Uranium Miners Outperforming Spot Prices


"Analysts now expect uranium spot-price floor ~$45–$50/lb."

The market valuation of Canadian companies with one or more uranium projects appreciated ~22% over the past month, 28% over the past three and 43% over the past year. Despite some Resources-Super-Profits-Tax concerns, shares of Australian miners have performed relatively strongly—rising 18% over the past month, surging 29% over previous quarter and 18% over the past year.

The uranium spot price retreated this week losing some of the momentum gained earlier last month. TradeTech reported its Spot Price Indicator at $46.50/lb., down $1.50 from last week. The spot price dip resulted from a lack of firm buying interest at higher prices and the introduction of new supply. Five transactions were concluded last week with buyers, including both producers and traders.

Reduced prices attracted buyers back into the market, and new demand emerged late in the week with two buyers entering the market to buy up to 1 Mlb. of uranium. A producer issued a Request for Proposal (RFP) for the purchase of up to 500,000 pounds with offers due at the end of September.

On the supply side, USEC is expected to issue a proposal this week on behalf of DOE, requesting bids for approximately 640,000 pounds of uranium. This material is being sold to fund additional clean-up efforts at the Portsmouth, Ohio enrichment facility.

With the uranium spot price currently trading at $46.50/lb., it is up 14% from three months ago ($40.75/lb.) and still showing improvement since the start of the year, when it was $44.50/lb.

Some analysts now expect the uranium spot price to find a floor around the $45–$50/lb. range. This gradual drift in spot and contract prices over the past 12 months reflects in part the tremendous growth in new mine supply from Kazakhstan's ISR projects.

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