The Conversation (0)
Nov. 01, 2012 03:30AM PST
China has reduced its 2015 nuclear energy capacity target from 50 gigawatts to 40 gigawatts — yet the Asian nation still needs to more than triple its current installed capacity of 12.54 gigawatts to meet that target.
The uranium spot price shed another 50 cents, TradeTech reported, “primarily driven by a lack of buying interest.” The bleak short-term outlook continues, with sellers being forced to accept lower prices in a market dominated by well-supplied buyers content to sit on the sidelines and wait for prices to stabilize.
The news that China has lifted its ban on new nuclear power stations should have lent support to an optimistic long-term outlook. However, the decree only pertains to nuclear plants in coastal areas, and China’s State Council has said the country has reduced its 2015 nuclear energy capacity target from 50 to 40 gigawatts — “[leaving] the market feeling less optimistic about the potential for a surge in near-term uranium demand from China,” commented TradeTech.
Yet China would still need to more than triple its current installed capacity of 12.54 gigawatts to meet that target. And the number of nuclear reactors under construction near coastal areas is 27, according to the World Nuclear Association.
India is also keen to expand its civilian nuclear power program, and Australia’s pro-mining government is making a strong push to supply that expansion with uranium mined in Australia. Last week, Queensland, under pressure from the Federal Labor government, lifted a 23-year ban on uranium mining in the state. The land Down Under boasts 40 percent of global known uranium reserves.
Company news
Last week, Paladin Energy (TSX:PDN;ASX:PDN) announced that Électricité de France (EdF), France’s main electricity generation and distribution company and the world’s largest nuclear utility, is the previously-undisclosed utility that entered into a long-term offtake agreement with the uranium miner. EdF, which manages 58 nuclear power plants in France, has agreed to a deal that includes a prepayment of $200 million by early next year and the delivery of 13.73 million pounds of yellowcake over six years, starting in 2019. Paladin first announced the deal in August.
On Wednesday, shares of Paladin were trading at $1.19 on the TSX.
Also last week, Strathmore Minerals (TSX:STM;OTCQX:STHJF) announced a favorable preliminary economic assessment (PEA) as well as an updated NI 43-101 compliant resource estimate for its Roca Honda uranium project in New Mexico. The project is a joint venture between Strathmore (60 percent) and the Sumitomo Corporation of Japan (40 percent).
Using a cut-off grade of 0.13 percent U3O8, the updated NI 43-101 resource estimate shows combined measured and indicated resources of 2,077,000 tons containing 16,783,000 pounds of U3O8 at a grade of 0.404 percent. An additional inferred resource of 1,448,000 tons contains 11,894,000 pounds of U3O8 at a grade of 0.411 percent.
On Wednesday, shares of Strathmore were trading at 0.215 cents on the TSX.
On Monday, Quasar Resources, an affiliate of Heathgate Resources, announced its stakeholders have voted to restart operations at the Four Mile uranium project in South Australia. The company is planning an in-situ recovery operation that will commence at Four Mile East in the second quarter of 2013 and at Four Mile West in the fourth quarter of 2013, with uranium sales beginning in 2013′s third quarter. The mine is expected to produce 2.1 million pounds of U3O8 over 16 months as part of a staged start prior to construction of full-scale production facilities. Cash expenditures of A$97.8 million to the end of 2013 are expected, with operating costs estimated at between $25.46/lb and $40.33/lb. The company expects sales prices to reach $62.58/lb in 2013.
A division of Alliance Resources (ASX:AGS) that holds a 25 percent stake in the project voted against the decision, preferring the construction of a standalone plant to operations at Four Mile.
On Wednesday, shares of Alliance were trading at 0.245 cents on the ASX.
This week, word hit the African newswires that uranium giant AREVA (EPA:AREVA) had informed the Namibian government that it will be shipping the first 250 tonnes of uranium produced at the Trekkopje mine. The uranium will be transported in the form of dried sodium diuranate (SDU) from Walvis Bay to the company’s uranium treatment subsidiary in France.
The news followed AREVA’s announcement earlier this month that it would be placing Trekkopje on care and maintenance in light of poor market conditions. The 250 tonnes of SDU come from uranium ore extracted via the project’s pilot plant in July of this year.
On Wednesday, shares of AREVA were trading at $13.52 on the EPA.
Wednesday, Ur-Energy (TSX:URE;AMEX:URG) announced that construction of a processing plant and other infrastructure has begun at its wholly-owned Lost Creek ISR uranium project in Sweetwater County, Wyoming. “Thanks to the advanced preparation of the Ur-Energy team, we have been able to initiate construction without delay following receipt of our final regulatory approval earlier this month,” stated Wayne Heili, the company’s president and CEO. “We anticipate that the mine will play an important role in south-central Wyoming’s economic development and employment opportunities throughout the next several years and are pleased to have the opportunity to utilize well qualified Wyoming-based contractors and sub-contractors.” Over the next six to nine months, Ur-Energy plans to invest $30 million to $40 million toward making Lost Creek production-ready by the summer of 2013.
On Wednesday, shares of Ur-Energy were trading at 90 cents on the TSX.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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Investor Insight
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.
- High-Grade Discovery Potential: Historical surface sampling at the Yath Project has yielded exceptional uranium grades, including boulders testing at 9.81 percent, 3.95 percent, and 2.14 percent U3O8.
- Expert Management with Exit Experience: Led by CEO Michael Collins, the team has decades of experience in mineral exploration and a history of co-founding companies that were later acquired, such as Prime Mining and Nuclear Fuels.
- Low-Cost, Rapid Exploration Strategy: By leveraging modern geophysics and extensive historical data, the company aims for a "short road to discovery," de-risking projects quickly to maximize shareholder value.
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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.
