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Apr. 15, 2015 03:45PM PST
Cameco announced Wednesday that it has inked a deal with the Department of Atomic Energy of India. The company will supply 7.1 million pounds of uranium concentrate to India through 2020.
The agreement is garnering plenty of attention as it represents the end of a lengthy dispute over uranium supply between Canada and India. Canada banned uranium and nuclear hardware exports to India in the 1970s, and Wednesday’s deal has been pegged as a vote of confidence in India by both parties, according to the Financial Post. ”Canada is providing uranium to India as a mark of its trust and confidence in India,” Indian Prime Minister Narendra Modi is quoted as saying.
The deal comes as India moves to ramp up its clean energy strategy. Currently the world’s second-fastest-growing market for nuclear fuel behind China, India operates 21 nuclear reactors that meet roughly 3 percent of the country’s electrical needs. However, another six reactors are set to come online by 2017, and by 2032, the country expects to up its nuclear capacity from 6,000 megawatts to 45,000 megawatts.
“This contract opens the door to a dynamic and expanding uranium market,” said Cameco’s president and CEO, Tim Gitzel, in a company release Wednesday. “Much of the long-term growth we see coming in our industry will happen in India and this emerging market is key to our strategy.”
Rob Chang of Cantor Fitzgerald certainly agrees with that statement, and in a research note calls the agreement a “landmark deal” for Cameco. ”The long-term supply agreement will provide revenue security at profitable prices for the company that could underpin its financial position, possible acquisitions, or even a dividend increase,” he states.
In terms of demand growth from the country, research from Cantor Fitzgerald suggests that U3O8 demand from India could increase from 4.1 million pounds per year to 6 million once the country’s next six reactors come online. By 2023, that number could grow to as much as 20 million pounds if 53 planned and proposed reactors come online.
Furthermore, Chang notes that the main impact for the company is the securing of a long-term supply agreement, pointing out that “[t]here have been fewer transactions of this variety over the past few years as utilities have opted for shorter contracts or spot market purchases to take advantage of the lower prices in the current excess inventory environment.”
While Chang states in his note that Cameco’s deal with India will use market-related pricing, he adds that the current long-term price referenced by industry publications is US$49 per pound, much higher than the current spot price of US$39 per pound.
The deal could potentially have implications for the broader uranium market as well. Chang notes that Cameco is “certainly one of the preferred sources of supply,” meaning that most of the company’s yearly output is often largely spoken for. With India taking another 7 million pounds out of the mix for the next five years, some customers may need to look elsewhere, meaning that there could be potential for “a bit of a bidding war” to get uranium from other safe sources. “It could potentially be a bit of a tailwind for prices,” suggested Chang.
David Talbot of Dundee Securities also believes that the news is important, suggesting in his own research note that the news could mean a pick up in term contracting. That “could help kick start the market … as end users start to worry about securing supply,” he states. Certainly, uranium investors will be keeping a close watch for any changes.
Beyond that, Chang suggests that the deal, along with others in the future, “could perhaps underpin acquisitions of current and up-and-coming world-class projects” such as those owned by Denison Mines (TSX:DML), Fission Uranium (TSX:FCU) and NexGen Energy (TSXV:NXE).
Not surprisingly, both analysts are positive on the company overall. Cantor has rated the stock a “buy” with a one-year price target of $26.15, while Dundee has also given Cameco a “buy” rating and a $23.50 target price.
Cameco’s share price was up 5.69 percent, or $1.08, to close at $20.07 on Wednesday, with over 2 million shares of the company trading hands.
Securities Disclosure: I, Teresa Matich, hold no direct investment in any of the companies mentioned in this article.
Related reading:
Cameco’s Uranium Sales Deal with India in Final Stages
Cameco CEO Talks Uranium Market
As Rio Tinto Mulls Uranium Trade With India, What’s Next For Companies Down Under?
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Generation Uranium offers investors high-leverage exposure to a potential major discovery in Canada’s underexplored and resource-rich Thelon Basin, led by a management team with a proven track record of securing high-value exits.
Overview
Generation Uranium (CSE:GEN, OTCQB:GENR, FRA:W85) is a Canadian exploration company focused on wealth creation through discovery within the uranium sector. The company’s primary strategy is to build a high-caliber exploration team that can rapidly test and drill high-potential targets, de-risking projects for potential takeover by larger producers. Currently centered in the prolific Thelon and Angikuni Basins of Nunavut, the company is also actively evaluating additional project acquisitions in the Athabasca Basin to expand its portfolio.
The company is led by a veteran management team with nearly 30 years of experience in mineral development. CEO Michael Collins has a significant track record of building and exiting public companies, including the co-founding of Bluerock Resources, a conventional uranium producer during the 2000-2008 cycle. This expertise is paired with a focused business model that leverages modern geophysical targeting to accelerate exploration timelines and reduce costs, ensuring the company can deliver results quickly in a bullish uranium market.
Company Highlights
- Strategic Location in a Premier Uranium District: The flagship Yath Project is located in Nunavut’s Thelon Basin, contiguous to ATHA Energy’s Angilak Project, which hosts the high-grade Lac 50 deposit.
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Key Project
Yath Project - Nunavut, Canada
The Yath Project is Generation Uranium’s flagship project. This 100 percent owned property covers about 120 square kilometers within the underexplored Thelon Basin in Nunavut, Canada. The project is located where the Yathkyed and Angikuni sub-basins meet, which is a region known globally for high-grade uranium potential. It sits directly along the same trend as the Angilak Project owned by ATHA Energy (TSXV:SASK, OTCQB:SASFK, FWB:XSU.F), which contains the Lac 50 deposit, one of the highest-grade uranium resources found outside of the Athabasca Basin with a historical mineral resource estimate of 43.3M lbs at an average grade of 0.69 percent U3O8.
The Yath Project is contiguous to the Lac 50 trend and is crossed by several regional faults and basin boundaries. Past exploration work has already identified high priority targets, while surface sampling in the area has produced uranium grades from boulders, with some testing at 9.81 percent, 3.95 percent, and 2.14 percent U3O8.
The company has commenced its initial field program at the site, set to define and rank drill targets. Historic showings will be combined with new anomalies from the MMT geophysics survey, preparing the project for an anticipated drill permit.
Management Team
Michael Collins - CEO & Director
Michael Collins is a professional geoscientist with nearly 30 years of experience in mineral exploration. He has co-founded several public companies, including Exploits Discovery, Prime Mining (acquired in 2025), and Nuclear Fuels (merged with Premier American Uranium in 2025). He is also currently a director of First Atlantic Nickel.
Christoph Bruening - Director
Christoph Bruening is the founder and managing partner of Value Relations GmbH, a full-service investor relations and public relations agency in Frankfurt with over 25 years of excellence, focusing on mining, exploration, biotech and health care. In addition, he has listed over 600 companies on the Frankfurt Stock Exchange and is a speaker and author of several publications, including on rare earths and uranium.
Dallas Miller - Director
Dallas Miller has been working within the international mining industry for over 15 years, working with BHP and Santos Ltd. He has experience on the ground from an operational standpoint, as well as being an integral part of raising millions of dollars in capital funding for both private and public companies in recent years.
Roger Leschuk - VP Corporate Development
Roger Leschuk has been in corporate management for over two decades, with the past 15 years dedicated to corporate development and investor relations. He has experience participating in and assisting with mergers and acquisitions, and was an investment advisor for various services such as stocks, mutual funds and tax-sheltered investments. He is a Chartered Investment Manager and a Fellow of the Canadian Securities Institute.
Monty Sutton - CFO
Monty Sutton brings over 35 years of experience in public markets and corporate governance. He previously served as CFO for Nuclear Fuels from its IPO through its acquisition.
