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Spot Uranium On The Rise Again
BY RUDI FILAPEK-VANDYCK @ FN ARENA NEWS – 21/04/2009
http://wotnews.com.au/view/3314489/
Has the spot uranium market finally managed to break the spell from the Lehman Brothers inventory overhang?

Last week’s small price increase in the weekly spot price benchmark as set by industry consultant Ux Consulting -up US50c to US$40.50/lb- has been swiftly followed up by a bigger price increase by fellow-consultant TradeTech; up US$1 to US$41.50/lb. This would suggest yellow cake changing hands at US$40/lb earlier this month is likely to have been the bottom, at least for now.

Analysts at Canada-based Raymond James nevertheless warn investors should not get too excited just yet. The stockbroker’s uranium specialists describe their own position as “near-term cautious” on uranium and when it comes to buying equities they’d advise investors remain “selective”.

Raymond James’ top picks in the uranium sector include Paladin (PDN) which also has a stockmarket listing in Toronto, Nufcor, First Uranium and Hathor.

Lehman Brothers confirmed last week what would have been the worst kept secret in the industry: following some minor initial sales, it still had about 500,000 lbs in U3O8 equivalent stored somewhere and as buyers had proved only interested in heavy discounts it had decided to put off any further sales indefinitely. While this has not completely removed the market overhang, it has taken away the short term threat of more selling pressure in the uranium market.

According to some sources Chinese buyers have recently entered the market and purchased more than 1 million lbs of product on the spot market, possibly adding to the short term positive momentum. Analysts at the aforementioned Raymond James, however, predict little movement in the spot U3O8 price in the weeks ahead.

Meanwhile, TradeTech reports the past week saw four transactions being concluded totaling just over 1 million pounds U3O8 equivalent. Moreover, reports the consultant, each of these four transactions appear to have been concluded at progressively higher prices.

Overall market activity has now picked up remarkably with TradeTech calculating total volume in deals done for the first three weeks of April now stands at over 4.3 million pounds U3O8 equivalent as compared to 2.2 million pounds for the entire first quarter of 2009.

The last time spot uranium prices had moved higher was in the fourth week of November last year.

TradeTech’s longer term price indicator has remained unchanged at US$70/lb.

Recently we have seen a lot of activity in EXT and more recently PDN. But not much interest has been shown in BMN. I find the image below to be very interesting….

Minister backs uranium mining
9th April 2009, 14:30 WST

Australia should be a bigger supplier of the fuel, Resources and Energy Minister Martin Ferguson said today.

“We are a major uranium supplier and we should be an even bigger supplier of uranium,” Mr Ferguson said today at a resources industry briefing in Melbourne.

“We need to guarantee that we mine uranium here in Australia with safe hands and export to countries who are prepared to use it with safe hands.”

Australia could add $17 billion to gross domestic product by 2030 by maximizing suppliers to meet rising global demand for nuclear energy, the Uranium Association said last month

WA last year scrapped a six- year ban on uranium mining, though Queensland last month ruled out lifting its ban.

I take the view that over time the position in Queensland will change, Mr Ferguson said.

Uranium mining is a fact of life and I am a big supporter of the industry.

Australia has three producing mines in South Australia and the Northern Territory.

MELBOURNE
BLOOMBERG

With the prospect of 30 million pounds of uranium evaporating from the supply lines four years hence, Blackmont Capital research analyst George Topping sees sovereign stockpiling already beginning to make itself felt on the demand side of the equation. In this exclusive interview with The Energy Report, George says he sees the price nudging up to $65 by the end of this year, then to $70 in 2010, $80 in 2011 and $100 within five years. read article

Article from: The Australian

CHINA is hungry for more of our uranium to feed a planned doubling of its nuclear reactors — and the Rudd Government believes we should be mining more to step up exports.

China has undertaken to rapidly expand its network of nuclear reactors to supply abundant, cleaner energy.

Australia sent its first load of uranium to China in November last year under a comprehensive bilateral agreement developed by the Howard government.

“The expansion of the nuclear industry here in China opens up new resource opportunities in Australia from the point of view of uranium mining,” Resources and Energy Minister Martin Ferguson said in Beijing this week.

“We are a leading nation in terms of uranium mining. We should be actually mining more than we are at the moment.”

Australia accounts for about a third of global uranium resources.

read more

Ferguson calls for increased uranium mining
Friday April 3, 2009, 9:07 am

Resources Minister Martin Ferguson says China is preparing to expand its nuclear energy program and Australia needs to increase uranium mining.

Mr Ferguson, who is visiting Beijing, says Australia’s second-biggest trading partner will buy a lot more uranium if it is given half the chance.

Last November, the first shipment from the Northern Territory arrived in the Chinese capital but Mr Ferguson says that after discussions he has had with local Chinese companies, they are going to want plenty more.

“Clearly the intention of the community in China is to actually expand its nuclear activity over time,” he said.

“The expansion of the nuclear industry here in China opens up new resource opportunities in Australia from the point of view of uranium mining. We are, as a nation, a leading nation in terms of uranium mining. We should be actually mining more than we are at the moment.

“There has been considerable exploration across Australia in terms of the uranium industry over recent years. It will expand, and it also will expand at a time at which we expect an increased demand for uranium internationally.

“Because the secondary sources of old nuclear warheads are now starting to decline in number, hence market opportunities, such as in China, will open up for Australia.”

Mr Ferguson says Australia will only sell uranium to China on the basis that it will not be stockpiled and will only be used for civil nuclear energy purposes.

And he has played down suggestions that selling uranium to China expressly for civil purposes would free up the country’s other stocks to be turned into weapons.

“I just say that in terms of our responsibilities, to mine our uranium with safe hands and guarantee that it’s used only for peaceful purposes, I actually think that is a well-founded policy that has served Australia well in the past.

“I think it’s also appropriate to the future.”

From today’s miningnew.net

THE market valuation of Australia’s listed uranium plays increased by 11% in March, despite the spot uranium price currently trading at 19% lower than the December 2008 price.

According to Resource Capital Research’s March quarter equity report on global uranium companies, the uranium spot price is currently $US42.50/lb, down from $52.50/lb at December 31, 2008.

This can be seen in this chart

URANIUM STAR CONFIRMED
Namibia’s uranium bull market

Extract Resources, a global top stock performer, among all stocks, is finding that grades improve as it drills deeper at the (already) world class Rössing South project.
Author: Barry Sergeant
Posted: Friday , 27 Mar 2009

Extract Resources put it this way on Friday when announcing its latest assay results: “Rössing South is the highest grade granite hosted uranium deposit in Namibia and potentially one of the largest uranium deposits in the world”.

In Australia, certainly, the long lamented bull market in listed uranium stocks seems to be back – certainly, again, for those names on the right pieces of ground in Namibia. Extract’s stock price has exploded over the past few months, not least on news that major miner Rio Tinto (and world No 2 uranium miner) has raised its stake in Extract to 15.6%.

The Extract stock price is currently nearly 500% higher than its recent lows, seen in November 2008. Kalahari Minerals, which holds 38.85% of Extract Resources, has seen its stock price rise by 269%; the two names rank as among the best-performing in the world, across all equity subsectors. Rio Tinto has also acquired a 15% stake in Kalahari Minerals.

The latest news from Extract on Rössing South, which lies immediately south of Rio Tinto’s Rössing mine, can only be classified as confirming a world class deposit. In January Extract announced an initial resource of 108m pounds of uranium oxide at a grade of 430 parts per million at zone I of its Rössing South project. The very latest numbers include 53 meters at 794ppm U3O8, 65m at 1,056ppm and 20m at 3,351ppm, from 90 meters to 247 meters depth.

Rio Tinto owns 69% of the Rössing mine, known to uranium specialists as the “grand old lady” of the Namibian uranium industry, with a claim of 140mlb historical production over 30 years. Rio Tinto also holds a majority stake in ERA, and ranks overall as No 2 uranium miner in the world, after, of course, Cameco.

More broadly, the latest upbeat news from Extract once again highlights uranium names busy in Namibia. Paladin delivered first production from its key asset – Namibia’s Langer Heinrich – in 2007 on time and on budget, and continues with the process of ramping production to what could amount to 6m pounds of uranium a year, at a cash cost of $25/lb by the second half of 2010. Uranium spot prices are currently around $42.50/lb; term prices sit around $60/lb.

Paladin’s Kayelekera, a second low risk open pit operation, located in Malawi, is expected to begin producing during the first half of 2010, ramping to a run rate of 3.3m pounds a year by 2011. Paladin is seen by a number of specialist investors as offering among the most viable growth profiles in the industry, one of the best cost structures (with all-in costs second only to the ISL (in situ leaching) projects of Kazakhstan), and is an easily traded stock in both Canada and Australia.

Mantra Resources, which ranks among the top performing uranium developers, holds a 36m pound uranium resource at 360ppm in southern Tanzania, across the border from Kayelekera; the Mkuju River project is headed for mining. Attention has increasingly been drawn to Mantra by the endorsement and 20% shareholding of Highland Park – an investment vehicle representing the ex LionOre team which picked the top of the nickel market to sell LionOre to Norilsk for $5.5bn in 2007.

Back in Namibia, possible consolidation in the uranium fields looms ever larger.

Uranium-related activity and development in Namibia gained a relatively high profile in August 2007, when Areva paid $2.5bn for Uramin, formed just two years previously to acquire and develop mineral properties, predominantly uranium, in Namibia, the Central African Republic and South Africa. Further names now present in Namibia include Bannerman, Deep Yellow (in which Paladin owns 19.3%), Xemplar, and Forsys, which may be acquired by George Forrest International Afrique S.P.R.L. for C$579m.

Click to view the table…