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uranium exploration companies’ bleak outlook, with low uranium prices

Low uranium prices take toll on African exploration, Ft.com  Jan 21, 2014 Low uranium prices, especially in the post-Fukushima era, are taking a toll on African exploration.

Between 2005 and 2007, the uranium price increased steeply from $20 per pound ($44 per kg) to almost $140 per pound ($311 per kg) during what came to be described as a ‘nuclear renaissance’……

But the spot price decreased after 2007. By late 2013 it had dropped to $35 per pound ($78 per kg), a challenge for an industry characterised by long timelines and heavy investments. Countries keen on building new nuclear capacity seemed to stall, including the US and the UK. Then came the Fukushima crisis, which “raised questions in the public mind about the feasibility and desirability of nuclear. It came on top of already negative market developments,” according to Ian Anthony, a nuclear expert at the Stockholm International Peace Research Institute. Finally, the shale boom brought gas into the spotlight, and nuclear lost a little of its shine.

The low prices   have had a knock-on effect on African projects. Tanzania issued its first uranium mining licence in April 2013 to Mantra Tanzania, a subsidiary of Mantra Resources, but extraction from the Mkuju River project was delayed due to low prices. Botswana’s Letlhakane project, developed by A-Cap Resources, was intended to start producing uranium annually from this year but operating costs have outstripped the market price.

Low price trends also caused a delay to a feasibility study of Zambia’s Chirundu mine, and Areva was forced to postpone work on its Bakouma project in the Central African Republic for the same reason. The country’s serious conflict since has undermined the investment case further.

This has left companies in the lurch. In June 2013, Paladin boss John Borshoff warned that a minimum $70 per pound price level was necessary to justify investment and give risk reward to shareholders, adding that such a price appeared to be “a long way away”.

Big players are struggling too, with the likes of Areva left holding significant extraction investments which turned out to be commercial white elephants when there was no short term demand. Similar challenges have faced BHP Billiton and Canada’s Cameco in other regions…..http://blogs.ft.com/beyond-brics/2014/01/21/low-uranium-prices-take-toll-on-african-exploration/#axzz2rFiM1T6k

January 24, 2014 - Posted by | business and costs, Uranium

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