The Conversation (0)
Aug. 22, 2012 04:00AM PST
A Dundee Securities analyst believes that the uranium market has hit its bottom. More positively, prices are seen climbing this year and into 2013 as Japanese reactors come back to life and the Megatons to Megawatts program expires.
Unchanged from last week, TradeTech is reporting a uranium spot price of $49 per pound. However, the consulting firm says “[a]ctivity … is on the upswing, with four transactions reported for this week, signaling that prices have dipped low enough to attract buying interest.”
David Talbot, senior mining analyst at Dundee Securities, believes we’re now witnessing the bottom of the market. In an interview with The Energy Report, Talbot said he expects prices to firm up later this year and into next year as Japanese reactors come back to life and the Megatons to Megawatts program expires.
“The supply/demand balance in the mid-to-near-term may impact pricing,” Talbot said. “The current supply deficit should put upward pressure on prices, eventually making projects … more feasible. We’ll be lucky if annual uranium production reaches 180 Mlb by 2020. And that would require sustained spot prices of $70-80/lb. Our current forecasts for next year and 2014 are $70/lb and $67/lb, with a long-term forecast [of] $65/lb.”
According to TradeTech’s most recent report, it is still to soon to tell whether prices have bottomed. It states, “[w]hile lower prices have generated some additional buying interest, this demand is extremely price sensitive and any increase in offer prices causes buyers to retreat.”
In other market news, Kazatomprom announced that it will increase its stake in Kazakhstan’s uranium reserves from 41.8 percent to 52 percent by December of this year. The atomic company, which is the nation’s uranium importer and exporter, has been buying up shares in joint ventures and plans to increase its reserves by 250,000 tons by 2020. Kazakhstan is the world’s leading uranium producer, with about 35 percent of world production for a total of 19,450 tonnes in 2011, according to the World Nuclear Association.
Company news
Making headlines this past week is France’s Areva (EPA:AREVA). The world’s biggest nuclear plant manufacturer inked a uranium supply agreement with the United Arab Emirates’ (UAE) Emirates Nuclear Energy (ENEC). Under the $491.3 million agreement, Areva will supply enriched uranium for eight years to four of ENEC’s planned reactors at the Barakah plant in Western Abu Dhabi. The UAE will be the first Gulf Arab state to build a nuclear power plant. State-owned ENEC expects to begin electricity production at Barakah by 2017.
Last week, Areva announced that following a six-year review the Canadian government has approved the environmental assessment of the company’s proposed Midwest uranium project, located in the Athabasca Basin in Saskatchewan. The project holds an indicated resource of 42.9 million pounds U308 and is a joint venture between Areva Resources Canada (69 percent), Denison Mines (TSX:DML) (25 percent) and Japanese investment group OURD Canada Company (6 percent).
On Monday, miners at Areva’s Somair uranium mine in Northern Niger, the top supplier to France’s nuclear energy industry, went on strike over labor conditions. The strike was short-lived, ending Tuesday as miners and management resumed negotiations; however, a labor spokesman said workers may strike again after Friday if “authorities” do not “keep their promises,” stated Reuters. The mine produces 2,650 tonnes of uranium annually.
Paladin Energy (TSX:PDN,ASX:PDN) announced last week that it has signed a six-year, long-term off-take contract with an unnamed major utility that includes a pre-payment of $200 million no later than January 31, 2013. The deal includes delivering 13.73 million pounds of U308 starting in 2019. The news pushed the company’s shares up 19 percent.
“It’s a big positive for Paladin as it removes near-term liquidity concerns,” Haris Khaliqi, an equity research analyst at Sydney-based Foster Stockbroking, told The Australian. “Moreover, our view is that there’s definitely going to be a supply gap for uranium from 2014 onwards and this is the first confirmation that major utilities are looking to lock in long-term supply, and on terms that appear more favorable to the actual producers.”
Ur-Energy (TSX:URE,AMEX:URG) announced on August 17 that the Bureau of Land Management (BLM) released the final environmental impact statement (EIS) for the company’s proposed Lost Creek uranium project in Wyoming, which it anticipates will commence production in late spring or early summer of 2013.
“I am extremely pleased to share news of this significant development for Ur-Energy’s flagship project. The completion of the Final EIS by the BLM marks the start of a very exciting time for Ur-Energy and its shareholders,” said Wayne W. Heili, Ur-Energy’s president and CEO, in a press release. “During the next 30 days our technical team and general contractor will be finalizing schedules and logistics for ground breaking and the commencement of construction activities at the project site.”
Australia-based Aura Energy (ASX:AEE) has entered into an exclusivity agreement with “a major uranium market participant” to investigate a potential joint venture that would provide funding for feasibility work at Aura’s Häggån project in Sweden in return for an equity stake in the project. “It should be stressed that discussions remain at any early stage and there can be no assurance that a binding agreement will be executed. Aura will provide further updates on the process in due course,” the company stated.
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.
- 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.
