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Uranium Week: Selling Accelerates

Weekly Reports | Oct 29 2019

This story features PALADIN ENERGY LTD. For more info SHARE ANALYSIS: PDN

The uranium market remains in a state of flux due to policy uncertainty. Sellers became more anxious last week.

-Iran waiver deadline looms
-Sellers jumping over each other
-Paladin moves forward on Langer Heinrich restart

By Greg Peel

Industry consultant TradeTech sums it up succinctly in suggesting the uranium market is currently “frozen by uncertainty”. Last week was the fifth in succession in which the uranium spot price fell, this time notching a less incremental fall than prior weeks on slightly greater volume than has been the case recently during this period of demand stasis.

TradeTech reports six deals concluded in the spot market last week totalling 750,000lbs U3O8 equivalent. Each deal traded at a lower price than the last, resulting in a -US75c drop in the consultant’s weekly spot price indicator to US$24.10/lb. Sellers have clearly become more anxious.

It isn’t helping that the Nuclear Energy Institute is this week hosting its International Uranium Fuel Seminar in Nashville. Such market gatherings, which are quite numerous in the nuclear industry, typically lead to reduced volumes during the period. But the real issue remains that which has hung over the market for a seemingly interminable period – US government policy uncertainty.

At the risk of “broken record” reporting, this extract from last week’s report highlights the most immediate issue:

When the US dropped out of Obama’s deal with Iran with regard its nuclear program, sanctions were applied but waivers were also granted to those companies already invested in supporting Iran with its nuclear power objectives. If these waivers are not reinstated, sanctions would apply to said companies, jeopardizing some 20% of US nuclear fuel supply.

The effects of secondary sanctions could reverberate through the global nuclear fuel market by isolating some major suppliers from customers in Western Europe and beyond. Should the US levy sanctions on countries providing nuclear fuel products and services to Iran, these restrictions would likely include certain Russian, Chinese, and European companies, thereby disrupting nuclear fuel imports into the US.

Throw in President Trump’s yet-to-report Working Group and a review of the Russian Suspension Agreement underway, and it is understandable that demand commitments simply cannot be made with any confidence at this juncture, notwithstanding there is as yet little evidence of desperation on the part of still well-stocked utilities.

Perhaps this week might bring some break in the drought. The aforementioned Iran waivers are set to expire tonight.

There are nevertheless tenders for delivery contracts out in term markets at present, albeit no action as yet. TradeTech’s term price indicators remain at US$27.00/lb (mid) and US$31.00/lb (long).

Rapid Restart

One company that remains confident uranium prices can ultimately recover is Australian listed miner Paladin Energy ((PDN)), which has completed phase one of a prefeasibility study into restarting the Langer Heinrich mine in Namibia. The mine has been under care & maintenance since August last year due to uncommercial uranium prices.

The phase one study suggest improved financials and production capacity, confirming the mine is ready for a “rapid” restart within twelve months of securing adequate financing. One presumes adequate financing may itself hinge on the uranium price outlook.

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