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 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.

Visit my other site Australian Uranium Investing

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.

Visit my other site Australian Uranium Investing

Supply Crunch Signals "URANIUM BOOM"

Published on Wednesday Oct 20 2010

GOLD is justifiably hogging investors' attention at the moment, but the uranium market is looking interesting, judging by presentations from uranium producers at recent investment conferences.

Executives such as Paladin Resources CEO John Borshoff (presenting at the Africa Down Under conference in Perth, Australia) and Denison Mines CEO Ron Hochstein (addressing the Modern Energy Forum in Denver, in the United States) reckon the uranium price is about to start moving because of a looming supply crunch.

There are two key factors they maintain will trigger that crunch. While there’s no shortage of the metal worldwide, there’s been a dearth of successful new uranium mining companies able to supply it. That’s due to under-investment in the sector, because the uranium price has been so low for so long while many of the companies that have entered the business have made a mess of it.

Borshoff loves to rub it in on that point, emphasising how Paladin has successfully developed two mines over the past five years – Langer Heinrich (in Namibia) and Kayelekera (in Malawi) – while a string of its competitors have either failed outright or are performing way below expectation.

South Africa provides two classic examples.
Uranium One failed outright with the development of the Dominion Mine, against which it took a $1,8bn impairment charge when it shut it down last year. And First Uranium has run way behind on its production schedules at Ezulwini and its Mine Waste Solutions and is still in business mainly because it was bailed out financially by shareholder Simmer & Jack Mines.

“This is a highly complicated metal to produce. People just don’t seem to understand the complexities of it,” says Borshoff.

But the crunch factor is probably going to be the end of the highly enriched uranium (HEU) deal through which uranium has been provided to the nuclear power generating industry from decommissioned Russian nuclear weapons.

That secondary supply is what has kept the uranium price depressed for the past 20 years, bar the short-lived spike in 2007/2008. Hochstein says that deal ends in 2013 and it’s not going to be renewed, which will leave a large gap in the market.

Hochstein reckons there are 440 nuclear reactors currently operating that require 184m lbs of uranium oxide (U308) to keep them running. World supply of newly mined uranium oxide currently sits at around 130m lbs/year.

Article Continues .....................
Link Provided: www.miningmx.com/news/energy/Supply-crunch-signals...

Visit my other site Australian Uranium Investing

Northern Territory Govt Backflips On Uranium Mine

Published on Wednesday Sept 29 2010

The Northern Territory government has withdrawn its support for the development of a uranium mine near Alice Springs two weeks out from a local by-election.


Environmental groups have welcomed the government's opposition to the uranium mine at Angela Pamela, about 20km south of Alice Springs, but question the timing of the announcement.


A by-election will be held in the reasonably safe Country Liberal Alice Springs seat of Araluen on October 9, following the retirement of opposition deputy leader Jodeen Carney.


NT chief minister Paul Henderson said the decision to oppose the mine, having previously granted an exploration licence to Cameco, was due to strong community opposition to the project.


'Labor's Araluen candidate, Adam Findlay, has also been receiving this feedback very strongly while doorknocking in the electorate,' Mr Henderson said in a statement released on Tuesday.


'We also acknowledge Alice Springs is a tourism centre and a mine in such close proximity to the town has the very real potential to adversely affect the tourism market and the Alice Springs economy.


'I reiterate this decision does not mean the Northern Territory Government is opposed to the establishment of new uranium mines elsewhere in the Territory.'


Mr Henderson acknowledged that final approval of a mining lease at Angela Pamela was the responsibility of the federal government, and that the commonwealth had the power to override any decision made by the territory government.


The Australian Conservation Foundation's Dave Sweeney told AAP there was nothing like a bi-election to make the federal and NT governments listen to the concerns of the community.


But he welcomed the announcement, adding that the NT government's change of heart would at least be a 'significant procedural and political road block'.


Australian Greens uranium spokesman Scott Ludlam urged the federal government not to override the wishes of the NT.


'I sincerely hope the Country Liberals will make the sensible decision to support the wishes of the Alice Springs community and join in opposing the mine,' Senator Ludlam said in a statement.

More Production, Resources For Australia's Paladin And Alliance Resources

Paladin Energy has enjoyed record quarterly uranium production and sales despite slower than expected progress at its Malawi mine. Meanwhile, Alliance Resources has confirmed a 16% resource increase at its Four Mile uranium project in South Australia.

Kayelekera (Image: Paladin)




Paladin's quarterly report for the final quarter of 2009 boasted record quarterly production of 987,310 lb U3O8 (380 tU) from its two operating mines in Africa. Most of this - 841,995 lb U3O8 (324 tU) - came from the Langer Heinrich mine in Namibia, which reached the anticipated production rates for stage 2 of the company's long-term four-stage expansion plan during the quarter.

The Kayelekera mine in Malawi, which started production in April 2009, produced a total of 145,315 lb U3O8 (56 tU) for the quarter. Ramp-up at the mine has been slower than anticipated because of problems encountered in the processing plant: specifically, the slow movement of uranium-loaded resin to elution, which has restricted the plant feed capacity. A secondary wash screening facility is to be installed in March or April, but in the meantime, improvements to the existing screening facility mean production should be much improved from the end of January.

The Australian company also reported record quarterly sales of 1.095 million lb U3O8 (421 tU) at an average price of $56.54/lb U3O8 and says it has signed a "substantial long term contract" with a major Asian utility covering the supply of over 4 million lb U3O8 (1539 tU), commencing in 2012. The company is also planning a trial shipment of uranium to China to "test and demonstrate the efficiency of logistics from Africa to Chinese conversion facilities."

More resources at Four Mile

Alliance Resources has announced a 16% increase to its mineral resource estimate for the Four Mile uranium project in South Australia. The resource now stands at some 71 million lb U3O8 (27,136 tU) at an average ore grade of 0.33%. The increase comes from an updated estimate for resources at the Four Mile West deposit, which now stands at 42 million lb U3O8 (16,112 tU) at an average 0.33% grade. The resource estimates include indicated and inferred resources at the Four Mile West deposit and inferred resources at Four Mile East, as classified under the JORC code (one of two standards used internationally in classifying uranium resources: it stands for Joint Ore Reserves Committee Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves).

Four Mile is being developed as an in situ recovery (ISR) project through a joint venture of Alliance Resources (25%) and Quasar Resources (75%), with plans for a satellite ion exchange plant to carry out initial uranium recovery at Four Mile. The uranium-loaded ion exchange resin would then be trucked to Australia's only existing operational ISR uranium project, the nearby Beverley plant, for further processing.

All the resource estimates for Four Mile up to now have been made in anticipation of ISR as the only mining method, but Alliance reports that additional mineralization identified above or within about 20 metres of the water table in the western area of the Four Mile West deposit could potentially add up to 30% to the resource if proved recoverable by ISR or mineable by other means. According to Alliance, there is significant potential for further expansion of the resource base with other areas of mineralization awaiting further evaluation and drilling. Commenting on the latest announcement, Alliance Resources managing director Patrick Mutz described Four Mile as a "substantive uranium deposit which is still open in several directions."

RBS Equities Australia Say Cameco May Bid For Australia's Paladin Energy

Jan. 19 (Bloomberg) -- Cameco Corp., the world’s second-largest uranium producer, may be more interested in acquiring Paladin Energy Ltd. after the Australian company fell 15 percent in three months, RBS Equities Australia said.

“I think Cameco would certainly be looking at Paladin,” RBS analyst Lyndon Fagan said today. “Paladin’s share price has been underperforming recently because of failing to deliver on production targets, and the recent weakness could provide an opportunity for the likes of Cameco.”

The Australian uranium producer on Oct. 29 cut its production forecast after delays to an upgrade at the Langer Heinrich mine in Namibia and the replacement of equipment at the Kayelekera venture in Malawi. Perth-based Paladin estimated production of 5.6 million pounds to 6.1 million pounds for the year ending June 30, down from a previous projection of 6.6 million pounds.

Cameco declined to comment on a potential bid for Paladin. “As one of the world’s leading uranium producers, we are often associated with speculation about various business deals,” Lyle Krahn, a Cameco spokesman, said in e-mailed comments today.

Paladin Managing Director John Borshoff didn’t immediately return a phone call seeking comment.

The Australian uranium producer’s shares have fallen 15 percent from A$4.80 on Oct. 19 to close at A$4.07 yesterday, compared with a gain of 2.5 percent for the benchmark S&P/ASX 200 Index. Paladin traded at A$4.05 in Sydney, down 0.5 percent, at 1:35 p.m. local time, valuing the company at about A$2.9 billion ($2.7 billion).

Saskatoon, Saskatchewan-based Cameco, should it be interested in acquiring Paladin, would probably need to pay a premium of more than 30 percent to the Australian company’s share price, Fagan said by telephone in Sydney.

Speculation Not New

Discussion of a potential Cameco-Paladin transaction isn’t new. JPMorgan Chase & Co. said in March 2009 that Paladin may be an attractive target for producers such as Cameco. Speculation that Cameco may buy Paladin is increasing, and a takeover would cost the Canadian company about A$4 billion, the Australian Financial Review said in its Street Talk column today.

Paladin completed a share sale to institutional investors, raising A$429 million, the company said in September. Borshoff said last year the company may grow beyond Africa and Australia, while expanding its project in Namibia. Paladin will consider acquisitions of its own, he said in October.

Cameco, which plans to double annual uranium output from its existing operations by 2018, will consider acquisitions of mining assets and creating joint ventures with customers, Chief Executive Officer Jerry Grandey said in November. Paladin Energy is among the companies Cameco considers attractive, he said.

Even so, Grandey said: “We’ve always been challenged by the valuation.” Paladin shares rose 69 percent in 2009 to finish the year at A$4.18.

Cameco agreed to sell its stake in Centerra Gold Inc. for about C$872 million ($850 million), the company said last month.

The Canadian producer currently has “substantial financial capacity for acquisitions,” RBC Capital Markets analyst Fraser Phillips in Toronto wrote in a report yesterday.

By James Paton Jan. 19 (Bloomberg)

Paladin Energy Now On Cameco's Radar

Will Cameco Move Up The Nuclear Fuel Chain?

Wednesday, January 6, 2010

Andrew Willis

Cameco has $2-billion burning a hole in its pocket, and BMO Nesbitt Burns has an interesting take on where one of the world's largest uranium producers will spend its cash.

Cameco is flush after selling its stake in Centerra Gold, and is expected to do something with this capital, as earnings will drop by 20 per cent without Centerra’s contribution. Most analysts have rolled out a list of junior uranium plays as potential acquisitions, with Paladin Energy considered the most attractive target, and junior miner Berkeley Resources another possible purchase.

However, BMO Nesbitt Burns mining analyst Edward Sterck surveyed the landscape, and highlighted a potential deal with the cash-strapped British goverment.

Cameco could move up the nuclear fuel chain by acquiring the U.K. government’s one-third stake in URENCO group, which has four plants that enrich uranium for use in reactors. The British-based company’s web site explains that this is the highest value-added stage of the fuel supply chain.

After crunching the numbers. Mr. Sterck said: “acquiring a one-third stake in URENCO for $3-billion would dilute Cameco’s net present value per share by 10 per cent but increase earnings by over 40 per cent by 2014. A stake in URENCO looks like the most accretive transaction, but Paladin is also a strong candidate from an earnings perspective.”

When it comes to Paladin, BMO Nesbitt Burns said a takeover would need to be pitched at a 40 per cent premium to where the stock is now changing hands, “resulting in a 27 per cent dilution to Cameco’s net present value per share, but increasing earnings per share by as much as 30 per cent by 2014.”

Paladin currently boasts a $2.9-billion market capitalization.

Uranium Producer Paladin Energy Resolves Dispute Over Shares With Areva

PERTH, Australia — Paladin Energy Ltd. (TSX:PDN), an Australian uranium producer that's listed on the Toronto Stock Exchange, said Thursday it has resolved a two-year-long dispute between its subsidiary Summit Resources Ltd. and Areva NC Pty Ltd.

Paladin announced Thursday it has reached a settlement that resolves the dispute with Areva, "and thereby paves the way for Paladin and Areva work co-operatively as shareholders of Summit Resources Ltd."

In April 2007, Summit entered into a strategic alliance with Areva, a subsidiary of the French nuclear enterprise. Under the alliance, Areva would subscribe for shares in Summit, giving it marketing rights over two-thirds of Summit's uranium production from its Australian projects.

Later that month, the directors of Summit recommended acceptance of a takeover offer by Paladin. At the close of the offer, Areva held 10.5 per cent of the shares in Summit and Paladin held 82 per cent.

In August of that year, Summit announced it agreed to settle a legal dispute with Resolute Ltd. and Mt Isa Uranium Pty Ltd.

Areva applied to intervene in the proceedings, seeking to restrain Summit and the defendants from making the agreement binding.

Its application to intervene was heard this summer and a judgement has yet to be delivered.

On Oct. 16, Summit entered into a conditional agreement with Areva, Resolute and Paladin without any party admitting liability to another.

If the settlement agreement becomes unconditional by the court, Areva's application to intervene will be dismissed, the strategic alliance will end, and Summit will pay A$4.5 million to Areva.

Shares in Paladin were trading down less that a per cent at C$4.03 on the Toronto Stock Exchange Tuesday.

Toro slams Queensland Government Over Uranium Mining Ban

TORO Energy has attacked the Queensland Government for its continued rejection of uranium mining in the sunshine state.

Managing director Greg Hall told the Brisbane Mining Conference today that the government’s list of reasons for continuing its ban on uranium mining didn’t stand up.

The Queensland Labor government has continually said it has no plans to lift its ban on uranium mining.

“There have been multiple reasons why the Queensland Government has decided that uranium mining is not suitable for this state,” he said.

“It started sometime ago, with the government saying that it didn’t want competition for coal and there was an expensive report done that proved that uranium was not competition for coal."

Mr Hall added that another concern was competition for funds during the global financial crisis, which he said had not been an issue as many uranium companies had recently raised capital.

“The people of Queensland have to rethink why is the government against uranium mining?” he said.

“Is it a throw back to old 1970s rhetoric or is it something that is genuinely there.”

Western Australia is now full steam ahead with uranium activity after Premier Colin Barnett’s Liberal party lifted the ban on mining the yellowcake last year.

South Australia, with BHP's massive Olympic Dam mine and the Northern Territory, with ERA's Ranger mine, are both pro-uranium states. Victoria and NSW have blanket bans on both exploring and mining uranium.

Geological survey of Western Australia executive director Tim Griffin said the industry got excited when Barnett won government and lifted the uranium ban.

“There is a lot of new work going on in Western Australia on the exploration side, but more particularly, in trying to get a mine up and running in the next fours years and the industry is confident it can do that,” he said.

“The government is definitely supporting that target and focussed on trying to make the changes to allow that to happen.”

________________________________



Paladin Lowers Production Guidance
PALADIN ENERGY (PDN)

Paladin Energy has lowered its production guidance for 2009/10 as the ramp up of its two uranium mines in Namibia and Malawi was slower than anticipated.

In its production report released today, the miner said production reached 744,188 pounds of uranium in the September quarter for both the Langer Heinrich mine in Namibia and the Kayelekera operation in Malawi.

Despite the slight production increase on the previous quarter (727,716lbs), Paladin said both mines, separately, had not achieved production targets.

For Langer Heinrich, a number of interruptions from the Stage 2 expansion operation caused production to be lower than the previous quarter at 654,516lbs of uranium oxide.

Sales from Langer Heinrich reached $US38.8 million from the sale of 703,000lbs of uranium oxide at $US54.48 for each pound.

A slower than expected ramp-up in July and August hampered production at Kayelekera, which produced 89,672lbs for the quarter.

Paladin said the September month production results improved, and the upward trend should continue towards the anticipated nameplate production rates in the March 2010 quarter.

Paladin is aiming for a throughput rate of between 2.2mlbs and 2.6mlbs for Kayelekera.

"Langer Heinrich and Kayelekera continued ramp-up activities during the quarter and, although ramp up was slower than anticipated, results continue to trend positively," Paladin said.

"Overall, considerable progress has been made towards removing identified production bottlenecks and achieving nameplate production levels as evidenced by the recent Langer Heinrich production figures.

"Previous guidance forecasting annual production rates for Paladin had been based on a faster ramp up of production than has been realised to date.

"Significant progress has been made during the quarter and management is confident the main delays have been absorbed into this period."

Paladin added that as Kayelekera is a new mine, production is more difficult to forecast.

As a result of the slower than anticipated ramp-up, Paladin has forecast a production range of 5.6mlbs to 6.1mlbs, down from the previous guidance of 6.6mlbs.