ENERGY
Uranium prices fall again as credit crunch bites
Expert laments “the continued credit crisis gripping the US and its impact on the world economy, including the uranium market”; uranium oxide price drops to two-year low.
Author: Barry SergeantPosted: Wednesday , 01 Oct 2008
JOHANNESBURG -
Scores of investors in dozens of listed uranium stocks around the world were once again disappointed in the past few days as uranium oxide prices moved down again, this time, to two year lows. Specialist trade entities Ux Consulting reported spot prices falling this week to USD 53/lb, down by USD 5/lb, while TradeTech reported USD 55/lb, also down USD 5/lb.
Ux Consulting, which also reported that the term (contract) market price fell USD 5/lb to USD 75/lb, after remaining at around USD 90/lb for much of the past 12 months, told its clients that the continued credit crisis gripping the US and its impact on the world economy was also impacting the uranium market. The uranium market, states UX Consulting "has experienced a great amount of activity as sellers (including hedge funds) have adopted a more aggressive posture to the market".
|
KEY ENERGY PRICES |
USD/unit |
Unit |
From high* |
From low* |
|
NYMEX sweet, light crude |
103.08 |
USD/bbl |
-30.1% |
39.2% |
|
Natural Gas (US) |
7.51 |
USD/mmbtu |
-46.4% |
5.1% |
|
Heating Oil (US) |
2.91 |
USD/gallon |
-31.4% |
37.1% |
|
Coal (Appalachian) |
94.58 |
USD/t |
-33.3% |
72.0% |
|
Uranium Oxide |
55 |
USD/lb |
-42.1% |
0.0% |
|
* 12-month |
|
|
|
|
Ux Consulting believes the credit crisis does not bode well for the future of nuclear power as economic growth will likely be much slower in the future "resulting in a reduced need for new electricity generating capacity". Furthermore, "nuclear power plants are highly capital intensive and require a great deal of financing, which will now be more expensive and difficult to obtain".
The rate of uranium mine production expansion is expected to be cut back due to a recent falls in price, coupled with continued high production costs: "some projects may now be unprofitable and go undeveloped".
The spot uranium oxide price has crashed since peaking around USD 138/lb in June 2007. In the past few years, as uranium spot prices rushed upwards to the 2007 peak blow off from starting lows of around USD 10/lb, an investor mania spurred enormous growth in numbers of would-be uranium diggers. The demand side was seen as an irresistible story, with global energy requirements pushing utilities to seek alternatives to conventional power plants, and switching heavily into nuclear choices.
Corporate activity in the global uranium sector has been relatively muted. Rio Tinto, the diversified major mining stock, recently acquired a stake of 11% in Kalahari Minerals, which holds 39% of Australia-listed Extract Resources, in which Rio Tinto recently acquired a 13% stake. Extract Resources has been in the news recently, on materially positive drill analysis results announced by it out of Namibia, from the Rössing South discovery.
On 5 September, Kalahari Minerals and Extract agreed to a friendly merger, by way of a scheme of arrangement, where Kalahari Minerals would bid 1.6 of its shares for each Extract Resources share, creating a "Mergeco" with some 341m shares in issue. Rio Tinto currently stands as No 2 uranium producer in the world, after Canada-based Cameco. Rio Tinto holds a majority stake in ERA, and also owns 69% of the Rössing mine, known to uranium specialists as the "grand old lady" of the Namibian uranium industry.
Uranium-related activity and development in Namibia gained a relatively high profile in August 2007, when Areva, world No 3 uranium miner, paid USD 2.5bn for Uramin, formed just two years previously to acquire and develop mineral properties, predominantly uranium, in Namibia, the Central African Republic and South Africa.
Extract Resources ranks as one of the better performing of dozens of listed uranium stocks, currently trading "just" 26% off its high price, compared to industry bellwether Cameco (down 54%), and favoured growth story Paladin (down 57%). Paladin recently announced a new resource estimate for the Langer Heinrich project in Namibia, where it has been mining since late 2006.
Further names present in Namibia include Bannerman (down 84%), Deep Yellow (down 58%), Xemplar (down 97%), and Forsys, down a "very" modest 20%. The relative outperformance of Forsys among uranium names is based at least in part on the recent grant of a mining license for its Valencia uranium project, 25km east of the Rössing Mine.
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Selected uranium stocks |
|
|
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|
Producers |
Stock |
From |
From |
Value |
|
|
price |
high* |
low* |
USD bn |
|
CAD 23.06 |
-54.1% |
8.7% |
7.518 |
|
|
AUD 17.13 |
-31.3% |
21.5% |
2.612 |
|
|
AUD 4.05 |
-56.7% |
13.4% |
1.988 |
|
|
CAD 2.30 |
-82.4% |
1.8% |
1.019 |
|
|
CAD 3.14 |
-77.0% |
5.0% |
0.565 |
|
|
Producer averages/total |
|
-60.3% |
10.1% |
13.702 |
|
Weighted averages |
|
-58.5% |
10.9% |
|
|
|
|
|
|
|
|
Developers & other |
|
|
|
|
|
First Uranium |
CAD 3.41 |
-71.6% |
13.3% |
0.423 |
|
UEX |
CAD 1.51 |
-83.8% |
25.8% |
0.260 |
|
Uranium Part. |
CAD 6.18 |
-55.9% |
1.3% |
0.423 |
|
AUD 2.20 |
-38.2% |
40.3% |
0.370 |
|
|
Mega Uranium |
CAD 1.13 |
-80.2% |
17.7% |
0.200 |
|
Alliance Resources |
AUD 0.66 |
-66.4% |
12.8% |
0.144 |
|
AUD 0.66 |
-84.1% |
45.1% |
0.080 |
|
|
CAD 4.93 |
-20.4% |
138.2% |
0.360 |
|
|
Aurora Energy |
CAD 1.48 |
-91.2% |
13.8% |
0.103 |
|
Laramide |
CAD 1.54 |
-82.8% |
18.5% |
0.091 |
|
Mantra Resources |
AUD 1.50 |
-62.5% |
36.4% |
0.096 |
|
AUD 0.73 |
-54.4% |
5.1% |
0.068 |
|
|
AUD 0.22 |
-57.8% |
34.4% |
0.193 |
|
|
AUD 1.10 |
-25.7% |
111.5% |
0.187 |
|
|
Strateco Resources |
CAD 1.60 |
-53.8% |
58.4% |
0.174 |
|
Strathmore Minerals |
CAD 0.46 |
-87.7% |
24.3% |
0.032 |
|
UR-Energy |
CAD 0.67 |
-84.5% |
17.5% |
0.059 |
|
Mintails |
AUD 0.15 |
-79.9% |
3.4% |
0.083 |
|
Uranium Resources |
USD 1.69 |
-88.7% |
8.3% |
0.094 |
|
Uranerz |
CAD 1.35 |
-69.3% |
12.5% |
0.071 |
|
CAD 2.90 |
-34.1% |
537.4% |
0.222 |
|
|
Mineral Securities |
GBP 0.32 |
-60.9% |
0.0% |
0.092 |
|
Marathon Resources |
AUD 0.99 |
-70.4% |
42.4% |
0.048 |
|
Nufcor Uranium |
GBP 1.44 |
-62.6% |
5.1% |
0.106 |
|
GBP 0.32 |
-30.6% |
53.6% |
0.096 |
|
|
Pan African |
GBP 0.03 |
-70.7% |
4.3% |
0.059 |
|
Uranium Energy |
USD 0.95 |
-80.3% |
33.8% |
0.044 |
|
Strathmore |
CAD 0.46 |
-87.7% |
24.3% |
0.032 |
|
Tournigan |
CAD 0.22 |
-92.3% |
22.9% |
0.025 |
|
Scimitar Resources |
AUD 0.17 |
-78.5% |
0.0% |
0.007 |
|
Vital Metals |
AUD 0.17 |
-82.5% |
0.0% |
0.015 |
|
Southern Uranium |
AUD 0.05 |
-81.4% |
0.0% |
0.005 |
|
Uranium Equities |
AUD 0.14 |
-61.1% |
40.0% |
0.021 |
|
Black Range Minerals |
AUD 0.03 |
-83.9% |
20.8% |
0.014 |
|
Berkeley Resources |
GBP 0.22 |
-73.2% |
4.9% |
0.040 |
|
CAD 0.24 |
-97.2% |
20.0% |
0.027 |
|
|
JNR Resources |
CAD 0.33 |
-90.6% |
10.0% |
0.026 |
|
Crosshair Exploration |
CAD 0.24 |
-91.7% |
11.6% |
0.022 |
|
A-CAP Resources |
AUD 0.38 |
-64.9% |
97.4% |
0.033 |
|
Fission Energy |
CAD 0.26 |
-84.1% |
15.6% |
0.010 |
|
Curnamona Energy |
AUD 0.26 |
-80.0% |
0.0% |
0.014 |
|
Coronation Minerals |
CAD 0.13 |
-70.5% |
4.0% |
0.012 |
|
Khan Resources |
CAD 0.47 |
-85.2% |
13.4% |
0.024 |
|
Bayswater Uranium |
CAD 0.14 |
-89.2% |
40.0% |
0.019 |
|
Energy Fuels |
CAD 0.48 |
-80.8% |
35.7% |
0.025 |
|
Azimut Exploration |
CAD 1.34 |
-77.2% |
27.6% |
0.021 |
|
Desert Energy |
AUD 0.27 |
-30.8% |
86.2% |
0.018 |
|
Pancontinental Uranium |
CAD 0.11 |
-90.8% |
29.4% |
0.005 |
|
Pepinnini Minerals |
AUD 0.47 |
-66.4% |
6.8% |
0.026 |
|
Nuinsco Resources |
CAD 0.20 |
-51.8% |
29.0% |
0.033 |
|
West Prospector |
CAD 1.30 |
-43.0% |
173.7% |
0.067 |
|
Pitchstone Exploration |
CAD 0.41 |
-87.3% |
6.6% |
0.012 |
|
Canalaska Uranium |
CAD 0.13 |
-78.3% |
18.2% |
0.017 |
|
Uranium Power |
CAD 0.24 |
-70.3% |
6.8% |
0.022 |
|
Bitterroot Resources |
CAD 0.23 |
-79.2% |
21.6% |
0.012 |
|
Encounter Resources |
AUD 0.30 |
-41.2% |
50.0% |
0.016 |
|
Calypso Uranium |
CAD 0.12 |
-85.5% |
0.0% |
0.006 |
|
Magnum Uranium |
CAD 0.24 |
-75.3% |
50.0% |
0.007 |
|
Atomic Resources |
AUD 0.11 |
-66.1% |
0.0% |
0.005 |
|
Titan Uranium |
CAD 0.20 |
-86.5% |
25.0% |
0.010 |
|
Uranex |
AUD 0.22 |
-85.1% |
13.2% |
0.014 |
|
Red Hill Energy |
CAD 0.68 |
-53.1% |
17.2% |
0.031 |
|
Pele Mountain |
CAD 0.16 |
-81.6% |
28.0% |
0.013 |
|
Crossland Uranium |
AUD 0.11 |
-63.3% |
37.5% |
0.010 |
|
Monaro Mining |
AUD 0.18 |
-83.6% |
9.1% |
0.013 |
|
Epsilon Energy |
AUD 0.11 |
-87.4% |
22.2% |
0.004 |
|
Eromanga Uranium |
AUD 0.05 |
-84.5% |
18.4% |
0.005 |
|
African Energy |
AUD 0.06 |
-87.4% |
31.0% |
0.007 |
|
Fusion Resources |
AUD 0.31 |
-76.5% |
3.3% |
0.012 |
|
NWT Uranium |
CAD 0.08 |
-91.1% |
7.1% |
0.008 |
|
Cash Minerals |
CAD 0.09 |
-88.8% |
28.6% |
0.010 |
|
Apollo Minerals |
AUD 0.25 |
-52.8% |
25.0% |
0.019 |
|
Forum Uranium |
CAD 0.10 |
-83.9% |
25.0% |
0.007 |
|
Wealth Minerals |
CAD 0.32 |
-90.9% |
5.0% |
0.008 |
|
Santoy Resources |
CAD 0.14 |
-82.3% |
16.7% |
0.012 |
|
Uracan Resources |
CAD 0.29 |
-70.9% |
90.0% |
0.018 |
|
Niger Uranium |
GBP 0.09 |
-82.1% |
19.4% |
0.019 |
|
Unor |
CAD 0.08 |
-77.1% |
23.1% |
0.011 |
|
Purepoint Uranium |
CAD 0.11 |
-83.8% |
15.8% |
0.008 |
|
Nortec Ventures |
CAD 0.23 |
-35.7% |
28.6% |
0.015 |
|
Int'l Enexco |
CAD 0.51 |
-84.1% |
6.3% |
0.009 |
|
U3O8 Corp. |
CAD 0.55 |
-71.8% |
0.0% |
0.012 |
|
Silver Spruce |
CAD 0.11 |
-91.9% |
37.5% |
0.005 |
|
Triex Minerals |
CAD 0.40 |
-89.5% |
1.3% |
0.008 |
|
Rum Jungle Uranium |
AUD 0.13 |
-54.5% |
38.9% |
0.012 |
|
Solex Resources |
CAD 0.19 |
-66.7% |
18.8% |
0.010 |
|
Uravan Minerals |
CAD 0.23 |
-75.5% |
21.1% |
0.006 |
|
Universal Uranium |
CAD 0.11 |
-85.5% |
4.8% |
0.005 |
|
Oklo Uranium |
AUD 0.06 |
-78.0% |
10.0% |
0.003 |
|
Hawk Uranium |
CAD 0.11 |
-78.6% |
40.0% |
0.005 |
|
Macusani Yellowcake |
CAD 0.35 |
-70.1% |
2.9% |
0.008 |
|
Great Australian |
AUD 0.07 |
-80.6% |
0.0% |
0.006 |
|
Contact Uranium |
AUD 0.08 |
-88.3% |
25.0% |
0.007 |
|
Blue Sky Uranium |
CAD 0.11 |
-85.9% |
0.0% |
0.003 |
|
Aura Energy |
AUD 0.23 |
-55.8% |
27.8% |
0.008 |
|
Empire Resources |
AUD 0.07 |
-75.0% |
6.6% |
0.004 |
|
Northern Continental |
CAD 0.13 |
-70.9% |
25.0% |
0.006 |
|
Int'l Montoro |
CAD 0.08 |
-81.3% |
0.0% |
0.002 |
|
North Atlantic Resources |
CAD 0.11 |
-85.3% |
37.5% |
0.003 |
|
Uranium City |
CAD 0.05 |
-86.6% |
50.0% |
0.002 |
|
Developer averages/total |
|
-73.5% |
30.2% |
5.188 |
|
Weighted averages |
|
-74.0% |
31.9% |
|
|
Overall averages/total |
|
-72.2% |
29.0% |
18.890 |
|
Overall weighted averages |
|
-64.3% |
16.0% |
|
|
|
|
|
|
|
|
Diversifieds with uranium |
|
|
|
|
|
EUR 548.96 |
-33.1% |
8.7% |
27.481 |
|
|
GBP 37.17 |
-48.1% |
19.5% |
95.493 |
|
|
GBP 13.15 |
-40.4% |
13.4% |
139.567 |
|
|
USD 23.10 |
-53.0% |
9.9% |
8.100 |
|
|
CAD 2.52 |
-64.0% |
7.2% |
1.414 |
|
|
* 12-month |
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Source: market data; table compiled by Barry Sergeant |
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