I CAREUranium price trebles, shares surge
Author: Irma Venter
Published: 2005/09/16
Engineering News
Uranium is shaking 25 years of doldrum dust off its feet according to a report by equity research company Resource Capital Research (RCR), which focuses on small resource companies.
The Australian firm has launched a major quarterly research report covering 20 global uranium- exploration and -development companies, with a focus on Australia, Canada and the US. Over 120 junior and mid-cap explorers and development companies are identified within the report, with total market capitalization exceeding $4,2-billion. The uranium industry is undergoing a major resurgence worldwide, with uranium exploration and property acquisition at a high level. The share prices of companies, many of them newly-formed and with uranium assets, have moved sharply upwards, says author of the report John Wilson. According to the report, advanced exploration and development-stage companies have generally had the most consistent share-price performance within the uranium sector in the last 12 months, such as Paladin (up 760%), South Africas Aflease Gold and Uranium (+ 204%), Energy Metals Corporation (+ 368%), Western Prospector Group (+ 757%), Laramide Resources (+ 735%) and Summit Resources (+ 1 160%).
More-mature companies will be able to take greater advantage (in the shorter term) of the stronger uranium price, compared with exploration companies, which are higher-risk players, says Wilson in his report.
The recent tripling of uranium market prices to around $30/lb is due to the decline in existing uranium-fuel inventories, plus a burgeoning demand from new international markets to satisfy nuclear power demand. Demand for uranium is forecast to outstrip supply for at least the next ten years, driven by end-users in the power-generation market urgently trying to secure future supply, notes the RCR report.
Much of the new demand for uranium will come from expanding nuclear power requirements within developing economies, with 130 new reactors expected over the next 15 years, representing a nearly 30% increase in reactor numbers globally. China has announced plans to build 27 new nuclear reactors by 2020 and India has reported plans to build 17 new nuclear reactors by 2012. This rate of expansion compares with the US, which built over 100 nuclear power plants in the 15 years between 1965 and 1980, notes the report. It also explains that supply is constrained by a lack of new mine production and declining inventories. World demand for uranium is about 77 000 t/y, while mine production is currently around 48 000 t/y. The balance 29 000 t/y is sourced from inventory, primarily the down-blending of weapons-grade uranium. Mine output is expected to increase to 54 000t/y.