Malcolm2001 wrote: Yes indeed they are but I think that would require some time consuming research.
As regards the "Mexican Standoff" I think that is quite an accurate description of where we are today and it is why Mike Aiken and others are convinced a catalyst is needed to break the deadlock. There is not a producer in the world that will sell for these prices and stay in business. My guess is that the material available on spot is very limited and may be supply coming from enrichers. I cannot envisage it is from miners. You would have to be desperate to sell at a loss and selling it at a loss will not help you stay in business for long. So my guess is secondary supply. If and when CCO dips into the spot market to fill long contracts we shall see how deep the spot market really is. I think it is shallow and draining fast.
This year and next is going to be very interesting.
As far as McArthur River goes there is no point in CCO restarting it without long contracts of at least $60/lb. Also note that Areva (now Orano) also owns 30% of that mine and 13% of the Key Lake Mill which means they will be looking elsewhere to supply the French fleet of reactors and their fuel supply contracts around the world.
I did wonder where that 10 month figure came from. It might be that they can continue to supply from inventory for at least that long but after that they would need spot material. I think their strategy is to test the spot price by buying at these crazily low prices and if they can secure material in the right volumes then they would not use their inventory and keep McArthur River and the Key Lake Mill closed for longer....let someone else take the losses.If the spot market is as shallow as we all think it is (I don't know but just assuming the pounds are not there to trade) then heavy buying by CCO will drive up the spot price thus increasing the value of their inventory and hastening the restart of the mine and mill. Clearly they want to buy as much as they can at low prices before their own activity forces the price to go up.
Just fascinating to watch all this. CCO is at excellent values right now. I already own alot but may consider buying some more once the herd finishes driving the price down.
Thanks for your insights into the RBC material. very interesting and informative.
Malcolm
Greenday wrote: @ Malcolm2001 - Japanese utilities are public companies so their pre and post Fukushima inventory levels could be examined to determine whether they took delivery of all contracted uranium or not. I haven't done that but I suspect that they did some cost benefit analysis and the extended nature of the uranium fuel cycle allowed them to divert some unmanufactured fuel into the spot market which in turn drove down the spot market over time.
The RBC narrative is that the market is in a Mexican stand off right now. Producers have little new business but there's little cheap uranium that utilities can buy.
It's a narrative that can be spun either way and today we've seen which way that RBC's analyst has chosen to spin it. At the end of the day though it's producers that are in the driver's seat because utilities continue to burn their inventory and annual demand is reportedly growing by 4%.
CCO tentatively shut down McArthur River for 10 months but they've also stated that McArthur River will not be reopened until they have uranium contracted at prices that justify reopening the mine. So is 10 months the time frame that CCO expected it would take for a recovery to take hold? CCO's guess is probably as good as or better than anybody else's guess. CCO's guess is better than RBC's guess is my guess.