Uranium Week: Canadian Restarts

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Canada's Cameco and Orano plan to restart virus-shuttered operations at the beginning of September.

-Draft US legislation aiming to revitalise US nuclear infrastructure
-Incremental fall in U3O8 spot price
-ERA reports $40m profit for the half year to 30 June

By Mark Woodruff

So far in 2020, industry consultant TradeTech estimates the covid-19 precautionary reductions to uranium production activities total over -14m pounds U3O8.

In some good news, Cameco Corp said it plans to restart the Cigar Lake Mine in northern Saskatchewan at the beginning of September, after temporarily closing it in March over covid concerns.

The company expects it will take two weeks to return the mine to production, providing it is safe to reopen the mine, according to TradeTech. Should the company restart and maintain continued operations, it is targeting its share of production for 2020 to total 5.3m pounds U3O8.

More detail below in the company news section.

Legislative News

TradeTech reports the chairman of the Senate Committee on Environment and Public Works (EPW) released draft legislation with the aim of revitalising America’s nuclear infrastructure. The draft legislation, known as the American Nuclear Infrastructure Act of 2020 (ANIA) will preserve America’s supply chain, reduce carbon emissions, enable US international leadership and strengthen the country’s economic, energy and national security, according to a statement from the Committee. 

Included in the ANIA is the authorisation for a uranium reserve to ensure the US doesn’t lose the capacity to fuel its nuclear reactors with domestic fuel. Also, on July 29, the Nuclear Prosperity and Security Act was introduced to the House of Representatives, to create a national uranium reserve.

In the US Senate, the Nuclear Energy Leadership Act (NELA) was passed. It aims to re-establish US leadership in nuclear energy, with a focus on the demonstration of advanced reactors.

Uranium Pricing

TradeTech's weekly spot price indicator was unchanged at US$32.70/lb last week. Over July, the indicator fell -US30c from end-June.

The monthly uranium spot price indicator has gained an average of over 4% per month so far in 2020. The average Exchange Value for 2020 is $29.62/lb U3O8. 

Spot market activity for July totalled 36 transactions, involving 5mlb U3O8 equivalent. Producers, traders, and intermediaries dominated the spot uranium market both as buyers and sellers this month with little spot market participation by utilities. 

Price fluctuations over a couple of days reflected the variety of views held by buyers and sellers following the news that Cameco would be restarting the Cigar Lake Mine in early September.

On the one hand, some market participants view the news as bearish and expect buying by one of the primary buyers in the market to slow. On the other hand, others remain bullish as the restart of the Cigar Lake Mine is not guaranteed since the number of virus cases continues to rise in North America, Kazatomprom has extended reduced operations in Kazakhstan, and end-user demand is on the rise. 

The lack of consensus around price development is expected to extend into next week and perhaps through mid-August, suggests TradeTech. 

Company News

Cameco has reported an attributable net loss of -C$53m for the quarter ended 30 June compared to last year's net loss of -C$23m. The result was driven by normal quarterly variations in contract deliveries, ongoing "execution on all strategic fronts” and additional care and maintenance costs due to its proactive closure of mining operations.

The company’s second quarter sales volume was 39% higher than the same quarter last year at 9.2lbs U3O8, at an average realised price of US$32.99/lb.

In related news, Orano Canada said this week it plans to restart the McClean Lake Uranium Mill in Saskatchewan at the beginning of September, in tandem with the Cameco plans to restart the Cigar Lake operations.

Energy Resources of Australia ((ERA)) has reported net profit after tax of $40m for the half year ended 30 June, which resulted from lower cash costs and contract sales being weighted to the first half. The average realised sale price on contracted sales was US$52.99/lb.

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