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Answers - Conventional Mining Will Keep Uranium Price High
“I never thought I would say this,” announced Dustin Garrow, marketing director for Paladin Resources (TSX: PDN) at the close of his presentation to an audience comprised of utility and nuclear fuel insiders. Then, he forecast a rise in the price of uranium in the coming months to between $80 and $100 per pound. A long-time industry consultant, Garrow acts as an intermediary between uranium producers and utility fuel brokers.
The Platts Nuclear Fuel Strategies conference held this past week in Washington, D.C. was sobering for U.S. utilities, yet revitalizing for the assorted supplier
The Platts Nuclear Fuel Strategies conference held this past week in Washington, D.C. was sobering for U.S. utilities, yet revitalizing for the assorted supplier
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
s and vendors attending this educational workshop. The jump in the spot uranium price to $55.75/pound, over the weekend, was hardly a surprise for those who participated. The conference’s mood was buoyant and electrifying as steady demand continues to strengthen for the ‘active supply’ of uranium. Analysts may be forced to upwardly revise their price expectations going forward through the end of this year and for 2007.
TradeTech published on the company’s website commentary on uranium transactions, writing, “Many sellers continue to seek market-related pricing terms for spot delivery
TradeTech published on the company’s website commentary on uranium transactions, writing, “Many sellers continue to seek market-related pricing terms for spot delivery
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
and buyers continue to show a willingness to raise bid prices in order to secure supply at fixed prices. The buyer mix remains diverse, with utilities, producers, intermediaries, and speculators seeking market purchases. Long-term uranium demand remains strong and continues to exert upward pressure on the spot uranium price. The spot uranium market is expected to remain active through October.”
We talked further with Gene Clark, Chief Executive of TradeTech, by email after briefly chatting at the Platts conference. He added his company was tweaking assumptions on price projections for
We talked further with Gene Clark, Chief Executive of TradeTech, by email after briefly chatting at the Platts conference. He added his company was tweaking assumptions on price projections for
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
utilities in a soon-to-be-published uranium market study. “We expect prices in the fourth quarter to continue to significantly exceed all previous expectations,” Clark wrote to us. “Active supply, which is our measure, determined by telephone interview of uranium actually being offered in the market, is back to the level of its historical low in the second quarter of 2004.” Earlier this year, Clark forecast spot uranium would reach $55/pound.
Clark considers this a major factor for uranium price forecasting. “Many potential sellers of uranium are holding back supply, making it ‘inact
Clark considers this a major factor for uranium price forecasting. “Many potential sellers of uranium are holding back supply, making it ‘inact
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
ve,’ because they are satisfied with their level of sales for this year,” he explained. “Barring the entry of a major new source, active supply is expected to remain low for the rest of the year.” The major source of demand, through the end of the year is likely to come from traders and hedge funds, Clark informed us. He lowered the demand status of primary users such as utilities from the ‘must have’ category to discretionary buying.
World Uranium Mining Trends and Outlook
“We’ve been trying to encourage utility companies to work more closely with junior uranium companies,” announce
World Uranium Mining Trends and Outlook
“We’ve been trying to encourage utility companies to work more closely with junior uranium companies,” announce
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
d Michael Knapik, Chief Editor of Platts’ NuclearFuel, before the uranium mining panel began their presentations. In a previous presentation that morning, Charles Peterson, a partner with the DC-based law firm Pillsbury Winthrop Shaw Pittman LLP had talked about the security of future uranium supply. Utilities have been hooked on buying low-cost uranium from Canada, Australia and Kazakhstan. Peterson has been advising utilities to begin discussions with speculators who have been purchasing uranium as the price has soared. “Some utilities are cooperating with speculators,” Peterson obse
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
rved.
As we reported at the conference last week, Scotiabank’s vice president of economics Patricia Mohr believes uranium will continue to be a bright spot in the commodities market in 2007. She pointed out her bank’s commodity index had probably peaked in August, but she felt uranium would be the “exception to this.” Mohr cited inadequate mining supply as the primary driver in the spectacular rise in the uranium price. Uranium producers only contributed 65 percent to last year’s demand, while the balance came from inventory sales and blended down uranium from decommissioned Russian w
As we reported at the conference last week, Scotiabank’s vice president of economics Patricia Mohr believes uranium will continue to be a bright spot in the commodities market in 2007. She pointed out her bank’s commodity index had probably peaked in August, but she felt uranium would be the “exception to this.” Mohr cited inadequate mining supply as the primary driver in the spectacular rise in the uranium price. Uranium producers only contributed 65 percent to last year’s demand, while the balance came from inventory sales and blended down uranium from decommissioned Russian w
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
rheads.
Paladin and Namibia
Dustin Garrow talked about Paladin’s amazing success story, discussing how he was approached by the company’s CEO in 2003 when the stock was trading for three cents and offered stock options. Three years later, Garrow remains ebullient on Paladin’s growth prospects in Africa and elsewhere. It is a tribute to unrestrictive environmental regulations in Namibia and Paladin’s rapid execution at the Langer Heinrich uranium project that the company can announce it will be shipping its first yellowcake in early 2007.
In an interesting disclosure, Garrow explaine
Paladin and Namibia
Dustin Garrow talked about Paladin’s amazing success story, discussing how he was approached by the company’s CEO in 2003 when the stock was trading for three cents and offered stock options. Three years later, Garrow remains ebullient on Paladin’s growth prospects in Africa and elsewhere. It is a tribute to unrestrictive environmental regulations in Namibia and Paladin’s rapid execution at the Langer Heinrich uranium project that the company can announce it will be shipping its first yellowcake in early 2007.
In an interesting disclosure, Garrow explaine
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
d how Paladin had arranged a syndicated loan agreement to fund its mine development and construction. Clauses within this loan agreement required the mandatory forward sale of a portion of the mine’s production. Those two sales contracts of more than 5 million pounds of U3O8 are scheduled for delivery between 2007 and 2012 to two U.S. utilities. Garrow led the audience to believe selling at such a low price was not something Paladin desired. Arranging the sale with his partner, Garrow said, “My partner and I have a combined 50 years in this business, and we provided this uranium to our
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
most preferred customers.”
Currently producing about seven percent of the world’s uranium, Namibia has become a hotspot since we reported on this country last March. At the time, there were but three companies. Since then, the number has grown to 14, according to an announcement by the Ministry of Mines and Energy. We checked the progress on Forsys Metals (TSX: FSY), which we reported upon in March. Forsys spokesman Sean Felker told us, “We are revising our resource calculation and releasing it in the fourth quarter.” The company has spent this year further proving up their resource,
Currently producing about seven percent of the world’s uranium, Namibia has become a hotspot since we reported on this country last March. At the time, there were but three companies. Since then, the number has grown to 14, according to an announcement by the Ministry of Mines and Energy. We checked the progress on Forsys Metals (TSX: FSY), which we reported upon in March. Forsys spokesman Sean Felker told us, “We are revising our resource calculation and releasing it in the fourth quarter.” The company has spent this year further proving up their resource,
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
while the company’s stock continues flying under the industry’s radar screen.
A research report by Orion Securities in Toronto, which participated in raising money for Forsys, suggested the all-in cost to mine the company’s Valencia project could come in under $25/pound and would have an IIR of 30 percent after tax. Early estimates show the Valencia project might annually produce 2.5 million pounds of U308 over ten years. This was sufficient to interest the fuel broker for a major U.S. utility. Felker said, “We’ve started the process of marketing our uranium after the utility sent a c
A research report by Orion Securities in Toronto, which participated in raising money for Forsys, suggested the all-in cost to mine the company’s Valencia project could come in under $25/pound and would have an IIR of 30 percent after tax. Early estimates show the Valencia project might annually produce 2.5 million pounds of U308 over ten years. This was sufficient to interest the fuel broker for a major U.S. utility. Felker said, “We’ve started the process of marketing our uranium after the utility sent a c
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
onsulting geologist to study the property.” Due diligence was done on site in Namibia. Felker explained his company’s Valencia project was about 30 months away from where Paladin’s Langer Heinrich is today.
Forsys appears to be following Paladin’s lead. As success was developing for Paladin in Namibia, the company moved to near completion of a bankable feasibility study at the Kayelekera uranium project in Malawi. Now, Forsys is considering other uranium properties in Africa. Both companies, and others developing uranium projects in Africa, will utilize the open pit method to maximize
Forsys appears to be following Paladin’s lead. As success was developing for Paladin in Namibia, the company moved to near completion of a bankable feasibility study at the Kayelekera uranium project in Malawi. Now, Forsys is considering other uranium properties in Africa. Both companies, and others developing uranium projects in Africa, will utilize the open pit method to maximize
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
recovery of uranium from their mines.
David Miller Predicts More U.S. Uranium Will be Conventionally Mined
It is likely that rising uranium prices will beget more costly uranium extraction methods, which of course will provide a more solid floor for the uranium price over the next ten to fifteen years.
The presentation made by Strathmore Mineral’s President David Miller vividly illustrated why the United States can continue mining uranium over the next two decades. Admittedly, the United States is unlikely to return to the glory uranium production years of the 1950s and 1960s. “T
David Miller Predicts More U.S. Uranium Will be Conventionally Mined
It is likely that rising uranium prices will beget more costly uranium extraction methods, which of course will provide a more solid floor for the uranium price over the next ten to fifteen years.
The presentation made by Strathmore Mineral’s President David Miller vividly illustrated why the United States can continue mining uranium over the next two decades. Admittedly, the United States is unlikely to return to the glory uranium production years of the 1950s and 1960s. “T
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
he U.S. can still become a medium size uranium producer,” Miller told the audience. He predicted conventional mining would replace the preferred method of ISR mining in the United States in less than ten years. In Miller’s presentation, he forecast conventional uranium mining – through underground and open pit mining methods – might exceed 16 million pounds annually by 2020.
Miller’s research demonstrated a number of uranium companies whose combined annual production could reach nearly 30 million pounds by 2020. In several slides, he extrapolated production estimates from various comp
Miller’s research demonstrated a number of uranium companies whose combined annual production could reach nearly 30 million pounds by 2020. In several slides, he extrapolated production estimates from various comp
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
nies – such as Uranerz Energy (Amex: URZ), UR-Energy (TSX: URE), Energy Metals (TSX: EMC) and Strathmore Minerals (TSX: STM) – to reach annual uranium production in excess of ten million pounds after 2012.
Miller explained to the audience that U.S. production could surpass 20 million pounds later in the second decade and help provide U.S. utilities with more than one-quarter of their annual consumption. He has argued, along with the Uranium Producers of America, for the development of a domestic uranium supply to benefit U.S. utilities from over-dependence upon foreign uranium.
We ta
Miller explained to the audience that U.S. production could surpass 20 million pounds later in the second decade and help provide U.S. utilities with more than one-quarter of their annual consumption. He has argued, along with the Uranium Producers of America, for the development of a domestic uranium supply to benefit U.S. utilities from over-dependence upon foreign uranium.
We ta
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
lked with him after his presentation about time frames and the mine operating costs at various uranium grades. Miller told us, “It will take the U.S. about four to six years to get up to steam.” A lot of the hurdles to overcome were not the mining issues or fund raising to bring those projects into production. “There are a number of interested parties wishing to participate in different U.S. uranium projects,” he told us without naming anyone in particular. “It is the permitting time which takes so long.”
He calculated, from studies he was recently involved with, that the operating co
He calculated, from studies he was recently involved with, that the operating co
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
sts for an underground mining and milling operation would cost about $80 to $120/ton. An average grade of 0.1 percent U3O8 would yield two pounds per ton, but a feed grade averaging 0.2 percent would yield four pounds per ton. Uranium ore yielding four pounds per ton would cost about $25/pound. Miller explained that grades at Green Mountain, which SXR Uranium One is currently investigating for purchase, and his company’s Roca Honda property, should be profitable using the $100/ton benchmark. Both properties have reported economic grades through various studies.
Strathmore’s Roca Honda
Strathmore’s Roca Honda
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
property in New Mexico demonstrated its resource through a National Instrument 43-101. Miller emphasized the higher percentage of recovery in New Mexico. “Historically, the Grants Uranium District in New Mexico recovered mid 90s percent,” he told us. “You don’t produce mine 340 million pounds (historical production in this area) by having poor recovery.” By comparison, Miller said the recovery rate in Wyoming was in the low 90s percentage-wise. These percentages exceed conventional mining average recovery rates as stated in the IAEA Red Book.
In evaluating production costs, derived fr
In evaluating production costs, derived fr
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
om discussions with other industry insiders, it is likely the resurgence of conventional mining could potentially double the capital and operating costs of several uranium projects. While it is possible some or several ISR uranium projects in Wyoming, Texas or New Mexico could enjoy operating costs for less than $30/pound, the capital cost for an underground U.S. uranium mine and mill could reach $200 million.
Rising labor costs, environmental regulations, increased start-up costs and even weather-related occurrences, such as the cyclone impacting production at Australia’s Ranger uran
Rising labor costs, environmental regulations, increased start-up costs and even weather-related occurrences, such as the cyclone impacting production at Australia’s Ranger uran
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
ium mine, point to a continued rise in the price of uranium over the next few years. At the very least, utilities might be facing a new floor price should the overheated uranium market step back a few price levels over the coming year or years.
In the next feature in this series, further conversations we had at the Platts conference confirm Gene Clark’s comments, and those made by others, that the uranium price has exceeded nearly everyone’s expectations. And it should continue doing so in the months ahead. To be continued.
COPYRIGHT © 2007 by StockInterview, Inc. ALL RIGHTS RESERVED
In the next feature in this series, further conversations we had at the Platts conference confirm Gene Clark’s comments, and those made by others, that the uranium price has exceeded nearly everyone’s expectations. And it should continue doing so in the months ahead. To be continued.
COPYRIGHT © 2007 by StockInterview, Inc. ALL RIGHTS RESERVED
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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