May 10, 2008 U3O8.biz Weekend Wrapup Publisher: U3O8.biz Author: Luke Brocki
The spot uranium price fell US$2 to US$63 a pound U3O8 this week according to price publisher Ux Consulting. Spot market activity remains slow with just five transactions concluded in April and the entry of more active supply applied further downward pressure on the spot price that month. The drop comes just a week after the metal's long-term price fell $5 to $90 a pound after eleven months at the previous price.
According to the weekly uranium update from Toll Cross Securities, uranium futures for May are trading at $63 while June and July contracts are priced at $64. Futures from August to November are worth $65, with December contracts jumping to $66. June 2009 futures are priced at $75 and December 2009 futures are worth $82.
Looking at the Toll Cross Junior Uranium Index, we see a 4.4-per-cent increase to 344.28 from 329.91, fuelled by rallying junior companies in the sector. Compared to last week, junior explorers were up eight per cent, advanced explorers jumped six per cent, production visibility companies gained 10 per cent and producers gained eight per cent.
Those findings were mirrored in Friday's trading activity on the TSX, where many juniors enjoyed higher closes. Here are a few of Friday's winners: Bayswater Uranium gained 4.5 cents, or 10.8 per cent, to 46 cents; Blue Sky Uranium gained 3.5 cents, or 10 per cent, to 38.5 cents; Cash Minerals was up 4.5 cents, or 23.1 per cent, to 24 cents; Crosshair Exploration & Mining jumped 17 cents, or 23.6 per cent, to 89 cents, after announcing its removal from the TSX Venture Exchange and graduation to the main Toronto board.
Continental Precious Minerals jumped 19 cents, or 25.7 per cent, to 93 cents; Delta Exploration gained five cents, or 20 per cent, to 30 cents; Ditem Exploration was up 12 cents, or 26.1 per cent, to 58 cents.
Several companies enjoyed spectacular jumps in stock price, including Cline Mining, which gained 47 cents, or 106.8 per cent, to 91 cents, after announcing the acquisition of coal property surface assets in Colorado. In addition to its coal resources, the company continues to explore for uranium in Madagascar; and Universal Uranium, which jumped 12.5 cents, or 89.3 per cent, to 26.5 cents.
The last two movers obviously excited investors with something they said, but it's clear the entire junior sector was enjoying some buoyancy this week. Let's see if it continues through the month.
In more industry news, Blackmont Capital's George Topping says the Street is being too optimistic about upcoming earning results at Cameco. Topping told the National Post newspaper cash flow at the Canadian uranium juggernaut will fall short of consensus after a string of operating problems in 2007.
Adding to Cameco's troubles are continuing declines in spot uranium prices and ongoing challenges at the company's Cigar Lake mine. Still, the company is a stable beast thanks to an extensive hedge book, which could prove invaluable in a bearish market.
And watch for uranium partnerships popping up in Saskatchewan over the next few months. That's according to David Skarica, editor of the addictedtoprofits.net newsletter, who spoke to the Saskatoon Star Phoenix newspaper at an investment conference.
Skarica believes Saskatchewan is six to seven years into a 15- to 20-year bull commodities market, with smaller exploration companies now benefiting from a release of funds into the market and becoming prime targets for takeovers, especially around when a discovery is made. Cameco is being pegged as the prime candidate for pointing a finger at partnerships with small junior miners.
A proposed nuclear reactor in northern Saskatchewan is being faced with mixed reactions by people in the region. This, after a consultant's report prepared for SaskPower named Lac La Loche as one of two regions where a nuclear reactor might be located.
CBC News reported the chief of the Clearwater River Dene First Nation likes the idea because of the potential economic boost it could spark. Meanwhile, Lac La Loche Mayor Georgina Jolibois worries about the plant's environmental impacts.
In other news from Saskatchewan, a Vancouver company with a record of helping junior explorers in that province use high technology to track suitable uranium drill sites, is opening up an office in Saskatoon. According to the Regina Leader Post newspaper, First Growth Exploration and Development Service, known for its 3-D seismic imaging of underground deposits, needs a Saskatoon office to analyze large amounts of digital data and strengthen research links with the geology department at the University of Saskatchewan.
Moving west to Alberta, we see that province's debate around nuclear energy continuing to unfold. Bruce Power Alberta has now started planning the first nuclear power plant in western Canada, while the Alberta government responded with a committee to research whether nuclear energy should find a home in the province.
It could take three years to complete a successful environmental assessment and consultations with communities. For starters, a comprehensive report to government is expected in the fall.
In other industry news, Rio Tinto, the world's biggest coal miner, announced it wants to double uranium production over the next five years. The company already mines uranium at Rossing in Namibia and at the Ranger Mine in Australia.
Meanwhile, French-owned energy giant Areva is gearing up to build a $2-billion uranium plant in Idaho. The Associated Press reported the company will build the enrichment plant near the Idaho National Laboratory outside of Idaho Falls, a hotspot of nuclear energy research since the 1940s. Areva plans to build the plant by 2014.
Finally, Russia and the United States, once bitter nuclear rivals, are friends again. Sort of. The world's two largest nuclear powers signed a pact Tuesday to strengthen their nuclear trade and devise innovative ways to stop the spread of nuclear weapons, but the deal attracted immediate opposition in the Senate.
Reuters reported the new deal would grant both countries access to the booming U.S. nuclear sector and Russia's vast uranium deposits to firms from both countries. It's set to do so by removing long-standing restrictions that prevented bilateral trade, thus choking off billions of dollars.
Above all, the agreement would simplify matters for U.S. and Russian nuclear companies alike by allowing them to deal in nuclear goods directly among themselves. The Bush administration is pushing for the bill's approval as soon as possible, despite criticism from other U.S. politicians who would rather disconnect from Russia on grounds that country is helping fuel Iran's nuclear ambitions.
Two opposing senators are already circulating a letter asking President Bush not to send the pact to Congress. Once lawmakers have seen the bill, they'll have 90 legislative days to pass a disapproval resolution. Russia's parliament must also ratify the deal for it to be successful.
In other U.S.-Russian collaboration news, scientists from the two countries are working together to commercialize a new material for radioactive waste storage. World Nuclear News reports the material is an award-winning development of phosphate cement called Ceramicrete, developed by Arun Wagh and Dileep Singh at Argonne National Laboratory in the USA more than 10 years ago.
Wagh and Singh worked with scientists from the Russian Federal Nuclear Center, which employs scientists formerly involved in the Soviet Union's nuclear weapons program. The Ceramicrete formula blocks neutrons and gamma rays, effectively blocking reactions with other particles being emitted by stored material nearby. The technology also allows for easy monitoring of closely packed nuclear waste.
You can view the Previous Market Commentary item: Tue May 13, 2008, Spot price slides again
You can view the Next Market Commentary item: Wed May 7, 2008, Sustainable uranium mining: Grappling with the new realities
You can return to the main Market Commentary page, or press the Back button on your browser.