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Uranium Week: Term Contract Prices Soar

Weekly Reports | Oct 05 2021

This story features VIMY RESOURCES LIMITED. For more info SHARE ANALYSIS: VMY

As the weekly spot uranium price has a second consecutive week of falls, prior increases have placed upward pressure on term contract prices.

-Material rises for both mid and long-term prices 
-Vimy Resources secures mining approvals
-Uranium spot price falls over -6% for the week

By Mark Woodruff

Term contracting prices moved up strongly last week, potentially signalling the recent rise in spot prices may not be an aberration.

TradeTech's mid-term price indicator for September 30 closed at US$43.75/lb, a rise of US$8/lb, while the long-term price indicator increased by US$10/lb to close the month at US$45/lb. 

Growing levels of spot purchases, by parties that intend to sequester the material, is placing pressure on the mid-and long-term uranium markets, points out TradeTech.

The August trend of spot uranium price rises outpacing prices in the mid-and long-term sectors was reversed in September. From the second half of the month spot prices began to fall. 

Buyers came to the mid-and long-term markets through various channels, including formal Requests for Proposals (RFPs) and off-market discussions with potential suppliers. Five transactions were reported in the term uranium market for September.

Meanwhile, TradeTech's Weekly Spot Price Indicator last week fell by -US$2.85 lb or over -6% to US$41.25/lb. The Indicator has risen 60% above the 2021 low point of US$27.40/lb and is up 36% in 2021. The average Weekly Spot Price in 2021 is US$32.26/lb, US$2.55 above the 2020 average.

The -20% fall over the last two weeks has been driven partly by dual uncertainties pertaining to the Evergrande debt crisis in China on world equity markets and the progress of the US$1.2tr infrastructure bill in the the US House of Representatives, according to TradeTech. It’s felt the arrival of investor interests, such as the Sprott Physical Uranium Trust (SPUT), has amplified the sentiment-driven nature of the spot price and broadened its sensitivity to developments outside the nuclear industry.

Nonetheless, the fundamental factors that led to the creation of SPUT remain at play in the uranium market, notes TradeTech. These include the structural supply deficit and lack of term contracting to support new production.

In the largest transaction volume total recorded in a single month in the uranium spot market since 1996, 14.5mlbs U3O8 equivalent were transacted in September. 

TradeTech's monthly spot price increased by US$7.45/lb to close out September at US$42.20/lb, the highest level reached in over eight years. It has risen over 64% in the last 24 months.

Company news

The Mulga Rock project may be developed and operated now that ASX-listed Vimy Resorces ((VMY)) has received approval for the Mulga Rock Mining Proposal and Mine Closure Plan.

Interim CEO Steven Michael noted “this allows Vimy to further de-risk the project….and continue on the path towards first production by 2025.”

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