Macquarie. Uranium peaked at $136 a pound in 2007.

Paladin is targeting uranium shipments to China in 2011 after signing a preliminary agreement with the nation’s second- biggest builder of nuclear power plants. The Australian company aims to convert a memorandum of understanding with China Guangdong Nuclear Power Group Co. into supply contracts later this year or early 2011, Borshoff said Sept. 1.

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Uranium One Announces Record Sales Of 1.7 Million Pounds And Lower Cash Costs

Published on Monday Nov 15 2010
 

Uranium One Inc. ("Uranium One") today reported record quarterly sales of 1.7 million pounds, production of 1.7 million pounds and a decrease in total cash costs at its operations to $12 per pound sold during the third quarter of 2010. Uranium One's 2010 production guidance remains 7.0 million pounds. The Company's production guidance for 2011 is 10.5 million pounds and 12.5 million pounds for 2012.

Q3 2010 Highlights

Operational Results

* Attributable production during Q3 2010 of 1.75 million pounds was 109% higher than total attributable production of 834,800 pounds during Q3 2009.

* The average total cash cost decreased by 20% to $12 per pound sold during Q3 2010, compared to the average total cash cost of $15 per pound sold during Q3 2009.

* An operating license was issued by the NRC for the Moore Ranch in-situ uranium project in September 2010; this is the first new license granted by the NRC for the development of a new ISR operation since 1998.

Financial Results

* Record attributable sales volumes of 1.7 million pounds for Q3 2010, an increase of 302% compared to 423,100 pounds sold during Q3 2009 and an increase of 12% compared to 1.5 million pounds sold during Q2 2010. Attributable sales volumes during October were 740,700 pounds.

* Revenue increased by 243% to $73.1 million in Q3 2010, compared to $21.3 million in Q3 2009. The average realized sales price was $43 per pound during Q3 2010.

* Earnings from mine operations increased by 197% to $27.9 million during Q3 2010 compared to earnings from mine operations of $9.4 million in Q3 2009. The increase was primarily due to an increase in the pounds sold, partially offset by a decrease in the average realized sales price per pound.

Corporate

* The ARMZ transaction is anticipated to be completed before the end of 2010, subject to receipt of one remaining regulatory approval (from the US Nuclear Regulatory Commission, which is expected to be received by the end of November 2010).

* On the initial closing of this transaction, Uranium One will issue 178 million new common shares to ARMZ for US$610 million in cash, after which a special dividend of US$1.06 per share will be declared and paid to all shareholders other than ARMZ; on the final closing, Uranium One will issue a further 178 million common shares to ARMZ in exchange for its joint venture interests in Akbastau and Zarechnoye.

Jean Nortier, President and CEO of Uranium One commented:

"Uranium One continues to deliver strong operational results from our assets in Kazakhstan. At a time when there is renewed interest in the uranium space, our shareholders are set to benefit from the Company's unhedged sales contract portfolio, excellent production growth profile, industry-leading low cash costs and strong partnerships in the nuclear industry. Our transaction with ARMZ remains on track for completion by the end of 2010 and we look forward to capitalizing on the new opportunities that this transaction will bring to Uranium One."

3 Month Performance Comparison UUU-Uranium One - CCJ-Cameco

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TradeTech Uranium Spot Price Reaches US$57.50

Published on Tuesday Nov 9 2010

Note** Since Posting Uranium Spot Price has since risen to US$58.50.00 P/Lb

*** Suppliers expect prices to continue climbing and are under no pressure to sell, which has made spot uranium supplies extremely thin,” TradeTech President Treva E. Klingbiel said ***

TradeTech’s uranium spot price rose dramatically last week, soaring to a record two-year high of US$57.50 per pound uranium oxide (U3O8) on November 5, as buyers from a variety of market segments remain active in the uranium spot market.

The steep price rise represented more than a 10 percent increase compared to TradeTech’s October 31 Exchange Value(1) of $52 per pound U3O8. “While the level of spot market demand is primarily discretionary, it is exceptionally high, with buyers including utilities, traders, and producers,” said TradeTech President Treva E. Klingbiel. In addition, the recent rise in uranium prices has attracted the attention of investors and speculators, with hedge funds venturing back into the market, TradeTech noted in its November 5 "Nuclear Market Review."

The uranium spot price gained strength throughout the past several weeks, driven largely by utilities seeking offers for spot, mid- and long-term deliveries. This increase in demand has encouraged sellers and has led to steadily higher prices in offers and transactions. 

“Suppliers expect prices to continue climbing and are under no pressure to sell, which has made spot uranium supplies extremely thin,” Klingbiel said. 

Utility and producer demand is expected to remain strong throughout November and TradeTech expects uranium spot market prices to remain firm or increase slightly.

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Bullish Signs in Uranium

Published on Saturday Nov 6 2010

Note** Since Posting Uranium Spot Price has since risen to US$56.00 P/Lb

UxC Price Update: “The UxC spot price is up US$1.50/lb to US$53.50/lb for the week (from US$52.00/lb). The long-term price remains unchanged at US$62/lb. Nine deals were reported during the week totaling 1.2Mln’lbs U3O8. Year-to-date, spot market volume has totaled 41.6 million pounds (218 deals) compared to 43.7 million pounds (187 deals) in 2009 and 35.1 million pounds (172 deals) in 2008. (source: Ux Weekly – Nov. 1, 2010).”

UxC Market Review: “Spot transactions for the month of October have accelerated with a total of 41 transactions vs the monthly run-rate in 2010 of 20.7. We remain supportive that prices will resume an upward trajectory from current levels and uranium equities remain inexpensive relative to historical valuation ranges. Medium-term, we believe spot prices will converge on the current long-term price (currently US$62/lb) and eventually move even higher as under investment in uranium production and lack of new supply, combined with low demand volatility and strategic inventory build serves to provide a fundamental underpinning. (source: Ux Weekly – Nov. 1, 2010).

Bullish Signs for Uranium. “There has been a resurgence of bullish signs for the uranium market and price in past few weeks. Production grade issues at Energy Resources of Australia’s Ranger mine resulting in lower production; and political and security risks in Niger, possibly impacting the start of the AREVA’s Imouraren project have increased supply risk. For 2010, we expect to see a net decrease in uranium production outside of Kazakhstan, signaling a tightening in supply relative to our previous forecasts. There is continued dependence on Kazakhstan for production expansion, but as a reminder, we estimate uranium prices need to be US$60+/lb for economic viability of some expansions.”

Further bullish signs for uranium include 

1/ U.S. dollar weakness vs uranium producer currencies (Australian Dollar, Canadian Dollar)

2/ Increasing long-term prices, which incentivizes utilities into mid-term deals where deal terms are more flexible; and 

3/ we are approaching the end of the HEU deal.”

Areva to sign uranium deal with China. “According to Les Echos, a French financial newspaper, AREVA may sign a US$3Bln deal this week with China Guangdong Nuclear Power Corp (CGNPC) to supply 20,000 tonnes of uranium over 10 years. Further discussions are also expected between AREVA, CGNPC and China National Nuclear Corporation  on delivery of two additional EPR nuclear reactors into China. China currently has 13 nuclear reactors in operation (11GWe), with a target of 40 gigawatts by 2020. There are 25 reactors under construction in China (21 French reactors).

Pricing update and market outlook provided by Ux Consulting Co. LLC

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Uranium-Mining ETF to Trade in New York, Global X Says

The world’s first exchange-traded fund linked to uranium-mining companies will begin trading in New York tomorrow, according to Global X Management Co., the issuer of the security.

The ETF will track an index that consists of 23 miners and refiners including Cameco Corp., the world’s second-largest uranium producer, Uranium One Inc. and Paladin Energy Ltd., said Bruno del Ama, the chief executive officer of Global X. The shares will initially sell for $15 each, and the ticker for the fund listed on the NYSE Arca stock exchange will be URA, he said.

“There are a lot of nuclear reactors being built around the world, and there’s already a short supply of uranium,” del Ama said. “With new demand coming into play, that’s going to increase prices of uranium, and obviously the mining companies that produce uranium are going to benefit tremendously from that.”

Global X, a New York-based asset manager, also has an ETF tracking gold-exploration companies that will begin trading today. The ticker of the fund, which tracks 30 explorers, is GLDX, del Ama said by telephone yesterday.

“There’s going to be a huge amount of interest,” he said. “We’ve seen a lot of inquiries from hedge funds, institutional investors and retail investors.”

Global X also provides ETFs linked to silver and copper miners.

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