Uranium and COVID-19: Who’s Reacting and How?

- March 25th, 2020

To help investors track the effects of the coronavirus on the sector, INN has compiled a list of responses from uranium producers and explorers.

The rapid spread of the coronavirus is weighing heavily on markets and battered equities. No sector has been immune to the uncertainty COVID-19 has brought to the global economy.

The uranium industry, which has been depressed for the bulk of the last four years, has also been impacted, with the chaos in the world adding another headwind to the space.

While U3O8 may not draw the same investor attention as gold or copper, the energy fuel is a crucial element in grids around the world, providing thousands of hours of electricity annually.

 

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As more closures and stricter regulations limiting social interaction are introduced around the world, we’ve gathered our uranium-focused COVID-19 coverage and collected individual responses from producers and explorers in the space so investors can better track the current state of the market.

All news and data were current as of March 25, 2020. This article will be updated as new information becomes available — if you know of a uranium company that has issued a response to COVID-19 but is not listed, please email editorial@investingnews.com. 

Uranium and COVID-19: INN coverage

Uranium and COVID-19: Producers

Kazatomprom — Kazatomprom, the world’s largest private uranium company, owned by the government of Kazakhstan, was the first to issue a statement regarding the spread of the coronavirus.

The statement, dated March 16, outlines the company’s heightened safety measures and notes that its projects will remain open due to their remote locations.

The uranium producer said it remains committed to its 2020 delivery schedule and will draw down out of its inventory of 8,500 tonnes of uranium if a production halt impedes output.

Kazakhstan is the top global uranium producer, accounting for 41 percent of world mine supply in 2018.

Energy Fuels (TSX:EFR,NYSEAMERICAN:UUUU) — The US-based company issued a brief statement on March 18 ahead of its 2019 full-year conference call.

Canceling travel and conference attendance are some of the measures the company has implemented to protect employees. Management also plans to hold regular webcasts or conference calls in the weeks and months ahead to keep investors apprised of developments.

In addition to uranium, Energy Fuels also produces vanadium, an important battery metal. In 2019, the Colorado-based company produced 70,000 pounds of U3O8 and 1.8 million pounds of high-purity vanadium pentoxide.

 

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Denison Mines (TSX:DML,NYSEAMERICAN:DNN) — Canada-focused Denison Mines has temporarily suspended its Wheeler River environmental assessment (EA) to reduce the spread of the virus.

“Considering the interactive nature of the engagement and consultation activities planned to support the environmental assessment process for Wheeler River, and the considerable uncertainty that has impacted capital markets, we believe that the decision to temporarily suspend the EA is in the best interest of all interested parties,” said David Cates, president and CEO.

Cates went on to say that he expects activity to resume quickly when “appropriate.”

Wheeler River is located in Saskatchewan’s Athabasca Basin, a prolific region for the uranium sector. The area accounts for all of Canada’s output and 13 percent of global mine supply.

Uranium Energy (NYSEAMERICAN:UEC) — In a March 20 statement, Uranium Energy announced plans to have staff work remotely; maintenance protocols at its Hobson processing plant and Palangana in-situ recovery mine remain unchanged.

Amir Adnani, president and CEO of UEC, also took the time to highlight the fragility of the international supply chain and America’s dependence on foreign countries for its uranium supply.

Annually the US spends roughly US$2 billion to import U3O8, which is used to fuel nuclear reactors that generate electricity. This issue has been a key narrative in the uranium space over the last two years.

In his 2021 budget proposal, US President Donald Trump called for a domestic surplus to be created using US-mined uranium.

“(T)he recent global events and supply disruptions further underscore the importance of domestic supply chains for vital resources,” said Adnani. “The proposed budget from the U.S. Administration outlining a 10-year, US$1.5 billion program to purchase domestically mined uranium for a national Uranium Reserve will be crucial to reviving the 100 percent idled US uranium industry.”

 

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Cameco (TSX:CCO,NYSE:CCJ) — In response to the Canadian government’s increasing restrictions due to the spread of COVID-19, Cameco, the world’s leading publicly traded uranium producer, has announced it will halt production at its Cigar Lake mine in Northern Saskatchewan.

The mine was the company’s last producing asset; its McArthur River mine was temporarily closed in 2018 due to prolonged low spot prices.

In conjunction with the Cigar Lake closure, Orano Canada, a private Canadian uranium company, will also suspend operations at its McClean Lake mill, which processes ore from Cameco’s mine.

The closing of the mill will also impact Denison, which holds a 22.5 percent interest in the project.

The McClean Lake mill accounts for 12 percent of global production.

Ahead of its joint announcement with Cameco, Orano issued two statements about COVID-19, noting it is monitoring the situation and encouraging employees who can work from home to do so.

Energy Resources of Australia (ASX:ERA,OTCPink:EGRAF) — On the other side of the world in Australia, Energy Resources of Australia is taking a more metered approach.

Its Ranger mine remains open at this time and the company is confident it will meet its yearly guidance of 1,200 to 1,600 tonnes.

However, on March 24, strict border controls were implemented in the Northern Territory; these could impact the company’s operations down the road.

Uranium and COVID-19: Junior companies

NexGen Energy (TSX:NXE,NYSEAMERICAN:NXE) — Also operating in the Athabasca Basin region of Saskatchewan, uranium explorer NexGen Energy has delayed the commencement of scheduled feasibility studies and economic assessments.

 

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Operating several development-stage projects in the region, including Rook 1, located at the Arrow deposit, NexGen plans to go ahead with ongoing work that was being done at the site before the spread of the coronavirus. Company CEO Leigh Curyer did note that the firm will closely monitor the local health authority and follow its directive.

Global Atomic (TSX:GLO,OTCQX:GLATF) — In Africa, Global Atomic is developing the Dasa project in Niger. At this time, operations at Dasa are ongoing. The company has permitted its office employees to work remotely and for on-site workers it has “implemented education to promote hygienic practices and limit social interactions to protect the employees and local communities in an effort to prevent the spread of the virus.”

Currently, hydrogeological and environmental impact assessment studies are underway at Dasa, and the explorer plans to release an optimized preliminary economic assessment during  Q2.

GoviEx Uranium (TSXV:GXU,OTCQB:GVXXF) — Explorer and developer GoviEx Uranium also has a project in Niger, Madaouela, as well as several other uranium projects around Africa.

In mid-March, the junior canceled the second tranche of a private placement as a result of the market turmoil brought on by the coronavirus.

“The recent drastic and rapid devaluation of the equity market has resulted in a significant gap between the original private placement offering price and the company’s current and prevailing market share price,” wrote CEO Daniel Major.

“(C)onsequently, the company has decided to cancel the second tranche of the Private Placement currently underway and to wait for markets to settle before returning to the market for future financing.”

GoviEx still plans to publish an updated prefeasibility study for Madaouela by the end of May.

More COVID-19 coverage from INN

Click the links below for more of INN’s commodity-specific coverage of COVID-19:

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Energy Fuels is a client of the Investing News Network. This article is not paid-for content.

 

Learn to profit from the uranium market in 2020!

 
Read our free outlook report to learn how!
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