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Uranium Week: And The Winner Is…

Weekly Reports | Apr 16 2019

The US Commerce Department’s section 232 recommendations regarding uranium imports have finally been submitted to the White House.

-The recommendations are in but the wait continues
-Yellow Cake buys more uranium
-Honeymoon just beginning

By Greg Peel

The US Department of Commerce has completed its investigation into uranium imports under section 232, regarding “national security”, and has submitted its recommendations to the White House.

Hooray!

The recommendations remain confidential.

Oh.

The president has 90 days to respond.

A spokesman for the original petitioners – two US uranium producers – told Reuters “We believe that President Trump will recognize the danger of relying on large and increasing levels uranium imports from Russia, China and our geopolitical rivals”.

A spokesman for a group of US utilities told Reuters “The geopolitical issues they raised have been more than adequately debunked. The petition would create a mandated market to make profits for two companies”.

Game on.

Have your cake

While uranium market participants pondered yet another three months of waiting for an answer, London-based investment vehicle Yellow Cake is undeterred. The Alternative Investment Market-listed firm has successfully placed 12m new shares, raising approximately US$30m.

The funds will be used to take up an option to buy at least a further 1mlbs U3O8 under Yellow Cake’s arrangement with Kazakhstan’s formerly fully state-owned, now partially listed, uranium producer Kazatomprom. The purchase price has been set at US$25.88/lb.

Yellow Cake will spend around US$27m in this round, with the balance of the option to buy US$100m worth of U3O8 open to end-2019. The firm “believes that the current uranium price level represents a compelling buying opportunity,” a statement suggested.

And not all utilities, both US and non-US, are sitting on their hands waiting for the 232 outcome. Several were in discussions or evaluating offers last week for significant volumes to be delivered in the near future, industry consultant TradeTech reports.

TradeTech’s weekly spot price indicator has ticked up US10c to US$25.85/lb.

Term market indicators remain at US$28.00/lb (mid) and US$32.00/lb (long).

Who’s the Boss?

The Australian federal government has granted permission for uranium to be exported from the Honeymoon mine in South Australia to countries which are signatories to the global Treaty on the Non-Proliferation of Nuclear Weapons. Honeymoon had been put under care & maintenance by its previous owners due to the weak uranium price.

“Renewing the export permit is a major step towards restarting production at Honeymoon,” said the MD of new owner Boss Resources ((BOE)), “as uranium is Australia’s most heavily regulated commodity." The company is also in discussions with utilities regarding offtake agreements.

The Australian government permits only four mines to export uranium, being Olympic Dam, Ranger (not currently mining), Beverley/Four Mile and now, once again, Honeymoon. Three of the four are in South Australia, which permits uranium mining at the state government level. Ranger, in the Northern Territory, resides under federal law.

The states of Queensland and Western Australia forbid uranium mining under current state governments, albeit WA has exempted four projects that were granted approval under a previous government. The Queensland economy is heavily reliant on coal production, an industry which no state government of either stripe has ever been game enough to take on.

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