RCR: Global Uranium Companies Report
Source: John Wilson, Resource Capital Research (12/11/08)
Resource Capital Research released its major quarterly research report covering 19 global uranium exploration and development companies. Its findings include increased uranium purchases by utilities anticipated early 2009, coupled with recent announcements of delayed deferred or moth ball mining projects is providing support to the spot uranium price with potential for further modest increases into 2009.
The quarterly report typically reviews companies listed in Australia, Canada, USA and UK and active in established uranium districts globally.
-The spot uranium price is US$55/lb and we expect it to trade in the range US$50-65/lb into 1Q09.
-Recent mine production cutbacks, project deferments and anticipated increased utility uranium purchases 1Q09 are supporting the near term sector price outlook.
-The industry long-term uranium price is US$70/lb, down US$10/lb (from US$80/lb) 3 months ago.
-The fund implied uranium price, a key leading indicator, has recently traded from a high of US$60/lb (8 Sept) to a low of US$28/lb (23 Oct) and is currently US$36-39/lb, suggesting forced fund sales remain a market risk.
-Planned and proposed new nuclear power reactors worldwide increased December ’08 to 376 units, up from 318 August ’08 (+58 units, +18%). The main increases are UAE (11), Italy (10), UK (6), Vietnam (6) and Poland (5).
-Interestingly, a significant number of new planned and proposed reactors announced since August are in advanced, non-Asian economies like Europe, confirming potential for growth in nuclear reactor demand in developed economies.
-The market valuation of Australian companies with one or more uranium projects is down 23% over the past month and down 75% over the past 12 months.
-This compares with a selection of Canadian companies with one or more uranium projects, down 27% over the past month and down 77% over the past 12 months.
-Production and development stage companies continue to face significant challenges in financing and developing new projects, including cost pressures and potential delays variously relating to permitting, infrastructure development, commissioning and now credit and equity market weakness.
-Strategic interest in large-scale projects continues in Namibia with a takeover offer for Forsys Metals (TSX:FSY) valued at US$7.50/lb U3O8 and Rio Tinto’s (ASX:RIO) interest in Extract Resources (ASX:EXT) project.
To access the free summary report or to purchase the complete 96-page comprehensive report, go to www.rcresearch.com.au/reports.