Weekly Reports | Sep 05 2023
Buyers of uranium have not waited for the northern summer to end, as had been expected, to move into the market.
-Volumes up in August, U3O8 spot price responds
-Term prices increase
-Cameco downgrades production guidance
-Morgan Stanley suggests “uranium awakes”
By Greg Peel
The end of the northern summer for the uranium industry came earlier than expected, industry consultant TradeTech reports, with transactional activity picking up significantly during the last week of August.
There had been an expectation there would be an uptick in activity in September and October as buyers returned to the market after the end of summer holidays.
But a number of buyers, looking to move ahead of what is expected to be a crowded buying arena in the next few months, took the decision to advance their plans and initiated purchases last week.
A total of eleven transactions were concluded in the spot market, with prices increasing sharply as each new tranche of demand appeared.
TradeTech’s weekly spot price indicator rose to US$61.00/lb to the Friday, September 1, up US$2.50 for the week.
The price at end-August was US$61.35/lb, up from US$56.50/lb at end-July.
Five transactions calling for the delivery of over 4.1mlbs U3O8 were concluded in the term market during August. Four utilities, including a US utility seeking 1.3mlbs for delivery over the 2026-2030 period, concluded transactions and selected preferred suppliers this month.
TradeTech’s term price indicators have risen to US$62.00/lb (mid-term) at end-August, up from US$57.25/lb end-July, and US$60.00/lb (long), up from US$57.75/lb.
At US$60.00/lb, TradeTech’s long term price indicator has reached a level not seen in nearly eleven years. The price hit a post-Fukushima low of US$28.00/lb in mid-2018 and has since risen 114%.
Much of that increase has occurred over the last two years as buyers and sellers have recognised a structural supply deficit in the market that has been amplified by covid-related interruptions to production, supply chain concerns, and rising production costs.
Canada’s Cameco provided a market update yesterday regarding challenges at its Cigar Lake mine and Key Lake mill that are expected to impact the 2023 production forecast.
Mining activities at the Cigar Lake operation were initiated from a new zone in the orebody in the second quarter of this year, which impacted productivity, Cameco reported. Equipment reliability issues emerged which further affected performance. The mine is scheduled to enter its planned annual maintenance shutdown that will run through most of September.
At the Key Lake mill, ramp-up activities remain ongoing. However, Cameco notes there is continued uncertainty regarding planned production in 2023 due to the length of time the facility was in care and maintenance, the operational changes that were implemented, availability of personnel with the necessary skills and experience, and the impact of supply chain challenges on the availability of materials and reagents. These factors have combined to impact production at Key Lake.
At the Cigar Lake mine, Cameco now expects to produce up to 16.3mlbs of U3O8 this year, a reduction from the previous forecast of 18mlbs. Production from the McArthur River/Key Lake operations for 2023 is anticipated to be 14mlbs, down from the previous forecast of 15mlbs.
The news sent uranium mining stocks surging yesterday, including those listed in Australia. Most notably, Boss Energy ((BOE)) rose 9.2%, ahead of a production restart of its Honeymoon mine in South Australia, Paladin Energy ((PDN)) rose 6.9% ahead of a production restart at its Langer Heinrich mine in Namibia, and Deep Yellow ((DYL)), which is looking to production from Namibia by end-2025, rose 7.1%.