Uranium prices have been showing some sure signs of life these
last few weeks. After floundering about at sub $30 per pound spot
prices, it’s refreshing to finally see some up ward movement. As
UxC reported on the first week of September, U3O8 spot price has
inch their way up to $32 per pound.
Accounting for uranium’s recent price rise are supply-side
issues, which have stemmed from lower prices forcing companies to
shut down rather than the more positive increase in demand.
As UBS commodities analyst Daniel Morgan warned in a comment to
the Sydney Morning Herald “There’s been a few supply-side issues
which has been enough for a very modest price rise. What the market
really needs is a demand-side driver to get the price going and in
my view we don’t have one at the moment.”
shutdowns like at Cameco’s (TSX:
NYSE:CCJ) McArthur River and Key Lake operations, will mean a
tightening of uranium supplies across the board, which has the
uranium market taking its most bullish outlook since the Fukushima
nuclear disaster in Japan three years ago.
As Morgan Stanley analyst
Joel Crane noted late last week, “[t]he reduction in sport
supplies has led to increasingly competitive offers and bids in the
market place, driving prices higher. Crane also pointed to
increased signs of restarts coming from Japan, which is good for
the market, however, the likelihood of high inventory levels held
by utilities will likely weigh on the market sentiment.
Australia and India
Alongside the budding uranium price, Australia’s Prime Minister
Tony Abbott has arrived in India to sign a nuclear cooperation
agreement that will bring the South East Asian country out of
nuclear isolation and increase its uranium supply options.
India sources over half of its electricity needs from coal-fired
plants, and suffers from crippling power shortages. In light of
that situation, the country has been trying to develop civilian
nuclear energy as an alternative. With 20 reactors and a capacity
of 4,780megawatts, but only 9 reactors operating at capacity, the
country is in need of a secure supply of nuclear fuel.
However, as the New York Times reported, “[s]ecuring enough fuel
has been a sticking point because of the [nonproliferation]
Looking beyond the issue of the treaty,
Abbott was unphased by the issue of the treaty. “We ought to be
prepared to provide uranium to India under suitable safeguards,”
he said, adding that “India is a fully functioning democracy
with the rule of law, and I think we should be prepared to support
India, and that’s what my upcoming visit will be all about.”
Abbott noted that “India has a strong nuclear energy program,
Australia has very large reserves on uranium. I do want
Australia to be an energy superpower in the years ahead. We have
large reserves of uranium. We have massive reserves of coal. We
have extensive reserves of gas. We are the world’s second largest
thermal coal exporter.”
While two of Cameco’s operations remain shutdown for the time
being, Uranerz (TSX:
NYSEMKT:URZ) shipped its first
yellowcake from the Nichols Ranch ISR uranium mine in Wyoming.
The delivery of the company’s first 36,000 pounds of drummed
uranium concentrate is a major milestone for the new producer, who
is making progress towards its first sales, which is expected later
Haywood Securities analyst Colin Healey was bullish on the news,
noting that “news of first delivery of drummed yellowcake product
to ConverDyn’s facilities confirms the functionality of Uranerz’s
logistics chain and capability to generate saleable uranium
concentrate from its new mine, processing facilities and
In a research note to clients, Healey noted his expectations for
the company to continue to ship loaded resins to the Smith Ranch
facility and deliver final product to intermediaries throughout the
rest of 2014.
Azincourt Uranium (TSXV:
was also in the news this week. On Thursday, the company announced
that it has come to an
agreement with Macusani Yellowcake (TSXV:
all Azincourt’s adjacent uranium properties on the Macusani Plateau
in Peru. Per the agreement, MAcusani will acquire 100% of Minergia
SAC, Azincourt’s subsidiary, for the issuance of 68,350,000 common
shares of Macusani, an approximate 29% of the outstanding shares
post-transaction. Azincourt’s CEO Ted O’Connor will be appointed as
CEO of Macusani following the completion of the acquisition
On Wednesday, the Athabasca junior also announced the completion
of its drill program at the Patterson Lake North property in
Saskatchewan. As part of the news, the company reported on the
discovery of the first significant anomalous radioactive
mineralization at PLN.
According to the company “PLN14-019, which tested the
prospective A1 electromagnetic (EM) conductor, has intersected two
narrow intervals of anomalous and variable radioactivity with a
maximum peak measured at 1450 cps over 0.5m occurring within a
strongly clay altered graphitic pelitic gneiss. All three other
holes (PLN14-016, 017, 018) intersected anomalous hydrothermal clay
altered intervals, associated with structurally disturbed sections.
Securities Disclosure: I, Vivien Diniz, hold no investment
interest in any of the companies mentioned.