Uranium Outlook 2019According to the articles quoted below, uptrend in uranium price should continue in 2019 and eventually correct to the true value of producing a pound of uranium, which is estimated to be between $50 and $70 per pound. It should be noted that with these prices Macusani Uranium Project has an after-tax NPV between US$600 million and US$1 billion.
https://investingnews.com/daily/resource-investing/energy-investing/uranium-investing/uranium-outlook/ Uranium Outlook 2019: Supply to Fall, Demand to Rise — Prices to Jump? (...) stable price growth is expected to continue into Q1 2019. When asked at this year’s New Orleans Investment Conference if 2019 will be the long-awaited year of uranium, Lobo Tiggre, CEO of Louis James LLC, suggested that 2018 has already been the energy metal’s year. “Uranium has been going up and down, but up more than down. And I think that’s very important,” said Tiggre.
IsoEnergy (TSXV:ISO) President and CEO Craig Perry sees depleting global stockpiles as one of the main reasons prices should advance in 2019. “The spot market looks like it is set to continue to tighten, and with very strong demand from Cameco (TSX:CCO,NYSE:CCJ) and financial entities we can expect much higher uranium prices that are sustainable,” said Perry. “Based on the inbound inquiry we are seeing from investors, and particularly major US and global funds, we think equities valuations are set to perform very well.”
(...) “We had expected more significant uranium mine production cuts, and we have now seen this with the cuts being very significant — particularly the closure of Cameco’s Macarthur River, which in oil terms would be akin to Saudi closing off all its taps,” noted Perry. “What we hadn’t expected was that the demand side would pick up considerably — and this is now happening in a major way.”
(...) Growing reliance on nuclear energy to power cities, submarines and fuel space travel will likely contribute to enhanced demand into the next decade. However, as Alex Holmes, CEO of Plateau Energy Metals (TSX:PLU), pointed out, “I think we’ve seen a rapid rise in the uranium spot price, [and] we may see it soften first before it continues to strengthen.”
“For this uranium market to continue in strength, we need to see term contracts signed by major utilities. This will be a strong reinforcing signal that the market rise will continue, [and] I anticipate term prices will be locked in much higher than spot today,” he also noted.
(...) When the largest uranium producer in Canada decided to shutter its project, it simultaneously became one of the biggest uranium buyers, looking to buy on the spot market to fulfil its contracts. Add to this the addition of a number of uranium funds, and it’s easy to see why a potential supply crunch could be on the horizon, especially if stockpiles dwindle before prices can hit an attractive threshold.
“These are all indications of a market that is severely out of balance, and we believe it is only a matter of time before the market corrects to the true value of producing a pound of uranium at more sustainable levels,” added Moore. “We saw this upside correction starting in in 2018, and it could accelerate in 2019.”
These conditions, plus Japan’s growing uranium needs, are factors that will contribute to uranium’s performance in the next calendar year.
According to Fulp, the 2019 uranium market will be punctuated with, “a continuing increase in the spot price; higher demand as new reactors come online and more Japanese reactors restart and US utilities begin to enter the market for long-term contracts.”
For Nick Hodge, founder of the Outsider Club, the future of uranium is dependent on utilities and enticing spot prices. (...) “You still need US$60, US$65, US$70 uranium to make money, and we’re just not there yet. I think at some point it’s going to be like getting hit by a freight train when the utilities come back into the market, a very rapid ascent. Everybody keeps saying 2019, 2020 — but for now it seems the utilities are content to buy in the spot market.” (...)
Uranium price: best performer of 2018 set for more gains The rally in uranium prices, which began in April this year amid production cutbacks in Kazakhstan and Canada, is set to continue as inventories of the nuclear material decline for the first time in nearly a decade.
Production at Kazakhstan state-owned uranium miner Kazatomprom, responsible for more than a quarter of global output, was 19,600 tonnes during the first eleven months of 2018, a 7% decline compared to the same period in 2017. Top listed uranium producer Cameco suspended production at its McArthur River operation in Saskatchewan a year ago, but in July the company announced an indefinite shutdown of the mine, which can produce more than 11,000 tonnes of U3O8 (yellowcake) although actual production never came close to nameplate capacity.
Struggling French nuclear giant Areva (rebranded as Orano this year) slashed production more than a year ago. In August Paladin put its Langer Heinrich mine in Namibia on care and maintenance, although this week the Sydney-based miner said it's working on a possible restart of operations with vanadium as a byproduct (vanadium is trading at record highs and the only metal outperforming uranium).
In a research note on Kazatomprom, BMO Capital Markets says the production discipline from top miners will break the trend of rising global uranium inventories following the Fukushima nuclear disaster in Japan in 2011 and prompt the first production deficit in more than a decade.
"The net result is that uranium has entered a period of structural undersupply and we forecast the beginnings of inventory drawdown, which should continue to provide upward bias to the uranium price as we exit the year. Inventories can be divided into two broad categories; strategic and excess inventories, with the definition of each somewhat subjective. If utilities begin to worry about the security of future supplies then excess inventories can quickly be reclassified as strategic, leading to a shift in purchasing strategies. This tipping point is hard to predict, but could occur soon given the rapid decline in uranium output and the difficulty of securing future offtake agreements at current prices."
BMO analyst Alexander Pearce says Chinese nuclear plans are core to the uranium outlook, and he anticipates that Beijing will recommit to its longer term nuclear targets at the upcoming plenary session of the ruling communist party, where economic goals for the next five years are set.
(...) The spot uranium price jumped to just shy of $30 a pound last week, up more than 20% since the start of the year. Today's price also compares to an all-time high of nearly $140 a pound reached in June 2007. BMO predicts a gradual increase in the uranium price as inventories are reduced and a long-term incentive price of $55 per pound, nominally in 2023.