Australian Uranium Blog

Spot Uranium Prices Continue To Rise
BY RUDI FILAPEK-VANDYCK @ FN ARENA NEWS – 24/04/2009

Deutsche Bank analysts have been among the most bullish on price prospects for uranium since the crash from the US$138/136/lb price peak in 2007. As such, their price projections have found widespread attention, both by media and investors. Alas for those investors who took too much guidance from earlier price projections, spot U3O8 prices went their own way, in the opposite direction, hitting US$40/lb earlier this month.

On Deutsche Bank’s earlier projections we should be at US$100/lb, if not US$125/lb by now.

No doubt, were we to ask Deutsche Bank analysts what exactly went wrong last year they would respond with “Lehman Brothers”. Ever since the US investment bank went into receivership last year, its administrators have tried to monetise on the inventory of yellow cake that came with all other assets, but the result has been that a relatively small uranium market was dogged by the impatient overhang of some 500,000 pounds of yellow cake, seeking a willing buyer.

As it turned out, buyers proved too eager to get their hands on the “stuff” at too large a price discount and the Lehman inventory has now been officially taken off the market, indefinitely. Long story short: overall activity in the U3O8 spot market has picked up considerably since March, and prices are now rising again as well.

Last week, industry consultant Ux Consulting was the first to make a small increase to its weekly spot price benchmark. The small price rise marked the first upward move since November last year. Fellow-consultant TradeTech has since followed up with its own price increase. UxC has now followed suit with another increase; spot up US$1.50 to US$42.00 a pound.

It would seem spot uranium prices are back moving upwards and US$40/lb may have been the bottom for the foreseeable future.

Deutsche Bank analysts currently forecast an average price of US$70/lb this calendar year, implying prices should rise a lot further from here (Lehman Bros ambitions notwithstanding). The average price forecast for 2010 currently stands at US$80/lb.

According to FNArena calculations, spot uranium has thus far averaged around US$45.50/lb so far this calendar year.

Deutsche Bank analysts recently attended the World Nuclear Association (WNA) conference (in Sydney this time) and drawn further long term confidence from the fact that governments in Korea and China remain ambitious in terms of increasing power generation from nuclear reactors. They continue to highlight that Australia’s Paladin Energy (PDN) remains the only high growth uncontracted uranium producer without ownership by a government or a utility (though Areva does own a minority stake).

However, the future does not hold bullish prospects only for the sector. The analysts mention in this week’s brief update on the uranium sector that technological developments are now allowing effiency improvements at US utilities (meaning they can generate more power with the same nuclear capacity) and in addition the US Department of Energy (DOE) is expected to push the overall market into oversupply again from 2011 onwards.

On this basis, current price projections are for an average spot price of US$70/lb in 2011 and for US$65/lb in 2012 and a return to US$50/lb from 2013 onwards.

It was a big day for many of the Australian uranium companies.

The underperformance of GGG seems to relate to their share issue at 20c….

“Greenland Minerals & Energy raises A$5 million for Kvanefjeld Project royalty repurchase

Greenland Minerals and Energy Ltd (ASX:GGG) has advised that they have received verbal acceptances to place 25,000,000 shares at 20 cents a share to raise $5,000,000. The funds will be used to increase general working capital and to facilitate a potential repurchase of the royalty outstanding on the Kvanefjeld project. Greenland’s flagship project is Kvanefjeld, a multi-element deposit located near the southwest tip of Greenland. Through focused exploration, Kvanefjeld is rapidly growing to become one to the world’s largest undeveloped deposits of rare earth elements, uranium and naturally occurring sodium fluoride, commodities with long term forecasts for strong demand increases. …”

Greenland Minerals & Energy
http://wotnews.com.au/news/Greenland_Minerals_And_Energy/

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.”