The Pulse: Milestone for Northern Minerals; Uranium crunch ahead; Boost for garbage-into-electricity
The company (ASX:NTU) delivered its maiden JORC reserve of 1.44 million tonnes at 0.73% total rare earth oxides (TREO) at its Browns Range project which is close to the Northern Territory-Western Australia border. That is a contained resource of (roughly) 10,000 tonnes of REE, with 89% of that comprising the heavies. The quantity of dysprosium would allow economic production of that element as a stand-alone proposition. In 2013 the plan is to increase the TREO resource to a contained 30,000 tonnes based on targets at which there have already been drill intersections reported. NTU is still pinning hopes of a 2015 start-up.
The other news was that an unnamed company has signed a memorandum of understanding to take 1,500 tonnes a year. It is understood that the group concerned has been eager to sign a deal. Its identity is remaining commercial-in-confidence for now not so much because of the NTU deal but because it is also involved in negotiations with other parties on separate projects. But what is known is that the MoU includes a premium on the spot prices for terbium and dysprosium.
Unfortunately, the shares in NTU fell on the news – from 20c to 18c. Yet the basket price (in-situ value) as of December for NTU’s Brown Range project is just under $120/kg, compared to just under $110/kg for Jiangxi ionic clays and around $40/kg for both Lynas Corp and Arafura Resources, according to a chart produced by Northern Minerals.
Green Energy: Reactors are facing a real uranium supply crunch unless prices pick up real soon. Still, there are signs that uranium is stirring after a long hibernation: this week the spot price rose $1.25/lb to $44.75/lb. But it’s going to have to pick up a lot more steam.
Meanwhile, Australia’s anti-nuclear federal government is in conflict with the pro-uranium mining state government in Perth, Western Australia. The state had given all the clearances for Toro Energy (ASX:TOE) to start development of Western Australia’s first uranium mine but the Federal environmental minister has delayed until next year the environmental processes that would clear the last remaining obstacle. But Canberra’s delaying move has drawn fire from both the company and the WA state government.
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A report from Sydney-based Resource Capital Research out this week states that any new uranium supply will need prices to be between $70/lb and $80/lb to make mines economic. Long term contracts have been settled well above the present spot price but it is the latter that reflects market sentiment.
RCR says the present long-term uranium contract price is $59.50/lb – so that, too, is well short of what any new miner would need. It’s been around $60/lb all year, well below its pre-Fukushima $73/lb.
The latest forecasts are for global nuclear power capacity to rise 101% above the 2011 by 2030. As of November, there were 484 planned and proposed nuclear reactors. RCR says Chinese expansion will lead the pack. That country at present has 26 reactors under construction.
RCR sees the other nuclear enthusiasts to be India, South Korea, the U.S., Britain, the Middle East, Russia and Ukraine. Demand for uranium is expected to rise from 164 million pounds a year to 226 million pounds by 2020. Current supply of uranium – 139 million pounds a year – is only around 50% of 2020’s expected demand. And we have seen BHP Billiton (Olympic Dam expansion) and Cameco (Yeelirrie and Kintyre in Western Australia) defer and delay projects that together would add about up to 45 million pounds a year.
Green energy: Japan’s JFE Engineering Corp claims it has come up with a new technology to improve the efficiency of using garbage to generate electricity.
The company is promoting (especially in Europe) its new high temperature gasifying and direct melting furnace. The Nikkei Weekly says what sets this apart from other gasification and melting furnaces is that coke and limestone can be added in an adjustable fashion to maintain a stable combustion temperature inside the furnace. Also, it leaves far less ash that has to be buried. Moreover, the furnace is said to handle a wider range of waste than present technologies, including sludge, industrial and medical waste because of the ability of operators to vary the coke and limestone according to the type of waste.
JFE’s operating plant at Fukuyama burns 314 tonnes of waste a day to generate 20 megawatt hours of electricity. In Europe, the report says, 40% of waste is buried in landfills and there is widespread opposition to use of traditional incinerators to burn waste.
Disclaimer: The above is an opinion written by Robin Bromby, and he is not a licensed investment advisor.
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