August 29, 2014

Cameco Mine shutdown spurs biggest rise in Uranium Price in 2 1/2 years

Published on Friday 29th August 2014 (AEST)  

Uranium increased the most in more than 2 1/2 years after Cameco Corp. moved to temporarily shut its McArthur River mine, the world’s largest source of the nuclear fuel, amid a dispute with workers.

The price of U3O8 - a tradable form of uranium - rose 3.2 percent to $32.50 a pound today, the biggest gain since November 2011, data compiled by Bloomberg show.

Cameco said Wednesday it started a “safe and orderly” shutdown of McArthur River in Saskatchewan and the nearby Key Lake mill after the United Steelworkers union said a strike will start on Aug. 30. The Canadian company said it doesn’t expect its move to affect 2014 deliveries and that it may draw on other sources of supply such as inventories.

McArthur River has the capacity to produce 18 million pounds of uranium a year, or about 10 percent of global demand, Edward Sterck, a London-based analyst at Bank of Montreal, said yesterday in a note to clients. The mine was the world’s largest by production last year, according to the World Nuclear Association.

The previous four-year labor contract at MacArthur River expired Dec. 31, according to Cameco. The lockout follows nine months of negotiations and more than 28 face-to-face meetings with the union, Mike Pulak, a USW spokesman, said Wednesday in an e-mail.
Pulak and Cameco spokesman Rob Gereghty didn’t immediately return calls for comment.

Still Low
Uranium prices are still 52 percent lower than just before the March 2011 earthquake and tsunami that led to the meltdown of three Japanese reactors and the suspension of the country’s nuclear power plants.
Cameco fell 0.7 per cent to C$21 in Toronto, extending its decline this year to 4.7 per cent.

Cameco, based in Saskatoon, Saskatchewan, is the largest uranium producer after Kazakhstan’s KazAtomProm, according to the World Nuclear Association.



August 5, 2014

David Sadowski: Are You Ready For Upward Pressure On Uranium Prices

Published on Tuesday 5th August 2014 (AEST)  

Take advantage of the temporary bear market in uranium juniors, David Sadowski tells The Mining Report. The Raymond James mining analyst explains why uranium prices are low and why they will rise in the medium term. Hint: It has something to do with how orange juice is produced. And he talks about why a gold lining makes the metals market a solid bet.

The Mining Report: In past interviews with Streetwise Reports, you predicted that the price of uranium will rise this year. But that has not panned out. Why not?

David Sadowski: Simply put, there is a short-term supply problem in the uranium industry. We believe, however, in the long term, supply will not be able to keep up with demand growth. The point at which we previously expected demand to outstrip supply has been pushed out by a couple of years. That development has impacted the price in recent months, as well as Raymond James' outlook for the price going forward.
The three main reasons for continued global growth of uranium mine production are the persistence of long-term fixed-price sales contracts, the intransigence of government producers who believe that security of supply is more important than mine economics, and byproduct uranium production. Secondary supply sources also remain robust.

TMR: Would you explain how these situations interrelate?

DS: Demand is lagging because Japan has been slower than expected to resume operations at its nuclear reactors. The Japanese reactors are not consuming uranium at the moment, but the Japanese utilities are continuing to take delivery on many of their supply agreements, causing their inventories to rise. A belief in the market that uranium might be dumped has, in part, kept other global utilities on the sidelines, resulting in lower levels of uranium buying and lower prices. And while uranium oxide "yellowcake" deliveries have continued to Japanese buyers, those buyers have slowed the movement of that material into the rest of the fuel cycle, which has decreased demand for conversion and enrichment products.
On the enrichment side, excess capacity has resulted in "underfeeding." The centrifuges at the enrichment plants are always spinning. The plants are paid to supply a certain level of enrichment to their customers. And during times of lower demand, they can utilize otherwise empty centrifuges to squeeze out more uranium product.

An apt metaphor for this process is orange juice. Imagine that you are running a juice bar with 10 juicing machines that are always spinning. Your customers bring you oranges and sign a contract to take delivery of a set amount of juice from those oranges. But suddenly you lose 20% of your customers. They stop bringing you oranges and they no longer pay you for the juice. What are your options to make up for that lost revenue? Given that all 10 juicing machines must continue to run, you can take the oranges that would under normal circumstances be squeezed by eight machines and instead run them through 10 machines, squeezing more juice out of each orange. The juice in excess to what the eight remaining customers have agreed to buy is available to the juice bar owner to sell to other customers.

That is the same type of activity that is going on in the uranium space. Enrichers with excess capacity especially during a period of relatively weak enrichment or "SWU" prices can squeeze more enriched product out of the material being provided to them, which generates excess uranium that the enrichers sell to others. Given the protracted outage of Japanese nuclear reactors, this squeezed source of supply has been greater than expected. In part due to our revised estimate that only one-third of Japan's nuclear fleet will return to operations, we expect underfeeding to continue to exacerbate oversupply for some time.

TMR: What about the uranium extracted from Russian nuclear warheads?

DS: Similarly, with respect to Russia, the end of the Megatons to Megawatts high-enriched uranium (HEU) deal was long anticipated to usher in a new period of higher uranium prices. But the same plants that were used to down-blend those warheads can now be used for underfeeding and tails re-enrichment. In this way, the Russian HEU-derived source of supply that provided about 24 million pounds (24 Mlb) to the market did not disappear completely; the supply level was just cut roughly in half. Meanwhile, uranium mines, in aggregate, have increased their output—even though prices are now well below average production costs. Kazakhstan, for example, has continued to grow its uranium industry, despite recent guidance from officials in Kazakhstan to the contrary.
Furthermore, since Fukushima, only one major uranium mining operation has closed down due to weak prices, Paladin Energy Ltd.'s (PDN:TSX; PDN:ASX) Kayelekera in Malawi. The high-cost Ranger mine in Australia, which has been processing its stockpiles since 2012, has defied protests from locals and restarted production following a major accident in late 2013. And Cigar Lake in Canada and Husab in Namibia are charging into production, even in this oversupplied environment. The bottom line is that oversupply will persist until 2020.

TMR: How will that solemn reality affect future prices?

DS: Current prices are untenably low and some producers are refusing to sell at rock-bottom prices. Upward pressure on prices into the $35 per pound ($35/lb) range should occur as utilities buy more uranium in the marketplace, and as secondary trading activity among financial entities picks up. The biggest factor is the behavior of the end-users of uranium, the nuclear utilities. Given what we know from available data, global utilities are going to have to sign a lot of new supply contracts to meet their uncovered reactor requirements in the years 2017 and beyond.

But looking at current utility-held inventories and the global supply/demand picture over the next five years, we predict that the utilities will not be rushing to sign new deals. A major upswing in prices toward mine incentivizing levels of $70/lb is thus at least a couple of years down the road. The spot price is $28/lb today. It should average $35/lb in 2015—a 20% rise and we see US$70/lb in 2018. Furthermore, it should be noted that this outlook can change in a split second. A flood at Cigar Lake, sanctions against Russian nuclear fuel exports, a major mine shutdown—if any of these events occur, the equation changes and prices could rise a heck of a lot faster, comparable to the rise in 2006–2007 and in late 2010.

TMR: What do you look for in a uranium mining junior?

DS: The best junior opportunities are to be found in companies with best-in-class assets, access to capital, and the potential for value-added news flow. Solid management teams, clean capital structures and trading liquidity are also key. For example, Denison Mines Corp. (AMEX:DNN) has world-class discovery potential at Wheeler River, and also another high-grade project that it is aggressively exploring. Denison will generate up to $7 million ($7M) annually in Cigar Lake toll milling revenues. And the company could bring several deposits into production in the medium term. Valuation is an obvious consideration when looking at investing in the juniors, but after peaking in late February and early March, most of the junior equities are now trading at attractive levels. Denison is one of our top picks among juniors in the Athabasca Basin.

TMR: What other companies do you like in the Athabasca Basin?

DS: Fission Uranium Corp. (TO:FCU) has similar qualities to Denison. Fission's Patterson Lake South has emerged as the best undeveloped uranium project in the world. There simply are no other high-grade, open-pit uranium assets left un-mined, so the value of Patterson Lake is off the charts. Based on assay results released by Fission through the winter program, we estimate 70–80 Mlb of contained metal has been defined. We anticipate that its aggressive summer exploration campaign will add even more to that total. All of the zones are wide open along the strike and to the north and south, not to mention the numerous coincident geophysical and radon anomalies in the region. There are question marks, such as the price and timeline to construct a new mill, but we look forward to seeing a maiden resource estimate at the project, which should come out in early 2015.

TMR: Fission Uranium spun out of Fission Energy Corp. (FIS:TSX.V) last year. Was that a good move?

DS: It was a great move. Fission Energy sold its Waterbury Lake and other uranium assets and spun out the Patterson Lake South project and ancillary assets, including a project on the Macusani Plateau in Peru. It turned out to be a fantastic deal for shareholders. Not only did they get shares in Denison Mines, they also got shares in Fission Uranium. Fission subsequently acquired Alpha Minerals Inc. and is now the 100% owner of the Patterson Lake South project, which in our view has lowered the hurdle for the company to get taken out. Fission is our top pick among uranium juniors at current price levels, with a Strong Buy rating and $2 target price.

TMR: Which uranium producers do you like in the United States?

DS: Ur-Energy Inc. (AMEX:URG) is our top pick among uranium producers. Since starting up production in late 2013, its Lost Creek mine in Wyoming has performed exceedingly well. Ur-Energy has a good operating team, well-executed plant build, solid ore body and is in an attractive jurisdiction. One of the company's key advantages over its competitors is the high fixed prices in its contract book. Over the balance of 2014, we estimate that Ur-Energy will deliver into sales agreements with an average realized price of more than $60/lb. Meanwhile, cash costs are expected to be very close to $20/lb, implying a stellar operating margin.

In a higher uranium price environment, Ur-Energy looks even better with its ability to scale production to 1 Mlb/year at its core operation at Lost Creek. Plus, it can go to 2 Mlb/year by incorporating its low-cost satellite mining operation at Shirley Basin. The company is highly leveraged to improved uranium prices, but it is also downside protected by its attractively priced contracts, which extend to 2019.

TMR: Is there synergy in going after both uranium and gold?

DS: Uranium deposits can occur alongside other metals, improving mine economics. In South Africa and Australia, uranium is mined as a byproduct of gold with a positive impact at those mines. In other cases, gold, nickel, molybdenum, and other metals can be an encumbrance to primary uranium production and can negatively impact costs.

TMR: What gold success stories are out there?

DS: We like Probe Mines Limited (TO:PRB). Its Borden gold discovery is 2 million ounces (2 Moz) at 5 grams per ton (5 g/t) amenable to bulk underground mining techniques one kilometer off a highway and 90 minutes from Timmins, Ontario. In fact, at its 3 g/t cutoff, the high-grade zone hosts 1.8 Moz at a 5.9 g/t average grade. We believe additional drilling along the strike to the east will further extend the deposit and underline what is already one of the best undeveloped gold assets in Canada.

The project also features a 2.3 Moz, 1 g/t pit-constrained low-grade zone that makes sense for open-pit mining, either in a higher gold price environment or as funded out of cash flow from the underground mine. The company is now closing a $26M flow-through financing, which will enable it to complete a maiden preliminary economic assessment at Borden in the fourth quarter, close an acquisition to tie up the regional land package, and facilitate aggressive exploration drilling through 2015. We believe Probe is a story that is seriously misunderstood. It is a real opportunity for investors looking at higher-grade, earlier-stage names.

TMR: How is Probe's share price performing?

DS: After being one of the darlings of the TSX Venture Exchange in 2013, Probe had a leg down this year. There were a few reasons for that. Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) had been viewed as a natural buyer for Probe. When Agnico made a bid for Osisko Mining, the market surmised that Agnico may not want to buy Probe in the short term. Also, some analysts regard Probe's recent resource update as ho-hum, a view I certainly do not agree with. Probe has a stellar underground deposit and maintains the open pit as a great option in a higher gold price environment.

TMR: What other gold firms do you have an eye on?

DS: We cover Kaminak Gold Corp. (TO:KAM); it owns the Coffee gold project, a nice leaching deposit in the Yukon that could host a highly economic open-pit heap-leach mine. Roxgold Inc. (ROG:TSX.V) is advancing its high-grade Yaramoko project in Burkina Faso into development later this year. Orezone Gold Corporation (TO:ORE) is moving its Burkina Faso Bomboré heap-leach gold project into the feasibility and permitting stages over the balance of 2014. We are bullish on each one of these companies.

TMR: What about precious metal plays in silver?

DS: MAG Silver Corp. (AMEX:MVG) is our top pick among silver juniors. MAG is truly an asset-rich company. It owns 44% of the world's highest grading silver project, Juanicipio, which is currently under development with its joint venture operating partner, Fresnillo Plc (LONDON:FRES):LS). We model production startup in 2018 with extremely low cash costs and low operational risk. Fresnillo has been engaged in very similar underground epithermal vein mining for decades, and it is one of the world's top silver producers.

MAG's second asset, 100%-owned Cinco de Mayo, is very intriguing. Cinco is a zinc-dominant carbonate replacement deposit or "CRD" target featuring very high zinc grades and a massive exploration upside. MAG has been temporarily expelled from the property by the locals, but we remain hopeful for resumption of drilling in the near future. It is an excellent undervalued company and we have a Strong Buy rating on it.

TMR: What will it take for MAG to reopen Cinco de Mayo?

DS: MAG is working to sign an agreement with the local ejidos in a small town called Benito Juárez, which is located in the Cinco de Mayo area. MAG negotiated a similar deal to restore access at its flagship Juanicipio project and given the particular circumstances surrounding Cinco, we believe an analogous outcome is likely.

TMR: Thanks for your time, David.

DS: My pleasure, Peter.

David Sadowski is a mining equity research analyst at Raymond James Ltd., and has been covering the uranium and junior precious metals spaces for the past six years. Prior to joining the firm, Sadowski worked as a geologist in western Canada with multiple Vancouver-based junior exploration companies, focused on base and precious metals. Sadowski holds a Bachelor of Science in geological sciences from the University of British Columbia. 



June 13, 2014

UW Research: Bacteria Show Promise in Restoring Aquifers Used in Uranium mining

Published on Friday June 13 2014 (AEST)  
 John Willford, coordinator of the instructional labs for the Department of Molecular Biology in UW’s College of Agriculture and Applied Science, shows microcosms in a UW lab that demonstrated the effectiveness of uranium bioremediation using naturally occurring bacteria. Field study of the technique will begin this month at the Smith Ranch-Highland uranium mine in Converse County. (UW Photo)

(Laramie, Wyo.)  — Wyoming’s resurgent uranium industry could get a further boost from University of Wyoming scientists, whose research on post-mining environmental restoration is yielding extremely promising results.
Research in UW laboratories has shown that stimulating growth of native bacteria could be a more effective way to remediate aquifers tapped by in-situ leach uranium mining, the technique used in the vast majority of Wyoming’s existing and planned uranium operations. If those findings are confirmed in the field, uranium companies could save significantly in groundwater restoration costs while achieving better results.
“The remediation process simply involves feeding the existing bacteria — no new bacteria are introduced,” says Kevin Chamberlain, a research professor in UW’s Department of Geology and Geophysics. “The result is a better restoration for less cost to the mining company — a win-win situation for the environment, the state and the company.”
Wyoming, which once had a thriving uranium mining industry, remains No. 1 in the nation in uranium reserves and is seeing something of a renaissance in mining operations after decades of industry decline and delay. Cameco’s Smith Ranch-Highland mine in Converse County is one of the country’s biggest producers, and several other companies have opened or are preparing to start in-situ leach (ISL) operations in the state — which stands to benefit through job creation and tax revenues.
ISL uranium mining involves injecting a groundwater solution (fortified with oxygen and carbon dioxide) into underground ore bodies through cased wells. The solution permeates the porous rock, dissolving the uranium from the ore, and is pumped to the surface through other cased wells. The uranium-rich solution then is transferred to a water treatment facility, where the uranium is removed from the solution by adhering to ion exchange resin beads. The groundwater solution exiting the ion exchange system is then sent back to the injection wells for reuse.
Consequently, there is little surface disturbance in ISL mining, and no tailings or waste rock are generated.
However, not all of the uranium is removed from the water, and the process also liberates other metals such as selenium and vanadium. Federal and state regulations require mining companies to restore aquifers by fixing the suspended metals. Most companies now do that with expensive, repeated reverse-osmosis water sweeps, using large amounts of water containing metal-fixing chemicals, with mixed long-term results.

  In the uranium lab. (UW Photo)

In the uranium lab. (UW Photo)

Bacteria Do the Job
At the Smith Ranch-Highland mine, Cameco, in the early 2000s, experimented with bioremediation: stimulating native bacteria to fix the metals. These bacteria live in the uranium-rich strata and use uranium as an electron acceptor in their natural life cycles. A number of substances, such as safflower, crude whey protein and even molasses, have been used to “feed” the bacteria, but the results were mixed.
In 2011, Chamberlain received a $100,000 grant from the UW School of Energy Resources’ (SER) In-Situ Recovery of Uranium Research Program, with a $25,000 match from Cameco, to study restoration of the relatively deep uranium aquifers at the Smith Ranch-Highland site using bioremediation. He says it became clear right away that more laboratory work was needed before initiating a field study.
Chamberlain enlisted the expertise of others on campus, including John Willford, coordinator of the instructional labs for the Department of Molecular Biology in the College of Agriculture and Applied Science; Pete Stahl, professor of soil ecology and director of the Wyoming Reclamation and Restoration Center; Craig Cook, research scientist in the Department of Ecosystem Science and Management and director of UW’s Stable Isotope Facility (SIF); David Williams, professor of botany and renewable resources and faculty director of SIF; and Calvin Strom, research scientist in the Department of Ecosystem Science and Management. Recently, scientists from outside the university — including the Los Alamos, Pacific Northwest and Lawrence Berkeley national laboratories — also have become involved.
Two UW laboratory projects were undertaken to determine the best “food” for the naturally occurring bacteria, and the optimum rate of feeding. The first project, which is complete, showed that the most effective substance to stimulate the bacteria at the Smith Ranch-Highland site is tryptone, a partially degraded milk protein commonly used in laboratories. The second project — which better simulated actual field conditions, tested different feeding rates and developed monitoring criteria — is nearing completion. It was funded by an additional $107,000 SER grant to Willford and Chamberlain, with a Cameco match of $50,000.
In the experiments, introduction of tryptone produced a 60 percent reduction in soluble uranium over 30 days, with higher reductions over the long term. The researchers believe the growth of bacteria will be long-lasting and effective in fixing the remnant uranium and other metals.
“We’re not introducing anything but a little food,” Chamberlain says. “We’re restoring the natural balance by feeding the naturally occurring bacteria that use uranium as part of their life cycle. Essentially, we’re just speeding up what’s believed to eventually happen anyway to keep the metals from remobilizing. It does a better job, and it’s less expensive.”

From the Lab to the Field
With the knowledge gained from the lab studies, the UW interdisciplinary team of scientists plans to begin the field trial with tryptone at Smith Ranch-Highland later this month. The study is expected to take 10 months to a year.
“Now, we feel armed,” Chamberlain says. “No. 1, we know bioremediation can work. No. 2, we’ve found a food that works well at this site. No. 3, we know the best rate at which to feed. We’re excited to put it all to work in the field.”
In addition, Chamberlain is developing isotopic metrics to effectively monitor the bioremediation process at a relatively low cost.
Cameco officials say they look forward to the prospect of using bioremediation, if the final results of the research confirm the laboratory findings.
“Cameco is pleased to be working with the world-class researchers of the University of Wyoming to hone restoration processes for the in situ recovery uranium industry,” says Jim Clay, senior scientist for the company. “The work being done at our Smith Ranch-Highland mine in Converse County is a collaborative effort with these researchers that will benefit both the environment and the mining industry in Wyoming.”
Chamberlain says this bioremediation technique has the potential to reduce the cost of aquifer restoration by as much as 90 percent, and may result in reduced regulatory bonding obligations for companies — along with improved results in the ground. While each ISL mining site is different, he and Willford believe the methodology used to develop the plan for the Smith Ranch-Highland site will work for other uranium operations as well.
“The system we developed for this should be applicable everywhere,” Willford says. “We’re working to find a good, long-term solution for the industry in Wyoming and elsewhere. Being the only research institution in the state, it’s appropriate for us to do something to help this industry and the state’s environment and economy.”
The In-Situ Recovery of Uranium Research Program was established by the Wyoming State Legislature in 2009. Sen. Jim Anderson, R-Glenrock, says the bioremediation research is exactly the type of work that he and other legislators hoped to see.
“In-situ recovery uranium mining is a critically important industry in my district and the state of Wyoming,” Anderson says. “It is important for Wyoming to invest in the most current science available to assist in improved production methods while protecting the state’s environment. These investments made by the state are critical in allowing the industry to move forward while sustaining Wyoming jobs and the economy.”
–UW News Service



June 5, 2014

Ranger Mine Resumes Processing Uranium

Published on Thursday June 5 2014 (AEST)  
 This photo shows the extent of damage to the tank that spilled up to 1million litres of radioactive slurry at Ranger uranium mine. Source: NT News

 Environmental groups want to know how the Ranger uranium mine in Kakadu National Park could be permitted to resume operations when the government report into the major industrial failure that led to the suspension of operations has not yet been made public. Uranium processing has been halted since December after a leach tank collapsed, spilling about one million cubic litres of radioactive and acidic slurry at the site.

On Thursday, both the federal and Northern Territory governments approved the resumption of ore processing at the site by operators Energy Resources of Australia (ERA). A progressive restart of processing will begin the same day. 

"We acknowledge that this was a serious incident that damaged community confidence in our operations," ERA CEO Andrea Sutton said in a statement.

"The measures we have undertaken are designed to prevent anything similar happening in the future and to reassure our stakeholders and the broader community of the integrity of our operation."
But Nuclear-free NT campaigner Lauren Mellor said the approval was premature.

"It's extraordinary that ERA are getting a green light when the long-promised report that led to the suspension hasn't even seen daylight," the Australian Conservation Foundation's spokesman Dave Sweeney told AAP.
"If the government is confident in their process, then put the whole thing in the public domain and stop this approach of piecemeal assessment that happens behind closed doors."
The Gundjeihmi Aboriginal Corporation, which acts on behalf of the Mirarr traditional owners, said it accepts the restart for the time being.

"We're comfortable with this start-up, but in order for us to not all be back here in several years' time, we need a major culture shift at the mine," CEO Justin O'Brien said.

He said he was confident both levels of government would review the regulation of the mine to simplify it and bring it into line with broader industry practice on process safety codes.

"This is as much a failure on the part of the regulatory system as it is on the part of the mining company," Mr O'Brien said.

But Ranger is the most regulated site in the world, said NT Minister for Mines and Energy, Willem Westra van Holthe.

"It's constantly under scrutiny, and rightly so. The investigation makes sure Ranger operates more safely now than it did six months ago," he said.

He said there has been "absolutely no impact on Kakadu" as a result of the spill.

ERA expects the processing plant to return to normal production levels during the third quarter of this year, with the company's 2014 production of uranium oxide expected to be between 1,100 tonnes and 1,500 tonnes.



May 16, 2014

Energy Fuels strengthens working Capital position in tough Uranium Market

Published on Friday May 16 2014 (AEST)  

U.S. uranium producer Energy Fuels (NYSE MKT:UUUU)(TSE:EFR) reported Tuesday its first quarter financial results, in which it revealed an increased working capital position alongside lower profit and revenue amid sustained pressure on uranium prices.  

At the end of March, the company had working capital of $42.27 million, up from $33.48 million at the end of 2013. The gain was mainly a result of Energy Fuels freeing up over $12 million in cash via  a bond restructuring. 

It also posted a net loss of $6.34 million, or 32 cents per share, compared to a net loss of $5.9 million, or 40 cents per share, in the year-ago period. Revenues fell to $11.36 million from $34.09 million.
Production during the quarter from the company's White Mesa mill, the only conventional uranium mill currently operating in the U.S., totaled 125,956 pounds of uranium, all of which was from alternate feed materials. It also sold 191,667 pounds of uranium, under term contracts at an average realized price of $58.53 per pound.

Energy Fuels delivers purchased uranium into term contracts, allowing it to purchase uranium at prices lower than its production cost and to realize significant margins between the spot purchase price and the contract sale price. This allows the company to extend the life of its mines by preserving its uranium resources, reducing operational risk and allowing it to implement additional cost-cutting measures amid the weak uranium market.

The uranium market has been hurt by the sharp decline in both the spot and term prices for uranium oxide ever since the earthquake and tsunami that struck Japan in March 2011, which led to the shutdown of nearly all the reactors at the Fukushima-Daiichi atomic power plant. Prior to the March 2011 catastrophe, Japan relied on nuclear power for about 30% of its electricity, according to stats from the World Nuclear Association.

Spot prices and long-term prices for uranium began the year at $34.50 and $47.00 per pound, and are currently down at $29.00 and $45.00 per pound, respectively. 

The company said Tuesday that though prices in the short and medium term are under pressure from excess supplies, it believes that prices will improve in the longer term on the need to fuel expectations for global growth in nuclear energy. It therefore plans to continue to strengthen its position as a "leading uranium company in the United States." 

Its main goals for this year are to produce and procure sufficient uranium to fulfill its delivery obligations under existing uranium sales contracts, and maintain its mines on standby as well as continue to permit new projects, thereby positioning Energy Fuels to increase production should market conditions improve.
Should markets get better, the company said it will consider the acquisition of additional properties in the U.S., and evaluate the sale of non-core assets. Maintenance activities will continue at its White Mesa mill, which is expected to be placed on standby in August of this year. 

Energy Fuels is forecasting 2014 sales of approximately 800,000 pounds of uranium, of which 191,667 pounds were sold during the first quarter. All of the 800,000 pounds of projected sales are to be delivered into its three existing long-term contracts, it said.

The company is currently America's largest conventional uranium producer, supplying about 25% of the uranium produced in the U.S. in 2013. Its White Mesa mill is capable of processing about 2,000 tons per day of uranium ore, and has a licensed capacity of over 8 million pounds.



May 12, 2014

Official Start Of Mining Operations Begins At Husab Uranium Project in Namibia.

Published on Monday May 12 2014 (AEST)  

Husab becomes the fourth uranium mine in operation in Namibia, the others being Rössing, Langer Heinrich and Trekkopje. China National Nuclear Corporation holds a 25% stake in Paladin's Langer Heinrich mine, entitling it to a corresponding share of the project's output.

The first blasting of rock took place earlier this year. Construction of the mine is scheduled to be completed by the end of 2015, with production then planned to ramp up to 5770 tonnes of uranium per year by 2017.

The operation will be an open pit mine with an acid leach process plant on site. The Husab ore-body is claimed to be the third largest uranium-only deposit in the world. With measured and indicated reserves of about 140,000 tonnes U, Husab is expected to operate for at least 20 years. The mine will comprise of two pits: the Zone 1 pit will be some 3km long, 1km wide and 412m deep; the Zone 2 pit will be about 2km long, 1.3 km wide and 377m deep.




May 6, 2014

China Starts 19th Nuclear Power Reactor Amid Construction Push

Published on Tuesday May 6 2014 (AEST)  

China fired up its 19th nuclear reactor as the nation pushed to more than double its expansion of atomic power generation capacity this year, which may boost demand for imported uranium.

The Ningde No. 2 reactor in the southern province of Fujian started commercial operations yesterday, according to a statement posted on the website of the State Council’s State-owned Assets Supervision and Administration Commission today. The facility is owned by China General Nuclear Power, the nation’s biggest nuclear producer. Its No. 1 reactor resumed production on April 29 after maintenance, the statement shows.

China may need to import more than 80 percent of its uranium by 2020 as it expands its nuclear construction and operations, compared with about 60 percent currently, Tian Miao, an analyst at North Square Blue Oak Ltd., a London-based policy researcher, said by phone today. The nation will add 8.64 gigawatts of atomic capacity this year, compared with 3.24 gigawatts in 2013, according to previously announced targets.
China General Nuclear Power has 10 operational reactors with a combined capacity of 10.5 gigawatts, making up 62 percent of China’s installed nuclear power, today’s statement shows.

Sun Qin, the president of China National Nuclear Corp., met with Ministry of Land and Resources officials on April 29 to discuss developing domestic uranium, the nation’s second-largest operator said in a newsletter on its website last week.

Its unit, China National Nuclear Power Co., plans to raise 16.25 billion yuan ($2.6 billion) in an initial public offering to fund the construction for four projects in Fuqing, Changjiang, Tianwan and Sanmen, according to a draft prospectus issued yesterday.



March 31, 2014

Death Cross For European Energy

Published on Monday March 31 2014 (AEST)

Commentators have begun to focus on the “moving average” of European energy demand  – always downward – as the moving average of European energy prices always rises. They easily conclude this is a death cross caused by the always-unrealistic energy policy and programs of the European Union. Making this more deadly, the “bearish outlook” for future energy supply in Europe is hard-baked into the policy mix and kept that way by political grandstanding and corporate inertia.

There is no point arguing that normally-speaking, when markets are working properly, shortage leads to higher prices which in turn leads to investment in new supply. This is not the case.
In a large number of EU countries, especially the UK, Germany, Spain but in general all EU member states from Poland to Portugal, power generating capacity is expected to fall further as declared-obsolete coal and oil-fired plants close, and made-obsolete gas-fired power plants are either mothballed or demolished.  The coal plants emit too much CO2, the oil plants cost too much to run – like the gas fired plants – and the intermittent renewable based power plants cost too much to install and operate when their infrastructure and support costs are included. Nuclear power plants, apart from their fantastic capital costs, have a degraded public image and their forward construction time, when or if they are funded, is excruciatingly long.

In several countries such as the UK and Germany, the government pleads to no avail with producers to restart their gas plants that are mothballed, and not yet demolished, but without cast iron revenue and profit guarantees the power producers will not operate them. With typical year-round capacity utilization rates that can be as  low as 15%, gas fired power plants in many EU states operate at a whopping loss. One example is the biggest power producer in Germany, E.On whose CEO in 2013 noted that his corporation's fleet of “state of the art” gas power plants was losing about 93 euro cents on every 1 euro of power produced by them. Mothballing these recently-built, high-cost, low emission, high-efficiency gas power plants is expensive, for plants that when they were used, were only able to operate 20 hours a week.

Governments Cajole, Then Threaten

EU governments plead with the continent's power producers to invest in the renewables, but to declining avail. Germany's No 2 producer, RWE in 2013 has pulled out of a number of large scale renewable power projects, such as Britain's mooted but unfunded giant-scale offshore windfarm in NW England, and has officially announced that the corporation could or might totally abandon electric power production and distribution by or before 2020. Corporate energy in Europe, led by the power companies, is backing off and away – from energy.  

This “reality gap” between European electric power prices, and the growing corporate and investor disinterest and abandonment of the power sector, is glaringly massive. In the poster child country for European “energy transition”, German household electricity prices are around 25 euro cents per kiloWatthour in early 2014, pricing their power at an oil equivalent (1600 kWh per barrel) of around $540 per barrel equivalent. Can we be surprised that German electricity consumption is falling?

Inevitably therefore, governments of all political complexions in Europe – from light blue to pale pink – are now asking why energy companies are not putting their increased profits into building new power plants, and new transmission infrastructures of any kind that can produce power and a profit?

Government spokespersons go on to ask: Why are the producers “out to lunch”?  The totally superficial nature of the politically-charged reaction and response of European governments to a steadily growing outlook of future power shortages, brownouts and blackouts – only held back, this winter, by record warm weather -  is proven by the dire “bottom lines” of most major power producers in Europe. This is the basic reason they do not invest, and their share prices continue to wilt.

Also inevitably, the governments of EU states whether Liberal Left or Liberal Right, have started to accuse the power producers and distributors of profit-gouging, market rigging and a general “failure to invest”. This accusation of course destroys any regulatory predictability for electric power and can only further depress the “will to invest”. The UK is a classic example.

Former UK Conservative Prime Minister John Major has proposed a windfall profits tax on the power companies. Labour leader Ed Miliband promises to freeze power prices for 20 months if he wins next year's election. With zero surprise, this has made the word “investment” equivalent to “leprosy” for the UK's electricity sector, more especially when both government and opposition, as in other EU states, threatens to further tax “fossil energy”, to fund and cross-subsidize renewables. If the power companies will not do it – governments will!

Newspeak jargon used for this not so much creeping, but rapidly accelerating, government takeover of electric power in Europe includes, in the UK, the key term “contracts for difference” with the stock exchange-friendly buzzword of “strike prices” for electricity added. At the same time, UK power producers (and similar legislation is creeping forward at a fast snail's pace, say a hungry snake's pace in other EU states) will have certain “capacity obligations”, that is power production capacity they will have to build and-or own, or buy – whether they use it or not.

The death cross for European electricity continues.

At Least Eighty Percent Less Emissions of CO2

EU member states such as the UK, whether government or Opposition, have at mostly “mildly diluted” their commitment to the Low Carbon Future. Across the continent, all major mainstream political parties continue to make green promises. In the UK, soon to be followed by other member state governments and opposition parties, government is threatening to “break-up the energy cartels” that it imagines firstly exist, and secondly imagines are thwarting the Low Carbon Goal.

Following the Dec 2008 European parliament vote in favour of the “climate-energy package”, this was quickly and unquestioningly transposed into the laws, regulations and policies of all the member states. By or before March 2009 only a very few countries had not yet “enshrined” the goals of the package – and more important the potential forward extensions of these goals.

Whatever the “liberal politics” ruling in the member states, whether pale blue or slightly pink, political leaders leapt on board with their own national extensions of the Dec 2008 goals. In the UK, during the 2010 election campaign, the Conservative Party endorsed the low-carbon rhetoric of the package, which had so thrilled the Greens and Ecologists, and UK Tory party leader David Cameron belted out the slogan "Vote blue, Go green." After winning the mandate, the Tories continued to support the UK's almost instant adoption of the European parliament resolution, by the previous New Labour government which in its own 2008 Climate Change Act committed the U.K. to reducing greenhouse gas emissions 80% by 2050.

In some countries preaching holier-than-thou (but rarely practicing it), such as Germany, the 80-percent-goal was soon drawn back towards the 2030s.

Shifting the definition of emissions, and above all outplacing national CO2 emissions to supplier countries of its uranium fuel, France was able to brandish nuclear power as the clean-green solution for achieving at least an 80% reduction by the 2040s. Several EU politicians such as former Spanish PM Jose Luis Rodriguez Zapatero before he was massively voted out of power, had brandished the possibility of a 100% reduction in Spanish CO2 emissions “by about 2045”.

The Dirty Diesel Debacle

For more than a week in late March, on a recurring base, several major French cities including Paris were swathed in a brownish smog dubbed “particules fines” by the media. That is microparticles emitted by “clean low carbon” diesel-fueled cars, now making up 75% of the French 40-million car fleet and over 85% of new car sales. The reason is ultra simple – diesel fuel is subsidized at a lower pump price than gasoline, despite diesel fuel having 10% more energy in every liter compared with gasoline. The apparent higher mileage of diesel-fueled cars is explained by that, but for politicians and the consumer public, especially in France, the diesel car was a miraculous weapon for fighting the catastrophe of global warming. Former president Nicolas Sarkozy and his environment minister Jean-Louis Borloo warmly supported French car fleet dieselization at the 2009 Copenhagen conference.

To no avail, public health and environmental associations point out that the UN WHO's Institute of Cancer Research, ironically based in the French city of Lyon went so far, in 2012, as to give a hard-edged estimate for the number of cancer deaths caused by inhaling and ingurgitating diesel fuel residues, of about 200 000 per year for the EU, and 44 000 per year in France. Only cancers linked with cigarette smoking cause a higher annual death toll, according to the UN WHO.

But who would take any notice of the WHO when sea levels are rising at seven-tenths of 1 millimetre per year and diesel cars are so cheap to run?

Diesel fueled cars are “green and ecological” by government fiat, and supposedly offer reduced oil consumption, as demanded by the political goals of “European energy transition”, set by the climate-energy package of Dec 2008 - and the increase of its goals set by later political grandstanding in various EU states. As a result of the “particules fines” smog alert in major French cities, some schools were closed, physical activity in remaining open schools was banned, oxygen was supplied to elderly and infirm persons, public transport and car parking outside city centers was supplied free, car speed limits were drastically reduced, industrial users of heavy fuel were “invited to reduce” their fuel burn. The struggle against global warming has to continue!

Drilling down, the climate-energy package's original format called for totally impossible rates of replacing “fossil oil fuels”, with renewable liquid hydrocarbon fuels – bioethanol and biodiesel. Due to massive increases of bioethanol fuel production, in Europe, being even more impossible than large increases in biodiesel fuel production – using imported intensively cultivated palm oil from Indonesia and Malaysia needing wide area devastation of tropical rainforest areas – the “diesel solution” was taken as the most feasible “upfront option” for shaving oil consumption.

Already existing pro-diesel policy and programs for increasing the diesel car fleets of the EU member states, based financially on “refinery crack spreads” using heavy and dirty crudes, costing less than lighter sweeter crudes, were bolstered by the Low Carbon rush to cut emissions. The collateral increase – a large increase - in cancer deaths was tucked away from public view.

Official policy and communication on the “dirty deadly diesel” spinoff from “clean low carbon” has been at best confused, and at worst – the majority of official communication – plain and straight lying. In France for example, government spin on the subject following the smog brownout in most major cities in late March, merely recycled the publicity of leading diesel car manufacturers. These claim that “by or before 2020” French diesel cars will be so clean they almost emit no “particules fines” at all. Move along now, there is nothing to see! (Circulez – il n'y a rien a voir).

Death Cross for European Energy

Noted in several other of my articles, and concerning the supposed-heroic EU struggle to “anchor Ukraine to Europe”, the reality is that there is basically no shortage of energy – of any kind – in Europe. Rumors that Ukraine is a critical pivot for European energy have been drastically exaggerated.

In this particular and specific case – Ukraine – the country has about 125 years of its current bloated natural gas consumption in the form of unexploited and ignored – but real – domestic conventional gas reserves. Why it ignores or ignored them, is for historians and political scientists to discuss.

The EU, IMF and US at least in theory, could run an emergency, heavily funded E&P program for Ukraine with the objective of turning it into a net exporter of gas to the rest of Europe - but the likelihood of that is minimal. Much better to practice austerity politics as in Greece, leaving a train wrecked economy behind.
Mass media spin and political grandstanding invites us to swallow the argument that Europe is facing a do-or-die struggle with Putin's Russia for “energy security”. Swallowing and breathing diesel fuel residues in French cities may now be “patriotic”. Paying extreme and unreal prices for electricity – while the supply of electricity declines – will be the New Normal.

Unfortunately (or not) this will do nothing to resolve the death cross facing European energy. Future supply is on a downward track. Prices, including taxes and charges and government grubbing of the wherewithal to provide energy subsidies, are on an upward track. This in fact is a long-term paradigm, with a host of subsidiary and related impacts – or collateral damage. As one simple but not immediately evident impact, European urban development policy and programs now have so many energy question marks hanging over them, that actual hard-edged decisions and real world projects are decreasingly easy to define and execute. For example, the question “Are European city dwellers (over 80% of national member state population in most EU states) willing to go on breathing and swallowing what the UN WHO calls carcinogenic diesel fumes “to protect the climate”, and give importers of Malaysian and Indonesian intensively-cultivated, genetically modified, pesticide and oil-rich “clean green palm oil”, a look-in to a New Market for European biodiesel fuel”?
Maybe they are that stupid but we do not yet know.

A Somber History of Gimmick Thinking

Tracing back to the 1980s  when I was an in-house policy analyst at the EC's Energy Directorate, and well paid, the original version of the European car fleet dieselization urge did not yet have a Low Carbon climate change mitigation handle. It was a straight economic gimmick. Heavy and dirty crudes, although they contain more energy than lighter crudes cost a lot less than them – in the 1980s. This is no longer the case, since heavy-light crude price spreads are small, these days. Heavy crudes like Saudi Heavy are in this specific case a standard 2.92% by weight Sulphur. They also contain a range of heavy metals such as Ni, Cr, V, Mn, Co, Hg and in some cases even Thorium and Uranium! Processing them costs much more than light crudes, but if the heavy crudes are cheaper to buy than light crudes this additional cost can be rationalized. Heavy crudes yield more middle distillates like diesel and heating fuel, so car fleets have to be dieselized to use the refined products.

The economic rationale for heavy crudes and more diesel fuel output shrunk or disappeared by the 1990s, but the Global Warming gimmick was rising, and European consumers were buying diesel cars to sop up the increased availability of heavily-subsidized diesel fuel, noting again that you buy 10% more energy in a litre or gallon of diesel fuel than a litre or gallon of gasoline. This was a classic Sorcerors Apprentice story, for political deciders also facing the problem of the European refining industry which despite massive investments was still producing too much gasoline – and facing tougher environmental standards for its inevitably dirtier, more-polluting heavy crude “pallets”.

The net result is cities polluted with (if you believe the UN WHO's Cancer Research Institute) provenly carcinogenic diesel fuel residues, a loss-making European refining industry, and massive numbers of recently-built, recently-purchased diesel cars in national car fleets of most major EU states. Telling the public they are breathing and swallowing carcinogens “to save the climate”, and-or “reduce their dependence on Putin's oil exports”, is unlikely to be voter-friendly, but we can count on our ruling elite to try this number – as they did in France, in late March 2014.

By Andrew McKillop



March 22, 2014

Mercenary Geologist Mickey Fulp - Video Content

Published on Saturday March 22 2014 (AEST) 
At this year's Prospectors and Developers Association Conference (PDAC), Investing News Network
 spoke with Mercenary Geologist, Mickey Fulp, who is hopefully optimistic in today's resource market.



March 12, 2014

Japan To Restart Two Nuclear Reactors

Published on Wednesday March 12 2014 (AEST)


Japan’s Nuclear Regulation Authority on Wednesday was to complete the review of countermeasures against tsunamis and earthquakes at the two units of the Sendai Nuclear Power Plant in Kagoshima prefecture, 1,100 km south-west of Tokyo, the Nikkei business daily reported. 

The regulators will then discuss final checks in a regular meeting on Thursday, marking the final stages of the checks, the Nikkei said. 

The reactors are expected to be restarted in July or later, the Nikkei report said.

The regulators seemed to be satisfied with the headway made on countermeasures against a quake at the plant run by Kyushu Electric Power Co, the daily said. 

New regulatory standards took effect in July, which regulators say reflect lessons learned from Japan’s worst nuclear accident at the Fukushima Daiichi Nuclear Power Station. The standards require significant improvements to quake and tsunami preparation in the quake-prone country.

The Fukushima plant suffered meltdowns at three of its six reactors after it was hit by the March 2011 quake and tsunami. 

On Monday, Prime Minister Shinzo Abe told a news conference that the country would restart nuclear reactors that have cleared updated regulatory standards. 

All of Japan’s 48 reactors have been out of service amid public fears of nuclear power following the Fukushima disaster.



March 6, 2014

U.S. Uranium Miners Make Contrarian Bet By Ramping Up Output

Published on Thursday March 06 2014 (AEST

Sinking prices for uranium in the past three years have caused many of the world's biggest uranium miners to scale back production plans or defer projects, but two small U.S. producers are bucking the trend by planning to increase output this year and investors have sent their share prices surging as a result.

Uranium prices are hovering near eight-year lows because an earthquake and tsunami struck Japan in March 2011, crippling the Fukushima-Daiichi atomic power plant, and leading to the shutdown of nearly all reactors in the country, which previously relied on nuclear sources for 30 percent of its power. The disaster crimped Japanese demand for uranium and fueled fears about a backlash to nuclear power.

Last month, Japan included nuclear power in its draft energy plan, easing doubts about the industry and boosting uranium company shares.

The spot uranium price, however, remains weak and companies scaled back production and halted expansion plans that curbed potential output by 20 million to 25 million lbs (9 million to 11.3 million kg), according to Edison Investment Research. That amounts to 16 percent of estimated global production last year.
U.S.-based UR-Energy and Uranerz Energy Corp are going in the other direction. They are poised to ramp up production this year, helped by low costs and long-term contracts at prices well above current spot prices.

Utilities locked in prices with the companies to secure near-term supplies, but they did so when prices were higher than now.

The two miners may be making a contrarian move at just the right time. While Japanese demand remains a question mark, it is rising elsewhere as 70 reactors are under construction globally, part of a net increase of 93 expected over the next 10 years, and the most since the late 1970s, according to Canadian uranium producer Cameco Corp . Last year, there were 433 operating nuclear reactors worldwide.

"There's a lot of nuclear development," said Francis McGuire, chief executive officer of Major Drilling Group International Inc, which offers drilling services to the mining industry. "We don't see it in North America so we close our eyes to it, but both in China and Eastern Europe, nuclear still is a viable option, and you've got to supply those generating stations."

Uranium is a radioactive metal used to fuel the fission chain reaction in nuclear reactors, which generates heat that is turned into electricity.

Uranerz' five-year agreements with U.S. utilities such as Exelon Corp price uranium around $50 or more per lb, against the current $35.50 spot price, said Paul Goranson, president and chief operating officer at Uranerz, who was talking on the sidelines of the Prospectors and Developers Association of Canada (PDAC) convention in Toronto.

"We've got contracts that provide us the ability to have good cash flow," Goranson said this week.
Uranerz hopes to start production this quarter, and is awaiting regulatory approvals for its mine in Nichols Ranch, Wyoming. The company is aiming to produce between 350,000 and 500,000 lbs in 2014, Goranson said.

Colorado-based UR-Energy began production at its Lost Creek, Wyoming, mine in August and is already operating at close to nameplate capacity of 1 million lbs on an annualized basis.
UR-Energy also has six long-term contracts with four U.S. utilities.
Uranerz stock price has more than doubled since mid-November, closing at C$2.03 in Toronto on Tuesday, while UR-Energy shares have nearly doubled to C$2.06. By comparison, shares of Cameco, the world's third-largest uranium miner, have gained about one-third.

The United States produces more nuclear-powered electricity than any other country, but it relies heavily on imports that are more costly than domestic supplies.

"I don't have to go marketing uranium all around the world when there's a great market in my backyard," said UR-Energy Chief Executive Officer Wayne Heili in an interview.
In situ mines, where producers like Uranerz and UR-Energy remove ore by injecting a solution into wells while leaving the rock in place, generally cost less to operate and come with lower environmental liabilities than conventional underground mines, said Dundee Capital Markets analyst David Talbot.
In situ uranium mining occurs in the United States, Kazakhstan, Australia and Uzbekistan, making up more than one-third of uranium production.

Not all low-cost producers can afford the risk of raising output in a slumping market. Texas-based Uranium Energy Corp cut production in its last fiscal year to 250,000 lbs because it did not have long-term sales contracts to hedge the risk of lower spot prices.

UEC plans to eventually boost production to 2 million lbs, but is not offering guidance on how soon, said Chief Executive Officer Amir Adnani.

"Clearly we don't predict and can't predict short-term uranium prices," he said. "The timing could be two to three years. It could be four to five years."

Cameco is considering eventual expansion of its U.S. in situ mines, but their cost of production is actually higher than its high-grade Canadian underground mines because U.S. volumes are much lower, said Ken Seitz, Cameco's chief commercial officer, in an interview.

However, it is not easy to expand uranium mining in the United States.

"The U.S. from a regulatory point of view is really complex at the state level, the federal level and the municipal level," Seitz said. "Could we look at expanding in the future? Yes, we could, but it will take time because of that very complex regulatory environment."

For example, Cameco began the environmental impact statement process with the U.S. Bureau of Land Management for its Gas Hills in situ project in central Wyoming in 2009. A favorable decision was just issued in February 2014, but plans for construction are now on hold pending better market conditions.


The uranium mining industry also faces several risks in the long run, including a large uranium inventory held by Japanese utilities that could overhang the market if reactors restart at a slower-than-expected pace, according to a report last week by Edison.
But encouraging signs are emerging after three years of mostly bad news for the sector.

UR-Energy is already looking to further boost output. Its acquisition of U.S.-based Pathfinder Mines Corp last year includes mine projects that were shut down in the 1990s due to low uranium prices. They should give the company a fast track to boosting production by another 10 million lbs starting in about three years, Heili said.

By then, many analysts predict the world will be approaching a steep uranium supply deficit. Cameco sees world uranium consumption growing to 240 million lbs per year by 2023, while production falls to 120 million lbs.

"If everyone's projections are right, then we have excellent timing," Heili said. (Additional reporting by Allison Martell in Toronto; Editing by Jeffrey Hodgson, Martin Howell and Lisa Shumaker)