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Uranium Week: US Infrastructure Bill Passed

Weekly Reports | Nov 23 2021

This story features BOSS ENERGY LIMITED. For more info SHARE ANALYSIS: BOE

As the spot uranium price stayed relatively flat last week, support for the nuclear industry comes from one of the largest infrastructure packages in US history.

-US infrastructure bill support for threatened nuclear facilities 
-Kazatomprom moves joint venture forward 
-Who will be Australia’s next uranium producer?
-Uranium spot price rises less than 1% for the week

By Mark Woodruff

The US$1.2tr Infrastructure Investment and Jobs Act was signed into law last week. 

The bill provides US$6bn in US Department of Energy funding to support nuclear facilities that are under economic threat of premature closures. 

The new legislation also appropriates US$2.4bn of funding for micro reactors, small modular reactors (SMRs) and advanced reactors, while an additional US$3.2bn is authorised through to 2027.

Company news

Kazatomprom, the world’s largest producer of uranium, has approved a Life of Mine plan for the 51%-owned joint venture Budenovskoye. As part of a move toward commercial production, the plan will be submitted to the Ministry of Energy in Kazakhstan.

The proposed 25-year plan (2021 – 2045) would entail a commercial ramp-up of up to 6.5mlbs U3O8, beginning no earlier than 2024, and the potential for a maximum annual production capacity of up to 15.6mlbs no earlier than 2026.

The joint venture’s anticipated production from 2024-2026 is fully committed to Russia's nuclear power industry (Rosatom), under an offtake contract at market-related terms.

In further company news in Australia, stockbroker Bell Potter believes ASX-listed Boss Energy ((BOE)) will be Australia’s next uranium producer. Bell Potter has initiated coverage with a Speculative Buy rating and 12-month target price of $0.44.

The pending restart of operations at the company’s Honeymoon project is thought to represent a comparatively lower-risk development opportunity in a tier-1 jurisdiction. The analyst estimates a 12 month lead time to first production and the potential to produce 2.45mlbs per annum within three years of the restart at a low level of capital intensity.

By locking in lucrative beginning-of-cycle contracts prior to additional supply entering the market, Bell Potter believes the company can attain first mover advantage. Moreover, nearby exploration potential is thought to lend potential for additional upside.

Uranium pricing 

TradeTech's Weekly Spot Price Indicator ended last week at US$46.25/lb, up US$0.05/lb from the previous week. 

The spot price has increased nearly 8% this month on notable transaction volumes, explains Tradetech. The weekly spot price is up 40% over the last three months, up 52% since the beginning of the year, and has risen 56% year-on-year. 

The average Weekly Spot Price in 2021 is US$34.05/lb, US$4.34/lb above the 2020 average. Just over 2mlbs U3O8 were traded last week, compared to 2.5mlbs in the prior week.

TradeTech's term price indicators are US$43.75/lb (mid) and US$45/lb (long). 

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