10th September 2021
The uranium market has been of increasing interest since March this year, when mining.com published an article suggesting that a price rally was on the cards. That has proven prescient, with the uranium spot price now over $40 USD/lb. That's a rise of over 30% year to date, which is pleasant news for those who never lost faith in the heavy metal after the Fukushima disaster in 2011. That catastrophe saw the price of uranium, which had already been heading downwards, begin a years-long decrease as demand dried up over fears of actual and public relations nightmares associated with nuclear power at the time. In 2016, the price bottomed out at around $17.75 USD/lb, creating very little desire to increase production in existing mines, or to invest in exploration for new ones. But since then, the price has been crawling skyward again, and this year might mark uranium's entry back into bull market territory.
A big part of the driving force behind this slow but steady increase in demand is the increasing urgency of a transition to low-carbon electricity generation. As it stands, nuclear is capable of producing vastly more energy than renewables with low CO2 release, and it also has the advantage of a significantly smaller land footprint and higher uptimes, as is highlighted in this article. The World Nuclear Association predicts an increase in demand for uranium of 26% between 2020 and 2030, citing new generators coming online in that time that will need new cores. Around 60% of new nuclear power stations are expected to pop up in China alone, as the manufacturing powerhouse looks to credibly green its massive industries. And while Fukushima may have slowed growth in nuclear power to a trickle, the sector has recovered well in the decade since, with power generation from nuclear plants reaching pre-Fukushima levels again around 2019.
In 2019, only 80% of demand for uranium was met by mine production, with the remainder coming mostly from stockpiles built up during the years of low prices after Fukushima. This below-par supply has been further fuelled by major players, such as Kazatomprom in Kazakhstan (which is the world's largest producer) and Cameco's Cigar Lake in Canada, saying that they will keep their reduced output due to COVID-19. Smaller but still significant suppliers including Rio's Australian Ranger Mine and Cominak in Niger have closed altogether. But this situation can't continue forever as stockpiles will eventually dwindle, and perhaps now would be a good time to look into increasing new and old mine production to meet anticipated future demand. One junior making moves in this space is Baseload Energy (TSXV:FIND, OTCQB:BSENF) with three exciting projects in Canada - see below for information on the intended closure of their successful private placement.
Another, much bigger player that is making a splash in the market at the moment is investment firm Sprott Inc. Sprott launched its physical uranium trust in July last year, and just last month it launched an at-the-market equity program designed to raise $300 million USD, of which it so far has $200 million. The trust has poured that money back into the market and it has been snapping up spot uranium at incredible speed. It has amassed over 24 million pounds of physical uranium, buying as much as 500,000 pounds in a single day, in a concerted effort to corner the physical market. With reports by Morgan Stanley and BMO predicting a price rise to $50/lb by 2024, it looks like Sprott might be onto something. Hopefully we can see some agile junior miners ride that wave as well.
Around the Traps
As promised, here is the most recent news release from Baseload Energy, who anticipate gross proceeds of up to $3,838,702 from the second tranche of its private placement, which it will use for exploration on its three Canadian uranium projects.
Very exciting news for Goldplay (TSCV:AUC), who have announced the acquisition of two large copper-gold projects in British Columbia, adding yet more high-potential ground to their rapidly growing portfolio.
Firefox Gold (TSXV:FFOX, OTCQB:FFOXF, FSE:A2PDU7) has a webinar coming up on the 13th of September featuring their CEO and Director as well as their Chairman. This is a chance to get insights on a great company from the horse's mouth! Especially since the company just announced an extension of its high-grade gold zone at the Mustajärvi project in Finland.
Solgold (LSE&TSX:SOLG) has some good numbers in the exploration update on its Tandayama-America copper-gold project in Ecuador.
Hope it’s been a good week for all of you, that’s all from me!
- Jane Lockwood