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Consider�
The Somair uranium mine in Niger, owned and operated by France's Paris
based Areva (a uranium miner and nuclear reactor builder), was very recently
the site of a terrorist attack. Areva, the world's leading nuclear company
has been working in Niger for more than 40 years and obtains more than 30
percent of its uranium from the country. Areva produced more than 4,500
tonnes of U3O8 from the country in 2012 - 3,000 tonnes coming from Somair.
According to the World Nuclear Association Niger ranks fourth in the world
for uranium production and accounts for 10 percent of world supply.
Cameco (TSE: CCO), is the world's largest uranium producer and is planning
to increase its U.S. production in the Powder River Basin, Wyoming. Cameco
president and CEO Tim Gitzel told an audience at the company's 2013 annual
general meeting that utilities will need to return to the market soon to
full-fill their requirements beyond 2016, this resupply happening just as the
Russian Highly Enriched Uranium (HEU) agreement ends late 2013. Gitzel also
said Cameco, and many other companies, have put their greenfield projects on
hold and with little new supply coming on stream the future remains strong
for the uranium industry.
Uranium One (TSE: UUU), is one of the world�s largest publicly traded
uranium producers with a primary listing on the Toronto Stock Exchange and a
secondary listing on the Johannesburg Stock Exchange. Commercial in-situ
recovery (ISR) mining has been ongoing in the Powder River Basin since 1987,
with production coming from Cameco Resources Inc.�s currently operating Smith
Ranch-Highland mine in the southern Powder River Basin and from Uranium One�s
Willow Creek ISR mine also in the Powder River Basin. Uranium One�s major
shareholder (50 percent) is JSC Atomredmetzoloto (ARMZ) which is a wholly
owned subsidiary of Rosatom, the Russian State Corporation for Nuclear Energy.
Uranerz Energy Corp. (NYSE: MKT, TSX: URZ) is a U.S. mining company
operating in Wyoming�s Powder River Basin where it controls a large strategic
land position. URZ is expected to be in production (initial annual recovery
targeted for 600,000 to 800,000 pounds after ramp-up) in 2013. Uranerz has a
processing deal with Cameco and long term sales contracts for a portion of
their production with Exelon (operator of the largest nuclear fleet in the
U.S.) and an undisclosed U.S. utility. The Company�s Nichols Ranch ISR
uranium project is licensed for a capacity of two million pounds per year of
uranium yellowcake.
Conclusion
There is no shortage of uranium in the ground - there is enough to meet
expected demand for the foreseeable future. Unfortunately, a lot of it is
just not economic to dig up at current prices. Exploration for new deposits
seems to be falling drastically and with lead times approaching a decade or
more, the mining industry looks like it is not going to have enough supply to
meet the increased demand.
Many analysts expect demand to start exceeding supply in early 2014, if so
we should soon see spot prices start moving up towards the current long term
contract price of roughly $60/lb. Most uranium, 80 to 85 percent, is sold
directly under long-term supply contracts between buyers and sellers, just
15-20 percent of uranium is sold at the quoted spot price.
Supply price shocks and market disruptions could happen if there are
problems (terrorist attack, NGO interference, natural disaster) with any of
the major supply sources. A source of U.S. market vulnerability is the
relatively low level of inventories held by buyers and sellers.
In 2012, U.S. suppliers and civilian owner/operators (COO) purchased 56
million pounds U3O8e - the United States mined just 4.1 million pounds of
uranium. Current annual global uranium consumption is 190 million pounds,
annual global mine production is 140 million pounds, stockpiles are dwindling
and the HEU agreement with Russia ends this year.
The inevitable, the unpreventable U.S. and global mined uranium shortage
should be on all our radar screens. Is it on yours?
If not, it should be.
rick@aheadoftheherd.com
www.aheadoftheherd.com
Richard is the owner of Aheadoftheherd.com and invests in the junior
resource/bio-tech sectors. His articles have been published on over 400
websites, including:
WallStreetJournal, USAToday, NationalPost, Lewrockwell, MontrealGazette,
VancouverSun, CBSnews, HuffingtonPost, Londonthenews, Wealthwire,
CalgaryHerald, Forbes, Dallasnews, SGTreport, Vantagewire, Indiatimes,
ninemsn, ibtimes, businessweek.com and the Association of Mining Analysts.
If you're interested in learning more about the junior resource and
bio-med sectors, and quality individual company�s within these sectors,
please come and visit us at www.aheadoftheherd.com
***
Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell or
the solicitation of an offer to purchase or subscribe for any investment.
Richard Mills has based this document on information obtained from sources
he believes to be reliable but which has not been independently verified.
Richard Mills makes no guarantee, representation or warranty and accepts
no responsibility or liability as to its accuracy or completeness.
Expressions of opinion are those of Richard Mills only and are subject to
change without notice. Richard Mills assumes no warranty, liability or
guarantee for the current relevance, correctness or completeness of any
information provided within this Report and will not be held liable for the
consequence of reliance upon any opinion or statement contained herein or any
omission.
Furthermore, I, Richard Mills, assume no liability for any direct or
indirect loss or damage or, in particular, for lost profit, which you may
incur as a result of the use and existence of the information provided within
this Report.
Richard Mills does not own shares in any company mentioned in this report.
Uranerz Energy Corp. TSX: URZ is an advertiser on Richard�s site,
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