The Conversation (0)
Apr. 07, 2015 02:30PM PST
The uranium spot price has seen an 11.3-percent rise in 2015, but is currently holding steady at $39.50 per pound of U3O8. While that might sound a little disheartening, Raymond James analyst David Sadowski pointed out in a recent note that the spot market saw some healthy activity in March, with total volume amounting to 6.9 million pounds U3O8e done across 32 deals.
The uranium spot price has seen an 11.3-percent rise in 2015, but is currently holding steady at $39.50 per pound of U3O8.
While that might sound a little disheartening, Raymond James analyst David Sadowski pointed out in a recent note that the spot market saw some healthy activity in March, with total volume amounting to 6.9 million pounds U3O8e done across 32 deals. That’s the highest monthly level seen over the past three years, and an increase of 2.5 million pounds.
Deals on the horizon
Sadowski also mentioned that although April is often a slow month on the uranium front, the metal’s price outlook is still generally positive, with the expectation for new deals to come that could possibly send the price moving higher.
That’s a topic covered not long ago by Seeking Alpha contributor Alpha World. The contributor notes that contracts signed in 2006 and 2007 are coming to an end, meaning that utilities are going to be returning to the market to secure future supply. They will no doubt be particularly keen to do so with the uranium price sitting so low.
Uncovered demand could also play a part in boosting prices, as it is expected to rise significantly between 2016 and 2018. In the current year, uncovered demand is only about 6.7 million pounds of U3O8; however, that amount is expected to increase to 17.6 million pounds in the coming year before jumping higher to 49.4 million pounds by 2018.
Japan and China’s nuclear ambitions
Looking longer term, the uranium price should be spurred upward by demand from Japan and China. Indeed, just last week Japanese law makers announced that the country plans to generate at least 20 percent of its electricity using nuclear power by 2030.
Though Prime Minister Shinzo Abe’s government continues to face opposition, it maintains that nuclear power is a key energy source. It is important to note that prior to the 2011 disaster, nuclear power made up roughly 30 percent of Japan‘s total energy production. In comparison, nuclear power only accounted for 1 percent of nuclear power in 2013.
Apart from Japan, China is also set to play an important role in boosting uranium demand. The Asian powerhouse is looking to build up to 100 new reactors in the next decade, a feat that undoubtedly will put more strain on supply.
Indeed, the country’s efforts to reduce carbon emissions means drastic changes in energy generation. As the Economic Times reported earlier in March, China’s low-carbon plan to means the country will need to boost its nuclear power capacity by as much as 200 gigawatts (GW) — a significant boost from 2014′s 20 GW.
With a capacity goal of 58 GW produced by nuclear power in 2020, the Chinese nuclear regulatory body needs to approve at least 10 new reactors in the next two years. That will be added to the current 22 reactors that the country has in full production, and a further 26 under construction.
Moving forward
Although Japan and China’s increased desire for nuclear power will have a positive impact on the market, JPMorgan Chase (NYSE:JPM) analyst Mark Busuttil recently cautioned that it does not come without strings attached. According to The Australian, he believes that both countries have significant build ups of material that will not bode well for demand growth moving forward.
In terms of uranium pricing, JPMorgan expects to see a rise in price this year to $42 per pound of U3O8. Beyond that, the firm believes that by 2016 the spot price will be $50 per pound, but will pull back again in 2017 as the stockpiles mentioned above come into play. However, by 2020 the firm foresees a rise to $75 per pound of U3O8 — certainly something for investors to look forward to, especially in the midst of today’s lower prices.
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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.
- Bullish Market Fundamentals: Generation Uranium is well-positioned to meet the growing global demand for carbon-free nuclear power, supported by a projected supply deficit and increased interest from major tech companies seeking clean energy.
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.
