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Uranium Price Finally Makes an Upward Move
U3O8 prices have managed to claw their way up to $30 for the first time since late spring.
Despite still being down a miserable 12.9 percent from $34.33 at the end of 2013, U3O8 made an impressive gain this week, trading hands 4.3 percent higher than the previous week.
What’s behind this sudden move, you ask?
As Raymond James analyst David Sadowski states in a new Weekly Uranium Tracker, so far in August, trading volume is up 1.3 million pounds on continued interest from traders and utilities.
Part of the fuss has been brought on by Russian sanctions, which remain a catalyst for buyer interest. Indeed, as Sadowski highlights, sanctions are “contributing to the recent run-up in spot pricing, up US$1.69/lb in six trading days.”
Also of note, is long-term volume, which is still at zero. However, “interest remains strong as evidenced by three utilities’ request for a total of ~5.8 Mlbs.”
Cameco labor dispute could result in strike
As one of the biggest fish in the pond, investors definitely take cues from Cameco (TSX:CCO,NYSE:CCJ) when it comes to the uranium market. Cameco has been in talks with unionized employees at both McArthur River and Key Lake since November 2013, as collective agreements expired at year end.
Since then, no agreement has been reached, which has resulted in the potential for work stoppages should no agreement be reached before August 30, 2014. Indeed, this week, 92 percent of unionized workers at the mines voted in favor of going on strike at month end should no agreement be reached with the company.
As Cameco spokesman Rob Gereghty told reporters, the company has “a long relationship with the union and hope[s to] reach an agreement.”
Commenting on the latest development with the top uranium miner, Salman Partners analyst Raymond Goldie said in a research note to clients that “[b]ecause the market would perceive that any loss of sales volumes would be more than offset by increases in uranium prices, we suspect that if there were to be a strike, Cameco’s share price would rise.”
Now that the spot price has firmed up just a touch, the overall hope is that equities will follow — despite the depressed pricing environment, companies are still hard at work on their projects.
Athabasca Basin uranium darling Fission Uranium (TSXV:FCU,OTCQX:FCUUF) announced more assay results from five holes drilled during the 2014 winter program on the R780E zone at its Patterson Lake South property. The company highlighted holes PLS14-209 (line 510E), which returned composite assay intervals including 21.97-percent U3O8 over 10 meters within a larger interval of 5.19-percent U3O8 over 57 meters.
Another bright spot is hole PLS14-215 (line 660E), which returned composite assay intervals of 11.8-percent U3O8 over 22.5 meters within a larger interval of 6.29-percent U3O8 over 48.5 meters. Mineralization from both holes is high-grade and was intercepted at a shallow depth.
Fission also notes that all five reported holes returned high-grade intervals of mineralization.
Forum Uranium (TSXV:FDC) also released assay results today from a 2014 winter drill program at the Northwest Athabasca JV project. The program included a total of 2,911 meters in 13 holes on five separate targets.
In today’s press release Forum highlights the Maurice Bay deposit, which shows 1.61-percent U3O8 over 5.5 meters, Otis West, which shows 0.95-percent U3O8 over 0.3 meters within a 30-meter-wide zone of radioactivity, Zone A, which indicates 263 ppm U3O8 over 4.8 meters, and Maurice Bay East, which returned 166 ppm U3O8 over 1.8 meters and up to 0.56-percent boron.
Encouraged by the results, Forum said that further drilling is recommended on all target areas.
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned in this article.