Spot Uranium Price Slips; Exploration Continues


"For the time being, news of delays could firm the market, especially if bulls can convince the rest of the uranium players that global demand threatens to outstrip supply."

Spot uranium prices fell $3 this week to $48 a pound U3O8, according to price publisher Ux Consulting.

The sudden softening of the market follows several weeks of quiet, but it seems sellers are no longer content to hold out for stronger demand.

Ux reported that at least one seller dropped its offer price in order to attract buyers. Trouble is, for sellers, utilities are still happy using material from their well-stocked inventories. According to Ux, delivery times for uranium were also getting longer, with mid-term delivery schedules preferred over immediate delivery options, thus, even though demand is present, it's not on material for immediate delivery.

In January, rival publisher Tradetech dropped its price estimate $1 to $50 a pound U3O8. Long-term uranium prices are unchanged at $ $70 a pound U3O8 and are expected to stay there through the end of February. The futures market continues to look good, with March futures trading at $50, June futures trading at $57, September contracts worth $58, and December contracts worth $62. 2010 is expected to bring more gains with March futures trading at $64 a pound U3O8.

According to the weekly uranium update from Toll Cross Securities Inc., uranium companies are down across the board, at least those making up the basket of stocks reflected in the Toll Cross Junior Uranium Index, which fell 1.5% this week to 158.13 from 160.53.

But one of uranium's biggest players is trying hard not to let floundering uranium prices and the global economic downturn affect its exploration activities. Canadian uranium giant Cameco Corp. is focusing on its Australian properties of late. The Australian Broadcasting Corporation reports Cameco will hire environmental scientists next month to start baseline surveys for water, dust and radiation levels south of Alice Springs.

Over in Namibia, an Australian company has just stumbled upon a massive uranium deposit and is now studying the feasibility of mining it. World Nuclear News reports Extract Resources has found a massive deposit alongside the existing Rössing mine. Extract announced for Zone 1 of its Rössing South deposit an inferred resource of 41,600 tons of uranium at a grade of some 0.037%, compliant with NI 43-101 standards.

WNN reports Rössing South lies about seven kilometers away from the Rio Tinto-controlled Rössing mine and current figures rank it fourth-biggest in Namibia, after Rössing, Langer Heinrich and Trekkopje.

Australian online financial news provider Business Day reports BHP Billiton's multibillion-dollar expansion at its Olympic Dam copper/uranium/gold operation may be slowing down, which has excited pure uranium plays, in a classic twist of Schadenfreude. BHP hasn't announced a slowdown, but Business Day reports the company just cut some 200 jobs associated with the project, as it doesn't expect environmental clearance until next February.

For the time being, news of delays could firm the market, especially if bulls can convince the rest of the uranium players that global demand threatens to outstrip supply. If a supply/demand gap indeed exists, we should soon see upward movement in the spot market.

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