Uranium could reach $80/lb this year, says UEC boshttps://www.miningweekly.com/article/uranium-could-reach-80lb-this-year-says-uec-boss-2011-05-27
Uranium could reach $80/lb this year, says UEC boss
27th May 2011
Updated 5 hours ago
TORONTO (miningweekly.com) – The uranium spot price could reach $80/lbby the end of the year, beating levels before the Japanese nucleardisaster, NYSE-listed Uranium Energy Corp (UEC) CEO Amir Adnani told Mining Weekly Online on Friday.
“You may see $80/lb late this year or early next year, I think it’s within the next year at the most,” he said.
The price of the nuclear fuel plummeted by about 15% after the Japanesetsunami caused radioactive leaks at the Fukushima-Daiichi plant, but ithas now stabilised at around $57,50, according to US-based UxConsulting.
The uranium spot price reached a three-year high of $73/lb in Februaryas Chinese utilities started entering the market in earnest to supplytheir rapidly expanding nuclear reactor fleet.
“I don’t have a crystal ball, but I think that there’s a supply deficitissue that should favour the price moving higher,” Adnani said.
In an earlier presentation, he showed how there could be a45-million-pound deficit in uranium supply once the Russia-US agreementto convert nuclear warheads into fuel expires in 2013, with demandtotalling 175-million pounds yearly.
UEC owns the Hobson uranium plant in Texas, which it bought fromCanada’s Uranium One in 2009, and started producing the fuel from nearbyorebodies at the start of the year.
Adnani said the company will produce at a rate of one-million pounds ayear within the next twelve months, at a cost of around $18/lb.
PRODUCTION GROWTH
UEC will then ramp up production to around 1,5-million pounds a year inthe next two to three years, through the addition of new orebodies toits Texas operations.
The company produces from relatively small, shallow uranium depositsusing so-called in-situ recovery methods, which means it pumps a mixtureof oxygen and water into the orebody through wells, dissolving theuranium, which is then pumped back up to the surface in a solution forprocessing.
The Hobson facility has capacity to produce three-million tons ofuranium yearly, and Adnani said this level could be reached by about2016.
Earlier this month, UEC closed the acquisition of a Paraguayan uraniumproperty, and the company aims to report its first resource statement bythe end of the year.
The deposit can also be mined using in-situ methods, said Adnani.
Uranium Energy wasn’t actively chasing further acquisitions, though assets were cheaper as a result of the Japanese crisis.
“We may look at a couple of other things, but it has to fit with whatwe’re doing. Right now’s a great time to buy, because it’s not going toget any cheaper than this,” commented Adnani.
SUPPLY AGREEMENT
UEC was set to sign its first supply deal within the next two weeks, he added, declining to say who it was with.
“We’re talking to a number of these guys, I’m not sure which will bethe first one, it’s just based on some fine details we’re negotiating.”
The company hasn’t sold any of its production yet, as it decided tohold off on signing supply contracts until the dust settled in the wakeof the Japanese nuclear disaster.
In other nuclear news, trading company Traxys announced on Thursdaythat it would buy all the uranium that the US Department of Energy isusing to pay a contractor to clean up a closed uranium enrichment plant.
The deal involved 1 605 t/y of uranium hexafluoride, which would haveotherwise entered the spot market, putting pressure on prices.
Edited by: Liezel Hill