Doom and gloom for the uranium industry – no improvement in sight
End of last month, the price had fallen to US$49.25 and for most of September, it hovered at the US$48 mark. This is almost 60% below the entry level target as calculated by Bannerman. The impact on the development of new mines, is obvious.
I believe the commodities boom is over, or at least on hold for another five years. In the meantime, no new mines.
Our Anticipated Uranium Projects Will Not Go Ahead, Except One [analysis] Equities.com Daniel Steinmann All Africa Global Media 22 Sept12, Bannerman Resources, the Australian company driving one of four new uranium projects in Namibia, recently said at a mining conference, the price for uranium U308 needs to be between US$75 and US$90 per pound (0.454kg) to drive any new investment in greenfields uranium mines.
Hidden in this seemingly neutral observation and analysis, are many serious consequences for the further development of the uranium sector in Namibia. Following a simple line of deductive logic, the syllogistic conclusion shows that the development of new uranium mines will only be considered once the price exceeds US$75 per pound.
For us the risk lies in a protracted delay of new projects due to the
uncertainty of market movement. At the same conference, the Bannerman
CEO said: “The market has to look seriously at those companies that
have taken their projects to definitive feasibility stage because this
is where the cost realities come in for future uranium projects.It
gets rid of the blue sky numbers at the scoping study levels and sets
the range at where new uranium mines can be viable.” And at this
point, he stated the cost reality – uranium below 75, no new mine.
So it seems the market price of uranium is the key factor and not
necessarily the ore grade. Of course, the ore grade is important, the
higher the yields the more diluted the overheads, but the long term
trend in the price cycle, is clearly the determinant for calculating
the break-even line…… End of last month, the price had fallen to US$49.25 and for most of September, it hovered at the US$48 mark. This is almost 60% below the entry level target as calculated by Bannerman. The impact on the development of new mines, is obvious….
For the other projects driven by Areva at Trekkopje, Forsys Metals at
Valencia and Bannerman at Etango, I see no immediate future unless,
unpredictably, the uranium price backs around and heads for the
cut-off US$75, a scenario which I find unlikely in the medium term….
Essentially, uranium is not a scarce mineral. It is found in many
localities, as often given away by using a simple Geiger counter in
the early stages of exploration.
Much needs to change before we see a meaningful new momentum. How long
it will take the Chinese to get the Husab project going, I do not
know. They have their own constraints to deal with. I just do not
anticipate a uranium price much above US$50. I believe the commodities
boom is over, or at least on hold for another five years. In the
meantime, no new mines.
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