Uranium’s spot price fell again this week to just $37.85/lb. But positive news keep coming. The Australian state of Queensland has just formalised the removal of the ban on uranium mining in the state imposed by its predecessor. No one expects any sudden spurt of activity given present prices but there are some projects (see below) that, with an improved price, could be brought into operation relatively quickly given some have established resources and advanced exploration.
And the majority of the most likely projects are held by Canadian-listed companies (again, see below for details).
Interestingly the federal government is making some positive noises about the uranium industry generally. The Australian Labor Party has a long history of being anti-uranium; after all, the mining bans were imposed in various states by Labor governments. So it was significant that federal Resources and Energy Minister Gary Gray not only attended this year’s big uranium conference in Perth but sounded some very positive notes about the industry.
Pointing out that Australia has a third of the world’s known uranium resources and supplies about 22% of China‘s needs, Gray essentially backed nuclear power — even though his own government has turned its back on that so far as Australia is concerned. He told the conference that “two important drivers of nuclear power remain unchanged – the rising energy demand from growing populations and the need to reduce greenhouse gas emissions. Australia is in a strong position to maximise these opportunities.”
In another encouraging sign, London-based brokers RFC Ambrian say there is light at the end of the tunnel. “The uranium sector should be set for happier times and improved pricing in the short to mid-term”. They cite the familiar reasons, including the growing likelihood of Japanese reactors starting up again and the end to the “megatons to megawatts” program.
Still, there’s a long way to claw back: uranium equities on average are 60% lower than what they were in March 2011.
Write the analysts: “Equities represent the main tool for those wishing to invest in uranium and we find it strange that, despite the evidence that future demand will continue to grow, they remain depressed. The M&A transactions seen over the past few years indicate that a number of key players in the sector are taking advantage of this depressed market.” (If you want to know about the M&A, I listed them in my July 6 post here on InvestorIntel headed “Shortages, acquisitions, new reactors – all spell a turnaround for uranium“)
RFC Ambrian says now is the time to take a look at uranium equities in preparation for an expected increase in demand and associated increase in equity valuations. The analysts believe prices could reach $70/lb by 2015.
The reports lists the world’s leading uranium operations with 2012 production totals:
1. McArthur River (Cameco/Areva) 19.4 million lbs
2. Olympic Dam (BHP Billiton) 8.9m lbs
3. Ranger (Rio Tinto) 8.2m lbs
4. Katco (Areva/KazAtomProm) 8.1m lbs
5. Somair (Areva/Somair) 6.8m lbs
6. Priargunsky (ARMZ) 5.7m lbs
7. Langer Heinrich (Paladin Energy) 5.1m lbs
8. Inkai (Cameco/KazAtomProm) 4.4m lbs
QUEENSLAND URANIUM: Just to bring readers up to date with the situation in Queensland, the most advanced projects in that Australian state are led by the Valhalla and Skal deposits, owned by Summit Resources (ASX:SMM), which in turn is 82% owned by Paladin Energy (ASX:PDN, TSX:PDN). The two deposits between them contain about 63,500 tonnes of contained uranium.
Areva’s Australian subsidiary is exploring in two areas over a combined 20,000 square kilometres. The company has expressed a belief it can find uranium in quantities equal to those it has a stake in in Kazakhstan.
Mega Uranium (TSX:MGA) has the Ben Lomond deposit and the Maureen deposit while Laramide Resources (TSX:LAM) has the Westmoreland deposits with 22,700 tonnes of contained uranium.