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One of the most anticipated catalysts for the uranium market came to pass this week; however, the result was not exactly what the uranium market had been hoping for.
Of the many factors keeping the uranium market weak, oversupply is a top contender. As Ray Goldie of Salman Partners explained to BNN‘s Andrew Bell, despite being in a deficit, “inventories are sufficient that the consumers of uranium who produce electricity aren’t concerned.” Goldie went on to add that “[e]very year there is a mating season where the producers and the consumers of uranium get together to decide on contracts. One is in April — that’s past — and nothing happened this year because there is too much uranium to engage in much mating.”
The expectation is that when the second “mating season” comes around in the fall, the uranium deficit will have finally caught up to the market, and prices will reflect that accordingly. That once again reinforces uranium bulls’ steadfast optimism in the face of today’s weak market. For his part, Goldie speculates that a turnaround will come “as early as September.”
No nuclear restart … for now
One of the most anticipated catalysts for the uranium market came to pass this week; however, the result was not exactly what the uranium market had been hoping for.
A Japanese court ruled against Kansai Electric Power (TSE:9503) carrying out a restart plan for two idled nuclear reactors, claiming that they are potentially vulnerable to earthquakes. According to the Financial Times, the decision by the judge in Fukui prefecture “could disrupt an already complicated and politically charged effort to restart some of the 50 Japanese reactors that have been shut over safety concerns since the Fukushima disaster.”
The rare victory for anti-nuclear proponents may be a blow to government efforts to end a nationwide nuclear freeze, but it does not block a restart, as according to Japanese law, the ruling is not final. As Reuters states, ”the district court decision does not legally block the restart of the reactors, bringing them back online in the face of such a judicial verdict could open the regulator and the government to criticism.”
That being said, the “ruling may not remain in force for long,” as per the Financial Times, because “[t]he regional high court in Osaka, whose jurisdiction covers Fukui, has already rejected several similar suits brought by citizens’ groups.” The company plans to appeal the ruling.
As far as nuclear power is concerned, Japan’s population remains skeptical and fairly divided, with opposition running about two-to-one based on recent polls. As Reuters notes, a March survey shows that roughly 80 percent of the people in Japan would prefer to see a gradual move away from atomic power.
Summer is coming to Japan
As Japan approaches another summer without nuclear power, companies like Kansai Electric Power are already cautioning that they will have “nothing in reserve when seasonal demand peaks.”
“We have managed to secure the minimum necessary power surplus thanks to the support of other utilities companies,” Jiro Kagawa, vice president of Kansai Electric Power, told South China Morning Post, adding “[b]ut we have virtually no extra power supply.”
While the country has already seen three summers without nuclear power, the fear is that “fading public consciousness” will result in people not curbing their power consumption. Additionally, Japan’s national economy has started to pick up, meaning that demand from the industrial sector could possibly see a boost.
As South China Morning Post explains, previously, “the government has set numerical targets for companies to reduce their energy consumption in order to avoid blackouts.” However, Tetsuo Kotani, senior fellow at the Japan Institute of International Affairs, believes that “the government fears that setting limits on energy consumption will stifle the nascent economic recovery and put Japanese firms behind their overseas competitors.”
Company news
This week, Cameco( TSX:CCO,NYSE:CCJ) announced that it has pulled back its applications to license the Millenium mine in Northern Saskatchewan. Citing a weak market, the uranium giant has opted to wait out current market conditions instead of moving ahead with the project, which is located 36 kilometers north of Key Lake. Cameco was granted approval for development from Saskatchewan’s environment minister in December.
According the the Canadian Nuclear Safety Commission, Cameco can still apply for a new license application at a later date.
On the junior side, Kivalliq Energy (TSXV:KIV) has teamed up with Westham Resources (TSXV:WHR.P) for continued exploration at the Genesis property in Northeastern Saskatchewan. While the transaction between the two companies is still subject to certain conditions, Westham can acquire an 85-percent interest in Genesis in exchange for: 20 percent of the issued and outstanding shares of Westham on a post-transaction/post-financing basis, C$1 million in cash payments and C$5 million in exploration expenditures over four years.
Per Kivalliq’s latest press release, once Westham has gained the 85 percent of Genesis, Kivalliq’s remaining 15 percent of the project will be carried out through the bankable feasibility study and a recommendation from the board of Westham to move forward with commercial production. Kivalliq will be the project’s operator for the first two years.
Wyoming’s newest uranium producer, Uranerz (TSX:URZ,NYSEMKT:URZ), submitted its license application for its third Powder River Basin mining unit, Jane Dough, to the US Nuclear Regulatory Commission. The Jane Dough permit area is contiguous and immediately south of the producing Nichols Ranch.
“Now that the Nichols Ranch facility is fully operational, we see the Jane Dough unit as being the next project to be developed. Given that this application is being filed as an amendment to the existing Nichols Ranch ISR Uranium Project license, we expect to see considerable time savings in the NRC review and approval process,” Paul Goranson, president and chief operating officer, said in a company statement.
Results from sediment samples tested at Alpha Exploration‘s (TSXV:AEX) Carpenter Lake project were encouraging this week. According to the press release, lake sediment results assisted in determining whether radon anomalies may be sourced from the overburden or bedrock directly beneath, which will be a valuable tool in developing future exploration programs on the property. The company plans to continue with a summer exploration program; it will include a detailed high-resolution airborne gamma radiation spectrometric survey.
Uranium Energy (NYSEMKT:UEC) picked up the Longhorn project in Central Live Oaks County, Texas, which is on trend between two former US Steel production areas. The ISR project has an existing aquifer exemption that provides the company with three big advantages:
- It eliminates a major permitting hurdle.
- It means no amendments are necessary as the existing aquifer exemption already includes the mining zone.
- The aquifer exemption is big enough to allow additional expansion without amending the boundary.
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.