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Uranium Week: Gates And Buffett Combine On Nuclear

Weekly Reports | Jun 08 2021

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

As the uranium spot price rises for the fifth consecutive week, advanced nuclear technologies in the US are pointing the way to energy grids of the future

-Next generation small advanced reactor project
-Paladin Energy expands shareholder base
-Uranium spot price rises by 1.9% for the week and 5% for 2021

By Mark Woodruff

Warren Buffett’s power company Pacific Corp, and TerraPower, founded by Bill Gates 15 years ago, have collaborated on a plan to launch a next-generation, small nuclear plant in the US.

TerraPower, Wyoming Governor Mark Gordon, and PacifiCorp announced plans last week to advance a Natrium reactor demonstration project which will feature a sodium reactor and molten salt energy storage system. The plant will take about seven years to build and is expected to perform better, be safer and cost less than traditional nuclear power, according to TerraPower’s chairman Bill Gates.

“The future of nuclear energy is here,” US Energy Secretary Jennifer Granholm said by video link. “It’s got a simpler design that will hopefully result in faster construction at lower cost. It’s going to create a smaller footprint. It’s going to be equipped with next generation safety measures.”

If it’s as reliable as conventional nuclear power, the 345-megawatt plant would likely produce enough power for approximately 250,000 homes.

Small advanced reactors, which run on more highly enriched fuels to traditional reactors, are regarded by some as a critical carbon-free technology than can supplement intermittent power sources like wind and solar.

Together with PacifiCorp, we’re creating the energy grid of the future where advanced nuclear technologies provide good-paying jobs and clean energy for years to come,” said Chris Levesque, president and CEO of TerraPower. 

Company news

ASX-listed Paladin Energy ((PDN)) has announced its upgrade from trading on the Pink Market to the (over the counter) OTCQX Best Market in the US. Trading commenced on the OTCQX market on June 2, 2021. The company will continue to have its primary listing on the ASX. 

Trading of Paladin Energy shares on the OTCQX allows the company to access new capital and to expand its shareholder base in the US, without the duplicative regulatory requirements of a US exchange listing.

The OTCQX market also allows for greater access to retail and small institutional investors, with investors being able to trade and settle in US hours and US dollars, allowing for greater visibility and accessibility of the company.

Uranium pricing 

TradeTech’s Weekly Spot Price Indicator is US$32.00/lb, up US$0.60 on last week’s Indicator.

The latest upward trend in the Daily Spot Price amounts to an 11% rise from US$28.40/lb in late April to the current year-high price of US$32.00/lb.

TradeTech’s Weekly Spot Price Indicator has risen over 5% in 2021, averaging a 0.3% weekly gain. The average Weekly Spot Price Indicator in 2021 is US$29.74, -US$0.03 below the 2020 average.

A total of eight transactions involving just over 800,000lbs U3O8 were reported for the week. 

TradeTech's term price indicators are US$31.50/lb (mid) and US$35.00/lb (long).

Heat on pricing for sellers in the mid-term market

Offer prices for uranium delivered in the mid-term period remain relatively flat when compared to the price increases noted in the spot uranium market, reports TradeTech. 

Other buyers are not seeing the same level of pricing as utilities for mid-term delivery. The lack of term sales opportunities has given utilities an advantage, particularly if the quantity is small and the delivery period is limited. Sellers are not taking a great risk in committing significant quantities at today’s prices though are seizing the opportunity to sell material to an end-user and taking it out of the potential sales cycle.

Access to exceptionally low interest rates by several non-primary sellers is one factor contributing to the flat price curve in the mid-term, explains TradeTech. As the second quarter of 2021 advances, more legacy contracts are nearing expiration.

Sellers, facing the erosion of their forward delivery portfolio, must find ways to survive. This may be achieved either through cuts to expenses, creative approaches to raising financial capital, or accepting lower prices in order to provide revenue for ongoing operations until the market improves.

This has resulted in a trend where sellers have expressed a willingness to accept lower prices for long-term deliveries for the earlier portion of a commitment, but only in exchange for additional volumes over the life of the contract that are significant.

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