The following is an excerpt from Canaccord Wealth Management’sMorning Coffee report.
One of the world’s largest uranium producers, Kazakhstan’s state-owned Kazatomprom, reported on February 1 that a storm in southern Kazakhstan in mid-January 2013 caused severe damage to power transmission lines, resulting in power outages at uranium mines in the Sozak region.
According to the statement by Kazatomprom, uranium mining in the affected area has been halted since the storm, and it will take one to one to five months to repair the damage to power lines.
No official timeline was provided for when mining might resume.
Bay Street’s largest brokerage estimates that the mining operations affected by this power outage represent annual production capacity of 21 million pounds of U308. Also, in supply side news, France has recently sent special forces and attack helicopters to protect their (Areva’s) uranium operations in Niger from potential conflict spreading from neighbouring Mali.
Currently Areva has two uranium operations in Niger with combined estimated production of 10.9 million pounds of uranium in 2013. The Bay Street brokerage, commenting on the recent developments, stated, “The weather-related problems in Kazakhstan coupled with the political turbulence in West Africa may at some point cause material disruptions to the global supply of uranium.
In the meantime, both Kazatomprom and Areva may be capable of making deliveries from inventories, but the sentiment in the market may be affected, which could positively impact spot prices.
In the uranium sector, Cameco Corp. (TSX: T.CCO, Stock Forum) (NYSE: CCJ, Stock Forum) rose 0.65% to $21.79 on Wednesday, leaving the company with a market cap of $8.62 billion, based on 395.3 million shares outstanding. The 52-week range is $26.43 and $16.50.
Paladin Energy Ltd. (TSX: T.PDN, Stock Forum) was unchanged at $1.15, leaving the company with a market cap of $962.3 million, based on 836.8 million shares outstanding. The 52-week range is $2.11 and 79 cents.