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'We're at or nearing the bottom of the uranium price cycle'
Denison Mines CEO Peter FarmerRelated articles
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By: Liezel Hill
Published: 19 Mar 08 - 17:42
Canadian-uranium miner Denison Mines expects the spot price for the nuclear fuel to rise closer to, and possibly even above, the more stable long-term price, and would not be surprised to see the long-term price increase too, CEO Peter Farmer said on Tuesday.
“We believe that it's at or near the bottom of the the price cycle,” Farmer said of the spot price, on a conference call on Tuesday.
Throughout most of 2007, the quoted long-term price for uranium remained steady at 95/lb, while the spot price fluctuated, finally closing the year at $90/lb.
Since then, spot prices have declined and are currently trading at around $74/lb, Farmer said.
However, he expects the spot price to recover, at least to parity with the long-term price, later this year, and believes the long-term price may also increase.
Uranium prices have risen significantly over the last couple of years, as demand continues to grow.
“Incremental” growth in supply from inventories, new production and other sources was not keeping pace with rising demand from new nuclear reactors, Farmer said.
“The supply-demand cycle for uranium is under pressure...over the past five years, supply has increased by just under 2% a year. Demand continues to outstrip supply,” he argued.
There were currently 34 new reactors under construction in 12 countries around the world, with more than 90 reactors in the planning stage.
Denison reported net income of $47,24-million for 2007, compared with a $17-million loss recorded in fiscal 2006, which was a 15-month period.
OUTLOOK REVISED
Denison, which mines uranium in the US and Canada, in December announced plans to go ahead with its Midwest uranium project, in Saskatchewan, that it owns with Areva Resources Canada, and is also considering building new mines in Zambia and Mongolia.
The company now expects to produce between 1,4-million and 1,7-million pounds of uranium in 2008, Farmer said.
The numbers were revised downwards from an earlier forecast of 1,7-million to 2,1-million pounds, after a delay in a refurbishment programme at its White Mesa mill, in southeastern Utah.
The refurbishment, which had taken longer than expected because of delays in the delivery of equipment, a lack of contractor availability and harsh winter weather, was now expected to be completed by the end of April.
Ore is currently being stockpiled at the mill and, once the cell relining is completed, Denison will apply for an operating permit, which it expects to receive by July 2008.
ZAMBIA DECISION NEXT YEAR
At the Mutanga prospect in Zambia, the company is carrying out an "intensive" drilling programme, including reverse-circulation and diamond drilling, COO Ron Hochstein said.
It plans to complete a feasibility study on the project by the end of this year, with a view to making a production decision in 2009.
The firm inherited the project, formerly called the Kariba uranium project, when it bought Australia's OmegaCorp last year.