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Overview
Countries worldwide are working towards decarbonization and paying more attention to clean energy sources. About 10 percent of the world's electricity is produced from 440 power reactors, and more countries like Japan, Germany, the UK and the US are revitalizing their nuclear energy capacities to reduce fossil fuel production while improving energy security.
Australia produces 12 percent of the world’s uranium, behind Canada (13 percent) and Kazakhstan (43 percent). It is also home to the Wiluna uranium project, a well-established uranium resource, which is also the flagship asset of Toro Energy (ASX:TOE), a uranium exploration and development mining company that actively seeks to uncover value from other commodities in its existing highly prospective project ground.
As of September 24, 2024, Toro holds JORC-compliant uranium resources of 112.7 million pounds (Mlbs) uranium oxide (U3O8), which includes the flagship Wiluna project, Dawson Hinkler deposit (100 ppm U3O8 cut-off), and Theseus and Nowthanna deposit (200 ppm U3O8 cut-off).
The 100-percent-owned Wiluna uranium project includes four key deposits – Lake Maitland, Centipede, Millipede and Lake Way – and offers significant uranium exposure of 87.8 million tons (Mt) at 331 ppm for 73.6 Mlbs U3O8 at 100 ppm cut-off (JORC 2012). It is located only 30 kilometers southwest of Wiluna in Central Western Australia.
The Wiluna uranium project has received state and federal approval (subject to required amendments) and has been granted mining leases.
Considerable research over recent years has identified processing redesign opportunities from unique geological attributes within the uranium deposits, but particularly at Lake Maitland, as well as the ability to extract the inherent vanadium held within the uranium ‘ore’ for a vanadium by-product.
Within the uranium mineralization envelope, the Wiluna project is estimated to contain 141.8 Mt vanadium oxide (V2O5) at 286 ppm for 89.3 Mlbs of V2O5 at 100 ppm V2O5 cut-off (JORC 2012), as of September 24, 2024.
The unique geology of the Lake Maitland deposit and the processing redesign have allowed for a mining and processing option exclusively for Lake Maitland, that could be economic on its own or be the economic spearhead of a longer-term, larger Wiluna mining operation (dependent on market conditions and approvals). The stand-alone Lake Maitland option, aided by the economic efficiency of the new processing design, results in a transformational potential increase in production from the Lake Maitland deposit.
The scoping study for the stand-alone Lake Maitland uranium-vanadium operation option shows potential for exceptional financial returns with a pre-tax NPV of AU$832.8 million, a short payback period of 2.5 years, 48 percent internal rate of return, and low capex of AU$291 million (US$203 million), based on price assumption of US$85/lb U3O8, US$5.67/lb V2O5 and a 70 cents US$:AU$ exchange rate.
The design phase of Toro Energy’s beneficiation and hydrometallurgical pilot plant is on track and in line with plans to begin operations in the second half of 2024. The pilot plant will test the improved beneficiation and hydrometallurgical circuit developed by Toro from bench scale research at a closer-to-production scale and as single streams. It will also test potential ore from the three uranium-vanadium deposits that Toro believes will make up an extended Lake Maitland operation – these include Lake Maitland, Lake Way and Centipede-Millipede.
The company will commence a large sonic core drill program to provide bulk, but targeted potential ore, for the upcoming pilot plant program.
Toro Energy has also recently initiated a refresh and update of its Lake Maitland scoping study using the latest, more favourable commodity pricing and exchange rate guidance.
The Lake Maitland deposit is part of a joint venture partnership with two reputable Japanese corporations, Japan Australia Uranium Resource Development. (JAURD) and Itochu.
Toro has been actively evaluating the prospectivity of its Wiluna asset portfolio for minerals other than uranium, including nickel and gold.
Toro’s Dusty nickel project is located on the northern, eastern and southern shores of Lake Maitland and the Lake Maitland uranium deposit and is focused on two main target areas: Dusty and Yandal One. These properties will be the subject of a proposed demerger, following Toro’s recent strategic review of its non-core assets and future plans to solely focus on its uranium development opportunities and its flagship Wiluna project.
Toro Energy’s management team and board of directors have extensive experience in the mining industry, with combined expertise that includes working at major mining houses, exploration companies, uranium mining operations, corporate financing and government and community relations.
Company Highlights
- Toro Energy is a well-established Western Australian uranium exploration and development company that actively seeks to uncover value from other commodities in existing highly prospective ground.
- Toro holds JORC-compliant uranium resources of 112.7 Mlbs uranium oxide across its Western Australian projects.
- Toro’s 100-percent-owned flagship Wiluna uranium project, located 30 kilometers southwest of Wiluna in Central Western Australia, 87.8 Mt at 331 ppm for 73.6 Mlbs U3O8 at 100 ppm cut-off over four deposits: Lake Maitland, Centipede, Millipede and Lake Way.
- The company has defined a significant maiden vanadium resource of 89.3 Mlbs of V2O5 inside the uranium mineralisation envelope.
- Scoping study completed for a stand-alone Lake Maitland Uranium-Vanadium operation shows potential for exceptional financial returns.
- In addition to its flagship uranium project, Toro’s strategic evaluation of the Lake Maitland tenure has resulted in the discovery of massive nickel sulphide and vein-hosted gold, which include the Dusty Nickel Project and the Yandal Gold Project.
- Following a recent strategic review, Toro is considering to solely focus on its uranium development opportunities and demerge its portfolio of non-core projects, including the nickel, gold and base metal assets in Western Australia.
- The company is led by a management team and board of directors with direct experience in the uranium exploration and mining as well as base metal exploration industry.
Key Projects
Wiluna Uranium Project
Toro Energy’s flagship asset is located only 30 kilometers from the town of Wiluna in the northern goldfields region within central Western Australia. The Wiluna project contains 87.8 Mt at 331 ppm for 73.6 Mlbs U3O8 at 100 ppm cut-off over four deposits: Centipede, Millipede, Lake Way and Lake Maitland. The asset has been de-risked and optimized to improve yield and has successfully incorporated the processing of a vanadium resource as a by-product. A scoping study was completed for a stand-alone Lake Maitland uranium-vanadium operation.
Project Highlights:
- De-risked Uranium Project: Toro Energy has de-risked the Wiluna uranium asset by:
- Obtaining state and federal environmental approvals. Retrospective amendment to substantial commencement date condition will be required as well as amendment to mining proposal required as a result of further studies which significantly enhanced the project (refer below)
- Securing mining leases
- Identifying a simple yet effective mining process
- Extensive laboratory testing of a new and efficient beneficiation and processing technique inclusive of the extraction of vanadium for a valuable by-product.
- Uranium Exploration assets: Toro also owns 100 percent of three other exploration projects in Western Australia that have a total uranium resource of 28.2 Mlbs at Nowthanna, Dawson Hinkler and Theseus.
- Lake Maitland Pit Expansion: A 2022 pit expansion campaign, based on the new beneficiation and processing flow sheet and a stand-alone Lake Maitland mining operation, increased the potential of uranium ore and the asset by US$608 million in potential gross product value.
- Scoping study at proposed Lake Maitland Uranium-Vanadium Operation: Conducted by mining engineers at SRK Consulting Australasia, and metallurgical and processing engineers at Strategic Metallurgy, the scoping study results highlight the project’s potential for robust financial returns (assumes a US$70/lb U3O8, US$5.67/lb V2O5 price and a US$: AU$0.70 exchange rate).
- Scoping Study Financial Metrics Refresh: A refresh of the scoping study is underway to incorporate current financial metrics and improved uranium pricing.
- Further Expansion of Scoping Study: to incorporate amenable ore from Toro’s Lake Way and Centipede-Millipede uranium deposits into the proposed processing operation at Lake Maitland.
- Expanded Resource at Lake Way and Centipede-Millipede deposits: Expansion of the stated U3O8 and V2O5 resources at both the Centipede-Millipede and Lake Way uranium-vanadium deposits was conducted by reducing the stated U3O8 and V2O5 resource cut-off grades to 100 ppm (from 200 ppm):
- The stated Centipede-Millipede U3O8 resource expands by 25 percent or 5.98 Mlbs to 29.95 Mlbs contained U3O8, with a reduction in average grade to 351 ppm U3O8.
- The stated Lake Way U3O8 resource expands by 15 percent or 1.79 Mlbs to 14.12 Mlbs contained U3O8, with a reduction in average grade to 406 ppm U3O8.
- The stated Centipede-Millipede V2O5 resource expands by 17 percent or 6.6 Mlbs to 45.2 Mlbs contained V2O5, with a reduction in average grade to 281 ppm V2O5.
- The stated Lake Way V2O5 resource expands by 9.5 percent or 1.1 Mlbs to 12.7 Mlbs contained V2O5, with a reduction in average grade to 307 ppm V2O5.
- Pilot Plant Design Commissioned: A detailed pilot plant design is being undertaken to further assess the new processing flowsheet for Lake Maitland at a closer to ‘operational’ scale. The pilot plant design is on track incorporating all aspects of both uranium and vanadium production. A sonic core drilling program will commence to deliver potential ore to the pilot plant currently in design for Wiluna.
- Robust Local Infrastructure: The assets are within an established mining center, which means much of the required infrastructure is readily available. The project has access to power and water, which reduces initial development costs.
- Joint Venture Partnership: Toro Energy has entered into a joint venture partnership with JAURD and Itochu for its Lake Maitland deposit. Both corporations have the right, but not the obligation, to earn a combined 35 percent interest in the project upon contributing US$39.6 million, and an additional proportionate share of expenditure thereafter, once a positive final investment decision has been made based on a definitive feasibility study.
The Dusty Nickel Project – Discoveries of Massive Nickel Sulphide
Toro’s Lake Maitland tenure is located in the Yandal Greenstone Belt within the Yilgarn Craton of Western Australia, a gold district within a world-class gold and nickel province. With little exploration for non-uranium minerals ever conducted on the properties, Toro considers the project area highly prospective for nickel, gold and base metals.
In 2020, Toro made a blind discovery of massive and semi-massive nickel sulphides associated with the base of a 7.5-kilometer unbroken length of previously unknown komatiite (Dusty komatiite) – arguably the first massive nickel sulphides discovered in the Yandal Greenstone Belt, which is located 50 kilometers east of the world-class Mt. Keith nickel deposit. The Dusty nickel project is located near the Lake Maitland uranium deposit and contains two key target areas: Dusty and Yandal One.
Continued exploration and diamond drilling on the project has resulted in four discoveries of massive/semi-massive nickel sulphide zones to date with only 4.5 kilometers tested so far at a single depth along a 7.5-kilometer komatiite magnetic trend. Only limited testing for massive nickel sulphides has been undertaken to date of an approximately 15-kilometer strike length of known komatite - ultramafic target rock. With such limited drilling on the Lake Maitland tenure, it is yet to be known whether other similar magnetic anomalies are also komatiite-ultramafic rock and how much more rock is prospective for massive nickel sulphides on Toro’s 100-percent-owned Dusty nickel project.
Project Highlights:
- Four zones of massive nickel sulphide discovered: Toro has discovered four zones of massive and semi-massive nickel sulphides: Dusty, Houli Dooley, Jumping Jack and Dimma. Significant diamond drill results from these discoveries to date include:
- DUSTY
- 9 meters at 2.07 percent nickel from 250.9 meters downhole (TED07) including:
- 2.0 meter at 4.01 percent nickel from 250.9 meters downhole; and
- 2.0 meters at 3.85 percent nickel from 255.5 meters downhole.
- 2.6 meters at 3.45 percent nickel from 184.5 meters downhole (TED04).
- 7.2 meters at 1.05 percent nickel and 0.26 percent copper from 252 meters downhole (TED22).
- 9 meters at 2.07 percent nickel from 250.9 meters downhole (TED07) including:
- HOULI DOOLEY
- 3.05 meters at 1.59 percent nickel from 297.75 meters downhole (TED14).
- JUMPING JACK
- 3.45 meters at 1.42 percent nickel from 240.2 meters downhole (TED37).
- 2.44 meters at 1.16 percent nickel from 231.6 meters downhole (TED38).
- DIMMA
- 4.31 meters at 1.16 percent Ni from 243.3 meters downhole (TED41).
- 3.13 meters at 1.42 percent Ni from 314 meters downhole (TED42).
- 4.6 meters at 1.61 percent Ni from 194.2 meters downhole, including 3m at 1.09 percent Ni from 166 meters downhole (TED54).
- 2.1 meters at 1.83 percent Ni from 147.1 meters downhole (TED55).
- DUSTY
- Yandal OneTarget Area: The Yandal One Target Area is located some 17 kilometers south of the Dusty discoveries and with limited drilling, Toro has proven the existence of another komatiite with the potential to host massive nickel sulphide.
Toro Yandal Gold Project
The Lake Maitland tenure is located only 20 kilometers northeast of the world-class Bronzewing and Mt McClure gold mines within the same Greenstone Belt, the Yandal, within one of the most famous gold provinces in the world, the Yilgarn Craton.
Early exploration by Toro at the Golden Ways target area in the north of the project has uncovered surface rock chip samples of up to 70 g/t gold and significant drilling results, including:
- 5 meters at 4.4 g/t from 22 meters (TERC24)
- Including 2 meters at 9.93 g/t from 22 meters
- 4 meters at 3.3 g/t from 28 meters (TERC25)
- Including 1 meter at 10.9 g/t from 28 meters
- 2 meters at 3.79 g/t from 10 meters (TERC38)
- Including 1 meters at 7.33 g/t from 10 meters
- 3 meters at 1.41 g/t from 9 meters (TERC36)
- Including 1 meters at 2.76 g/t from 10 meters
Management Team
Richard Homsany - Executive Chairman
Richard Homsany has extensive experience in the resources industry, having been the executive vice-president for Australia of TSX-listed Mega Uranium since April 2010. He has worked for North Ltd, an ASX top 50-listed internationally diversified resources company in operations, risk management and corporate, before its takeover by Rio Tinto.
Homsany is an experienced corporate lawyer and certified practicing accountant (CPA) advising numerous clients in the energy and resources sector, including publicly listed companies. He was corporate partner at international law firm DLA Phillips Fox (now DLA Piper), where he advised clients on a range of transactions and matters including capital raising, IPOs, stock exchange listing, mergers and acquisitions, finance, joint ventures, divestments and governance.
He is a fellow of the Financial Services Institute of Australasia (FINSIA) and a member of the Australian Institute of Company Directors. He has a commerce degree and honors degree in law from the University of Western Australia, and a graduate diploma in finance and investment from FINSIA (State Dux).
Homsany has significant board experience with publicly listed companies in Australia and Canada. He is the chairman of ASX-listed copper explorer Redstone Resources. and TSXV-listed iron ore and gold explorer Central Iron Ore Limited. Homsany is currently the chairman of the Health Insurance Fund of Australia Limited.
Michel Marier - Non-executive Director
Michel Marier joined Sentient in 2009 as an investment manager. Before joining Sentient, Marier worked eight years in the private equity division of la Caisse de dépôt et placement du Québec. Marier holds a master’s degree in finance from HEC Montreal and is a CFA charter holder.
Richard Patricio - Non-executive Director
Richard Patricio is the CEO and president of Mega Uranium, a uranium-focused investment and development company with assets in Canada and Australia.
In addition to his legal and corporate experience, Patricio has built a number of mining companies with global operations. He holds senior officer and director positions in several junior mining companies listed on the TSX, TSX Venture, AIM and NASDAQ exchanges. He is currently also a director of NexGen Energy (TSE:NXE, Mkt Cap. C$2.7 billion). He previously practiced law at a top-tier law firm in Toronto and worked as an in-house general counsel for a senior TSX-listed company. He received his law degree from Osgoode Hall and was called to the Ontario bar in 2000.
Katherine Garvey - Legal Counsel and Company Secretary
Katherine Garvey is a corporate lawyer who has significant experience in the resources sector. Garvey advises public (both listed and unlisted) and proprietary companies on a variety of corporate and commercial matters including capital raising, finance, acquisitions and disposals, Corporations Act and ASX Listing Rule compliance, corporate governance and company secretarial issues. She has extensive experience drafting and negotiating various corporate and commercial agreements including farm-in agreements, joint ventures, shareholders’ agreements, and business and share sale and purchase agreements.
Garvey is a senior associate at Cardinals Lawyers and Consultants, a corporate and resources law firm in West Perth, and company secretary of the Health Insurance Fund of Australia Limited. Garvey is also legal counsel (Australia) to TSX-listed Mega Uranium, and company secretary to TSXV-listed Central Iron Ore.
Dr. Greg Shirtliff – Geology Manager
Dr. Greg Shirtliff has over 20 years of experience in industry-related geology and geochemistry, including a PhD in mine-related geology and geochemistry from the Australian National University. Since his studies, Dr Shirtliff has spent over 17 years in various roles in the mining and exploration industry ranging from environmental, mine geology, resource development, exploration and management roles in exploration and technical projects inclusive of engineering and metallurgical. His roles have included a number of years at ERA-Rio Tinto’s Ranger Uranium Mine, as the senior geoscientist for Cameco Australasia and more recently as the lead geologist and technical manager for Toro Energy, where he is the exploration and technical lead responsible for increasing the viability of the company’s uranium and mineral resources, developing and directing the company’s uranium and non-uranium exploration strategy, aiding the company technically through EPA approval for a uranium mine, and guiding the engineering and metallurgical through to scoping level economic assessment.
Dr Shirtliff has had recent exploration success at Toro Energy, discovering multiple zones of massive nickel sulphide mineralization along the Dusty Komatiite, arguably the first massive nickel sulphide mineralization discovered in the Yandal Greenstone Belt in Western Australia.
Dr Shirtliff holds directorships on privately owned consultancy and prospecting companies and is a long-standing member of the Australian Institute of Mining and Metallurgy and the internationally recognized Society of Economic Geologists.
Marc Boudames - Financial Controller
Marc Boudames is experienced in statutory financial reporting, taxation, ERP systems, business analytics, corporate transactions, due diligence, mergers & acquisitions, finance, joint ventures and divestments. He previously worked at RSM Bird Cameron, as general manager –finance & administration for ASX-listed Redport Ltd and Mega Uranium (Australia), a Canadian TSX-listed mining and equity investment company focused on global uranium properties and multi-mineral exploration. He has worked for multiple companies across various industries, including listed and public companies associated with the mining and oil and gas sectors, such as WesTrac, CB&I and Spotless Group.
When Will Uranium Prices Go Up? (Updated 2024)
This most recent rally was sparked by a confluence of global and market events, including the Russia-Ukraine war and uranium supply challenges related to conversion and enrichment.
The drive for nuclear energy to be a part of the fight to combat climate change is also having an oversized impact on the uranium price outlook as governments look to nuclear as a carbon-free energy source. Even Sweden is considering lifting its ban on uranium mining in an effort to support growth in it own nuclear power industry, for which it currently imports nuclear fuel.
"Sweden currently uses 2.4 million pounds U3O8 annually in its three nuclear power plants and has committed to building two additional nuclear reactors by 2035," World Nuclear News reported.
Although prices have since pulled back to the US$78 to US$80 range as of mid-September, there are notable signals that the market may be in for plenty of upside to the uranium price forecast in the years ahead.
For many years, the uranium market's back-and-forth struggle to move out of a rather entrenched trough had investors asking, "When will uranium prices go up?" Now that they have, the questions that remain are whether they are up enough to spur uranium mining activity and whether or not they have further to go.
Before we try to answer those questions, we'll have a look at what's moved the uranium spot price in the past, including the energy metal's supply and demand dynamics.
How have uranium prices traded historically?
As briefly outlined above, uranium has experienced a wide price range this past century — while its highest level was nearly US$140, the lowest U3O8 spot price came in at just US$7.
In 2003, the price of uranium began an upward trend as demand for nuclear power rose alongside the world's need for energy, especially in growth economies such as China and India. These increasing energy demands came at the same time as significant supply-side disruptions. For example, in 2006, Cameco's massive Cigar Lake mine in Saskatchewan flooded, stalling production for several years at one of the largest uranium deposits in the world.
The inability to move this uranium ore to market was a huge setback for the uranium industry, and translated into explosive price growth for the metal in 2007. However, those impressive gains were soon undone by the 2008 economic crisis, which sent uranium on a downward spiral, slipping below the key US$50 level in early 2009 and to the US$40 range in 2010, as is shown in the uranium price chart below.
Uranium's price history, 2000 to 2024.
Uranium price chart via Trading Economics.
At the start of 2011, uranium got a serious push to the upside along with other energy metals as the global economy began to recover. The tight supply situation, heightened by years of low prices, also played a part in pushing the spot price past the US$70 level.
The rally was short-lived, however, as Japan’s Fukushima nuclear disaster in March shook confidence in the sector. The uranium spot price began a slow slide to lows not seen since the start of the century, ultimately bottoming out at US$18 in November 2017.
Although COVID-19-induced supply disruptions at the world's top uranium mines briefly sent the commodity to a four year high of US$33.93 in May 2020, it wasn't until the fall of 2021 that uranium started to find its footing again.
In September 2021, uranium began to show signs of life as it shot up to a nine year high of US$50.80. The 2021 uranium price rally came after supply cuts from major producers, including Kazakhstan's Kazatomprom and Canada's Cameco( TSX:CCO,NYSE:CCJ), alongside the emergence of the launch of the Sprott Physical Uranium Trust (TSX:U.UN).
Prices were soon see-sawing between US$38 and US$48 in October and November, but the start of 2022 brought civil unrest in Kazakhstan, as well as Russia's invasion of Ukraine. These events proved price positive for the uranium market, and by mid-April, uranium prices had reached an 11 year high of US$64.61.
Looking at the demand side, utility companies had once again returned to the table to sign new long-term uranium supply agreements to secure price and supply. This coincided with uranium supply challenges related to conversion and enrichment. The result was that from April 2021 to April 2022, the price of uranium soared by an eye-popping 106.47 percent.
By H2 2022, uranium prices had begun to slide back to the US$50 range. Much like the broader commodities market, uranium felt the squeeze of higher interest rates as central banks, including the US Federal Reserve, sought to curb rising inflation.
While the uranium price remained stuck in the low US$50s range for much of 2023’s first half, positive fundamentals born out of the view that nuclear energy is critical to reducing global carbon emissions sparked another major price rally beginning in the fall. By January 2024, as the uranium spot price hit US$106 per pound, many market analysts were loudly proclaiming that the next uranium bull market is finally here.
However, uranium prices went on to consolidate in Q2 2024 to the US$80 range, which many experts see as a natural part of the nuclear fuel's emerging bull market cycle. Although the spot price has pulled back this year, the long-term contract price has increased. Term prices are considered by industry insiders to better reflect uranium market fundamentals.
What factors impact uranium supply and demand?
Uranium prices are mainly influenced by aboveground mine supply and demand for nuclear energy. To understand where those stand, investors in this sector typically look to:
- output from uranium mines
- the number of nuclear reactors online, under construction or planned
- the signing of long-term contracts between uranium suppliers and utilities companies
Analysts with a bullish lean believe the uranium market cycle has reached its bottom and that a break to the upside for uranium prices is supported by positive supply and demand fundamentals.
On the demand side, nuclear energy generated from 440 reactors around the globe supplies about 9 percent of the world's energy requirements. Russia is constructing four with another 14 confirmed or planned, and India has seven nuclear reactors under construction. Meanwhile, China alone is constructing 30 new reactors at the moment. In fact, Bloomberg reported in August 2024 that the Chinese government is investing US$31 billion in building 11 new reactors across five sites over the next five years.
A World Nuclear Association (WNA) report forecasts that nuclear generation capacity will grow from 391 gigawatts electric (GWe) in 2023 to a total of 686 GWe in 2040. About 83,840 metric tons (MT) of uranium will be required to feed reactors in 2030, up significantly from the 65,650 MT of uranium required in 2023, according to the WNA's uranium forecast. The firm projects that nearly 130,000 MT will be needed in 2040.
On the supply side, major uranium producers are still not producing at full capacity, and new uranium exploration and development projects are few and far between. The WNA points out that world uranium production dropped from 63,207 MT of uranium in 2016 to 47,731 MT of uranium in 2020. Although that figure ticked up slightly higher in 2021 to 47,808 MT and again in 2022 to 49,355 MT, the organization notes that only 74 percent of 2022's reactor requirements were covered by primary uranium supply.
Huge cuts to global uranium production have come from Kazakhstan, the world's largest uranium-producing country. Responsible for 43 percent of global uranium production, the Central Asian nation began reducing its annual production levels in 2018.
In its 2023 financial report, Kazakhstan’s state uranium firm Kazatomprom warned that it sees a major supply deficit in the uranium market post-2030. “In the current pricing environment, another Kazatomprom-sized supply source will be needed to cover future market needs," said Kazatomprom CEO Meirzhan Yussupov.
In early 2024, the company reduced its production guidance for the year due to several challenges, including difficulties obtaining sulfuric acid.
However, after its H1 2024 production totals showed a 6 percent increase over total production in the same period last year, Kazatomprom increased its production guidance for the year from a range of 21,000 to 22,500 MT of uranium to the new guidance of 22,500 to 23,500 MT of uranium. The company's sales guidance for 2024 remained unchanged.
Canada, Namibia, Australia and Uzbekistan are also among the world's biggest uranium producers. In Canada, Cameco shuttered the Saskatchewan-based McArthur River mine in 2018 and temporarily closed Cigar Lake — the world's top uranium mine — in response to the COVID-19 pandemic. In November 2022, the mining giant brought the McArthur River/Key Lake operation back online.
In 2023, Cameco produced 17.6 million pounds of uranium, falling short of its original production target of 20.3 million pounds for the year. The company’s 2024 guidance is set at 22.4 million pounds. In its H1 2024 report, the company shared that production for the first half of the year had come in at 12.9 million pounds.
As for Australia, Boss Energy (ASX:BOE,OTCQX:BQSSF) announced in April 2024 that it had produced the first drum of uranium out of its Honeymoon project in South Australia as part of its commissioning process. The current mine plan only uses 36 million pounds of the project's total JORC resource of 71.6 million pounds. Boss’ goal is to scale up production at Honeymoon to 2.45 million pounds of U3O8 per year.
In the US, Boss Energy began uranium production at its South Texas-based Alta Mesa in-situ recovery (ISR) central processing uranium plant in June 2024. “With operations now ramping up at both Honeymoon and Alta Mesa, we are on track to hit our combined nameplate production target of 3 million pounds of uranium per annum," said Managing Director Duncan Craib.
Uranium Energy (NYSEAMERICAN:UEC) announced the restart of uranium production at its Wyoming-based Christensen Ranch ISR operations in August 2024. The first shipment of yellowcake from the mine is projected later in the year. Scott Melbye, executive vice president at UEC, told INN during a March 2024 interview that the Burke Hollow ISR project in Texas will be company’s next project to come online.
Despite this positive news, the WNA reports that supply deficits are likely to continue in the years ahead as current global production levels are not enough to meet forecasted demand.
"To meet the Reference Scenario requirements from early in the next decade, in addition to restarted idled mines, mines under development, planned mines and prospective mines, other new projects will need to be brought into production,” the WNA report states. “Considerable exploration, innovative techniques and timely investment will be required to turn these resources into refined uranium ready for nuclear fuel production within this timeframe."
When will uranium prices go up?
So when can investors expect to see further gains in the uranium price? And how far can we expect uranium spot prices to climb?
A good gauge for which way the winds are blowing is utilities contracts, as these entities are traditionally the greatest sources of uranium demand. In fact, only about 10 to 15 percent of uranium trades happen on the spot market — the vast majority of uranium is sold through large long-term contracts between producers and utilities.
It's also useful to watch the rest of the nuclear fuel cycle. Russia controls about 50 percent of global conversion and enrichment capacity — this dominance amid the country's war with Ukraine has spiked prices for these services. Recent moves by the United States may impact this dominance. In mid-May 2024, Biden signed into law a US bill banning Russian uranium imports through the end of 2040.
Speaking to the Investing News Network in a June interview, Ben Finegold, director at Ocean Wall, referred to this as one of the most significant events for the uranium market since Russia's invasion of Ukraine.
"I think that we're going to start to see a move much higher both in terms of term volume and in terms of term prices," he said. "Fuel buyers have got the clarity that they need, particularly in the west now, on the US' stance on the future procurement of Russian uranium."
In the month following the launch of the ban on Russian uranium imports, the US Department of Energy announced plans to invest up to US$2.7 billion to stimulate the development of the country's uranium enrichment capacity and nuclear fuel supply chain.
Not to be outdone, in September Russian President Vladimir Putin put forth the threat of limiting exports of uranium to western nations. The news gave a bump to the share prices of uranium miners such as NexGen Energy (TSX:NXE,NYSE:NXE), Cameco and Denison Mines (TSX:DML,NYSEAMERICAN:DNN).
Uranium stocks have languished in recent months as the winds have left the sails of uranium prices. But plenty of optimism remains for the sector. Speaking to INN in September 2024, Mart Wolbert, analyst at Contrarian Codex, shared his thoughts on supply and demand fundamentals in the uranium market, why uranium prices have dropped, if uranium stocks will go up and what's next for prices.
Even though uranium spot prices have receded down around the US$80 level, Wolbert remains bullish on the market going forward and thinks higher prices could be in the cards. He points to the 42.5 million pounds that have been signed into long-term contracts this year, and advises uranium market watchers to look at term prices rather than spot as a truer indication of where the market is going.
As Reuters reports, long-term uranium prices are coming in at 16-year highs, and are expected to increase further. "With a stronger market environment, we're currently locking in ceilings of about $125-130/lb and floors at about $70-75/lb in market-related contracts," according to Cameco.
Looking over at spot uranium price prediction for 2025, as of mid September 2024, analysts at Trading Economics were forecasting that uranium would trade at US$82.60 in 12 month's time.
This is an updated version of an article first published by the Investing News Network in 2020.
Don't forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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High-Grade Uranium Interval of 1963ppm at Likuyu North at the Mkuju Uranium Project; Commencement of Initial ISR Work
- Drill-hole LNDD020 drilled at the Likuyu North deposit, part of the Mkuju Project, returns 6 mineralised intervals including 7.1 metres averaging 1,963ppm eU3O81, from 63.1 metres depth. This hole was drilled central to the deposit to provide core for an assessment of In Situ Recovery (ISR) of the uranium.
- ISR is the preferred method for mining uranium deposits. ERM Australia Consultants Pty Ltd (ERM) are undertaking an initial ISR assessment for Likuyu North.
- Drill-hole LNDD015 down-dip of the deposit has a ~5m mineralised interval; samples have been dispatched to the lab. This interval is 100m south of the current Mineral Resource Estimate (MRE).
- The 2022 JORC compliant MRE for Likuyu North (4.6 Mlbs U3O8) was based on a pit- shell assuming conventional open-pit mining methods; adoption of ISR may support expansion of it.
Commenting on the drill results, Gladiator’s Chairman Greg Johnson said:
“Drillhole LNDD020 demonstrates the quality of the Likuyu North deposit, and we are excited by the potential opportunity the area provides. Grade and other characteristics appear to be well-suited to ISR. With that in mind, Gladiator has appointed ERM (formerly CSA Global) to help advance this strategy, and if the ISR study is encouraging the Company will consider larger-scale exploration at Likuyu North, Likuyu South and at the Mtonya deposit area, with an aim of maximizing the resource available for a potential ISR operation”.
Drillhole LNDD020
This hole was drilled to provide fresh drill-core to assist with initial assessment of the potential of ISR as a mining method for the Likuyu North deposit. The deposit has a JORC compliant Mineral Resource Estimate of 4.6Mlbs U3O8 with an average grade of 267ppm U3O8. The hole was positioned in an area relatively central to the deposit known to have thick and high-grade mineralisation, hosted by medium to coarse grained sandstone beds. Figure 1 is a cross-section and shows LNDD020. The hole contains 6 mineralised intervals (Table 2) including:
- 2.5 metres with an average grade of 438 ppm eU3O8 from 17.1m depth.
- 7.1 metres with an average grade of 1,963 ppm eU3O8 from 63.1m depth.
Figure 1: North-south cross-section showing the downhole logged eU3O8, mineralized layers and oxide/transitional zones. LNDD015 and LNDD020 are shown.
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This article includes content from Gladiator Resources Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
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