Australian Uranium Blog

Looks like there is a run on the ASX listed Uranium juniors…

14/07/2010

Summary of Extract Resources- ASX: EXT

Sadly the Australian Uranium share index doesn’t look at all encouraging.

At the moment after breaking through the 2009 support trendline (see the image below) the index is looking at a lower low. Link shows the last 12 months chart

I wonder if it is possible that we will see a re-run down to the 08 lows?

I’d like to see an up-tick before buying into our Uranium plays….

The link below shows the year to date….
http://australianuranium.com.au/australian-uranium-graph.html

China Seeking Long Term U3O8 Supply Contracts
BY RUDI FILAPEK-VANDYCK – 29/06/2010

It would appear that China has emerged as the potential saviour of uranium prices this month. Industry consultant TradeTech notes how buyers have taken the view that spot U3O8 prices have probably seen their bottom this year and that higher prices from here onwards should be expected.

The switch in market view appears to have come on the back of indications that Chinese buyers are seeking to secure long term supply contracts. The Chinese market emergence comes at a time when the US Department of Energy (DOE) has again entered the market to sell the final lot of inventory being sold in 2010 to fund cleanup efforts at the Portsmouth enrichment facility.

In the past, whenever the DOE offered uranium for sale, prices and overall market activity have tended to weaken.

The DOE is inviting bids for just over 250,000 tonnes of uranium in the form of UF6. TradeTech reports bids are due no later than July 2, with delivery to occur on August 6, 2010.

TradeTech estimates over 500,000 tonnes in uranium equivalent changed ownership last week and a further 200,000 is expected to have changed hands on Monday or Tuesday.

The uptick in overall market activity has caused a minor rise in the consultant’s weekly spot price indicator; from US$40.75 to US$41/lb (up US25c).

TradeTech’s mid-term price indicator has remained unchanged at US$50/lb, its longer-term indicator has remained at US$60/lb.

I will publish the Australian and Global share index data in the evening or early am.

Europe Crisis Hits Uranium
BY GREG PEEL – 25/05/2010
http://www.sharecafe.com.au/fnarena_news.asp?a=AV&ai=16792

Uranium sector consultant TradeTech has lowered its weekly uranium spot price indicator from US$41.25/lb to US$40.75/lb this week.

The drop is a disappointment given sellers had been hoping clearance of the big US Department of Energy sale order, which had been overhanging the market but was satisfied last week, would open the market up to some healthier trading levels.

There was indeed an immediate price jump, TradeTech reports, but this gave way later in the week such that Wednesday’s prices were US$1.00 above Friday’s prices. TradeTech takes an average of transaction prices to determine its weekly indicator.

Last week saw eight spot price transactions totalling one million pounds but none in the term market.

TradeTech suggests the price decline was prompted by a combination of factors including some sellers’ need to raise cash, the availability of inventory insensitive to price, and general nervousness surrounding the European debt crisis and weaker euro.

With Europe hanging as a cloud over everything at present, it seems the uranium market is also in the shadows.

Investments In The Nuclear Energy Industry Declined Marginally In 2009
Global investments in the nuclear energy industry witnessed a decrease of 5%, reporting $145.7 billion in 2009 compared to $152.9 billion in 2008. The difficulty in raising finance, start-up expenses, coupled with the global economic downturn led to an overall investment decline in 2009. However, the number of deals increased from 724 deals in 2008 to 822 deals in 2009. Read More

GlobalData’s “Nuclear Energy Annual Deals Analysis 2010” report is an essential source of data and trend analysis on the mergers and acquisitions (M&A) and financings in the nuclear energy market. The report provides detailed information on M&As, equity/debt offerings, private equity (PE), venture financing and partnership transactions registered in the uranium mining and processing, equipment and services, and power generation markets in 2009. The report provides detailed comparative data on the number of deals and their value in the last four quarters subdivided by deal types, segments, and geographies. Additionally, the report provides information on the top private equity, venture capital (VC), and advisory firms in the nuclear energy industry.
The data presented in this report are derived from GlobalData’s proprietary in-house Nuclear Energy eTrack deals database and primary and secondary research.

To clarify the post under this one… here is why we might have broken through support…..

Looks like we have well and truly broken through the support levels.

Nuclear Summit Changes Uranium Outlook
BY CHRIS SHAW – 14/04/2010

US President Obama’s success in convincing world leaders the best way forward is through the conversion of hundreds of thousands of tons of weapons-usable nuclear fuel into non-military fuel for power stations might be good news for world peace, but probably not so for investors in uranium companies.

This week’s nuclear summit in Washington has ended with a general pledge by participants from all over the globe to convert hundreds of thousands of tons of weapons-usable nuclear fuel by 2014, plus an intention to set a 2012 summit in South Korea to measure progress.

This inevitably means the supply-outlook has dramatically changed for the sector this week.

No wonder thus industry consultant TradeTech reports the weekly spot price has fallen by a further US50c to US$41/lb during the week ending last Friday. Fellow-industry consultant Ux Consulting also cut its weekly spot price, but only by US25c to US$41.75/lb for the week ending on Monday.

It is not uncommon for the two price benchmarks to temporarily differ.

Shares in uranium related companies across the world have outperformed broader share markets in recent weeks, but we cannot help but wonder whether this will prove sustainable in the light of the latest developments?

Yesterday, Energy Resources of Australia (ERA) delivered a much worse than expected production update leading to investors abandoning the shares in droves. Stockbrokers have responded by cutting earnings estimates and some have pulled back their rating as well.

We note that RBS Australia is now the only one left with a Buy rating on the stock. Overall market sentiment as measured by the FNArena Sentiment Indicator is negative.

The shares are trading on a Price-Earnings ratio of 21 for this year, according to consensus estimates (likely to fall further though). For more information: see Stock Analysis and R-Factor on the FNArena website.

The above is why I bailed from my uranium stocks a few months ago… I was and am still unsure but I thought it prudent in the light of the chance of a macro change that seems to have come to pass. But I wonder how many reactors can be supplied by the 35 tons of Plutonium that will be released over the next 8 years. It seems probable that it will be blended with lower grades but does anyone have the figure on hand?

There was another article published today saying that most companies with reactors have plenty of uranium stored hence the short term demand might not be as strong as it might be… and now we have a longer term “fresh” supply….

Again has anyone done the analysis?