Posts on this website are general "tips" and nothing more than that and should never be used to make an investment or trading decision. All information should be carefully cross-checked against official sources for accuracy.
Despite a number of positive comments by Martin Ferguson et al about the brilliant future for uranium the Australian Uranium Share Index still presents a gloomy picture (again) this week.
Personally I think that the new green tinged senate in july will make any progress within Australia reasonably doubtful. The Namibian uncertainty is still looming large… but perhaps a bright spot with AURA energy ASX: AEE rising strongly today… http://australianuranium.com.au/australian-uranium-graph.html
There has been some chatter that uranium shares were coming into favor. I’d been waiting to see the Australian share index’s behavior over the last week… still doesn’t look nice and seems that it might still have further to go.
http://australianuranium.com.au/australian-uranium-graph.html
I’ve added in the GURAF chart as it is useful to see how the global index is going as compared with the Aussie plays.
With the Australian and the global uranium share indexes at a low point it might just be time to buy back into or top up the sector.
But at the moment its far from simple….. ERA and PDN are producers and both have problems and prospects. But when I look at the explorers , in particular the ones with massive deposits like Namibia’s EXT it is hard to get past the nagging uncertainty associated with recent sovereign risk issues. I’ve spent the last week or so looking through the uranium plays and I think (unlike many others) that AEE might be one of the safer plays that has remarkable upside. Many think that our Australian onshore plays are safe… but with the green senate in July how many projects will get a clear pathway to development?
I still hold some EXT, some GGG and more AEE. Hopefully Namibia will act to clear up the resource annexation issues they have raised but until I see a clear statement that they will definitely allow EXT to gain the rights to mine Hsuab I’m going to be very cautious…
You can read why I’m keen on AEE here.
Negotiations between Government and De Beers on the restructuring of Namdeb, effectively giving the State 50 per cent of the interest in all De Beers’s land and sea operations in Namibia, are still ongoing, the international diamond giant has said.
De Beers has held “a long series of negotiations around the future of our diamond mining interests in Namibia”, the company said in an e-mail to Bloomberg on Friday. “These [negotiations] are coming to an end, but we’re not quite there yet,” the e-mail stated.
Locally, Government has been silent on Justice Minister Pendukeni Iivula-Ithana’s memorandum to Cabinet, proposing that a new company, Namdeb Holdings, be created with Namdeb Land and Namdeb Sea as subsidiaries. Government and De Beers will have 50 per cent of the shares each in the new holding company, the Minister suggested in her brief.
http://allafrica.com/stories/201105170571.html
I wonder if we are going to see a tsunami of nationalisation across Namibia and the rest of Africa that may well be as destructive for our Australian uranium companies with African projects as was the recent Japanese event was for Japan’s industries?
All of the Australian uranium plays listed on the overseas exchanges, including, EXT, PDN, BMN etc aren’t looking good and the GURAF is in agreement….
Could be a bargain buying time or a falling knife?
Judging by the market activity in Extract Resources today (up 15%) the Namibian nationalization threat may not be applicable to EXT. However PDN’s fortunes aren’t seen by the market as being all that rosy (down 0.3%). Also today’s “Update regarding possible offer for Kalahari” could have been the positive factor…
According to a story in miningaustralia: http://www.miningaustralia.com.au/news/aussie-miners-wont-be-affected-by-namibias-legis “The Chamber of Mines in Namibia said Minister Katali told the organisation that changes won’t affect existing mine licences.
“Held rights won’t be affected,” a spokesman for the president told The Australian.
“It doesn’t mean the state-owned entity will have a controlling stake…it’s not a form of nationalisation.” Australian-listed miners in Namibia said last week that the government has continued to be supportive of their projects. read full article
But here is the tricky bit: According to 2/5/2011 “Update on Proposed Policy Changes” – Extract is confident that the proposed policy changes will not adversely affect its Exclusive Prospecting Licences (EPL) or its Husab Uranium Project Mining Licence Application (MLA), lodged on 10, December 2010. Now re-read: The Chamber of Mines in Namibia said Minister Katali told the organisation that changes won’t affect existing mine licences.
I have long been a holder of Extract and being a very early investor it has been very kind to me. I got out at its peak and re-bought a much smaller amount several months ago. But the news out of Namibia is very unsettling and judging by the market yesterday and today many aren’t convinced that Namibia is going to do the right thing.
Gavin Wendt (ex Fat Prophets head and one analyst I pay attention to) was fairly negative according to today’s miningnews.net article where he says: “projects that were not previously impacted by the legislation may see it eventually applied to them.”
Putting it all together I got out of nearly all of my EXT early this morning with a small profit, since then the market is down another 11%.
This issue of African countries imposing new rules had made me very wary investing in them but Namibia was meant to be the one with the least risk…. I guess that leaves a lot of Australian explorers inside and outside of Namibia more than a little concerned.
Australia isn’t exactly a clean skin in the uranium sovereign risk department either…. hands up those that think the coming “green” senate is going to expedite new uranium mines?
And yet the world needs quite a lot of new uranium supply….
I still hold AEE, GGG and just a taste of EXT.
Despite the horrors that have been visited upon Japan China is going to persevere with its nuclear program according to the Reuters report below.
Reuters
BEIJING – China aims to encourage the construction and technological development of advanced nuclear reactors, and will also support further prospecting for domestic uranium resources, the country’s state planning agency says.
The National Development and Reform Commission included the nuclear sector in a list of industries it aims to encourage in the coming years as part of its attempt to restructure its economy.
It said China would also promote advances in uranium isotope separation technology, the handling of spent fuel and the prevention and detection of radiation.
The Chinese nuclear sector is still awaiting details of a strategic review of the industry in the wake of the Japanese earthquake and tsunami on March 11, which left the aging Fukushima reactor complex on the brink of meltdown.
China said on March 16 that it would “adjust and improve” its plans for the nuclear industry, and would halt further project approvals until it had finished inspecting existing reactors and construction sites.
Government and industry officials have so far stressed that China will not give up on its long-term commitment to developing nuclear power, but said that the pace of construction could be slowed down to allow the country to build the necessary manufacturing and regulatory capacity.
Before the Japanese nuclear crisis, many in the industry expected China to unveil a new 2020 capacity target of 80-90 gigawatts, but experts now anticipate a figure of about 75 gigawatts.
China’s total installed nuclear capacity stood at just 10.8 gigawatts by the end of 2010.
With the Easter break etc I think we might have to wait a while longer to see if there is a significant change…. My guess is that it will get worse for the Australia’s on-shore uranium plays but that we will see renewed buying in the off-shore explorers that have something remarkable such as AEE, GGG and EXT.
