The Conversation (0)
Jul. 04, 2013 04:30AM PST
With nowhere for excess uranium supply to go, spot prices are sinking to new lows. It’s a definite buyer’s market for those looking to make a play for uranium… if you can find a seller.
Meanwhile, sellers are reluctant to sell large quantities at such depressed prices; however, they are willing to sell smaller quantities at a lower price. Accounting for the majority of the purchases were utilities, who bought from producers and traders. The firm indicates that utilities are still on the lookout for low-priced sales.
Japan’s reactors
An oversupplied market is to blame for the drop in prices for the “other” yellow metal. The ample supply of uranium is a side effect of Japan’s nuclear reactors having been shut down following the Fukushima nuclear accident in 2011. But it looks like the state of Japan’s reactors is expected to change soon as new regulations relating to nuclear energy take effect July 8. In preparation for the new regulations, Tokyo Electric Power Co (TEPCO) has filed with the nuclear regulatory authority to restart two of the idle reactors in Niigata prefecture.
TEPCO is aiming to restart two of the seven reactors at the Kashiwazaki-Kariwa plant, a step that it believes will be “key to improving the struggling utility’s business conditions” by reducing costs spent on importing fossil fuels.
Four other Japanese utilities are expected to follow in TEPCO’s footsteps with their applications in the coming week.
Niger mine restarts
Areva (EPA:AREVA) partially restarted production at its uranium mine in Niger on June 20. The move comes after a May 23 twin-suicide bombing by Islamist groups at the facility damaged the site’s electrical plant and left 26 people dead. Pascal Bernasconi, director-general for Somair, told Reuters that teams have worked around the clock to repair the damage to the electrical plant and are working hard to find a way to bring the rest of the plant online.
Paladin in the news
Near the end of June, pure play uranium miner, Paladin Energy (TSX:PDN, ASX:PDN), announced that it was seeking to sell a minority interest in its Langer Heinrich project in Namibia in order to unlock value from the company’s asset base. Paladin is currently in negotiations with two parties, but was unable to finalize a deal by the end of June. As a result, investors should look for the transaction to complete at some time in the September quarter. Keeping in line with its goal of reducing costs between $60 million and $80 million over the next two years, this transaction could knock off roughly $10 million from the company’s budget.
Most recently it seems like John Borshoff has extended his self-imposed pay cut and hinted at his plans to continue in his role at the top of the company. Borshoff’s contract expires later this year, coinciding with his 20-year anniversary at the helm of the uranium giant. Borshoff has shrugged off rumors of his pending retirement, stating that he will be looking to renew in the next few months.
Company news
Strathmore Minerals (TSX:STM,OTCQX:STHJF) has finalized the sale of the Pine Tree-Reno Creek 5 percent gross revenue uranium production royalty to a privately held company, AUC, LLC for $3 million in cash. Both Strathmore and Energy Fuels — which announced its intent to acquire Strathmore by way of plan of arrangement — believe that the alternative sale of the royalty to AUC is a good opportunity to monetize a non-core asset for significant cash proceeds.
Anatolia Energy (ASX:AEK) released its preliminary economic assessment (PEA) for the Temrezli Uranium project on July 1. The PEA highlights an NPV of US$173.9 million at a discount rate of 8 percent. According to the study, the Temrezeli project looks like it will be in the lowest quartile for uranium production. “At US$ 40/lb U3O8, the NPV (8% DCF) is US$ 68.8M, whilst at US$ 80/lb U3O8 the assessment provides for an NPV (8% DCF) of US$ 279.0,” the company stated.
Forum Uranium (TSXV:FDC,OTC:FDCFF) has confirmed that a fertile conductive trend hosting high-grade uranium (found on the Patterson Lake South project) has been identified on the company’s property. The discovery was made following the completion of an electromagnetic and magnetic survey across the company’s Clearwater project. The discovery was made during the first phase of the company’s summer exploration program.
Ur-Energy (TSX:URE,NYSEMKT:URG) has entered into a uranium supply agreement with a U.S. nuclear operating company for deliveries ranging from 200,000 to 300,000 pounds of uranium concentrate per year for a multi-year contract slated to start in 2017. Per the agreement, the average delivery price is consistent with current published long term U3O8 prices indicators, which stands at $57 per pound. The latest contract makes six supply agreements with four different U.S. utilities at prices that are higher than the current spot price.
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any company mentioned in this article.
Featured Energy Investing Stocks
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.
