Uranium Week: Uranium Company Updates 

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As the uranium spot price remained unchanged last week, the world’s largest uranium company and several small ASX-listed companies released financial results.

-Cameco expects to produce up to 12mlbs in 2021
-Shaw and Partners' view on two ASX-listed companies
-Uranium spot price rises by less than 1% for the month

By Mark Woodruff

Canadian uranium producer Cameco last week reported a net loss of -US$29.4m for its second quarter ended June 30.

President and CEO Tim Gitzel noted the company added an additional 7mlbs to its long-term sales contract portfolio, bringing the total contracted so far in 2021 to 16mlbs. 

The company reported production of 1.2mlbs for the second quarter, and expects to produce up to 12mlbs on a 100% basis in 2021, provided there are no further disruptions due to covid-19, forest fires, or any other cause.

The second quarter was impacted by additional care and maintenance costs of -US$6.4m, resulting from the proactive suspension of production at the Cigar Lake Mine for about four months, until its restart in mid-April.

Other company news

Shaw and Partners yesterday released updated research on ASX-listed companies Boss Energy ((BOE)) and Lotus Resources ((LOT)) after both companies released June quarter activities reports.

Shaw believes Boss Energy can fund a restart of its flagship asset, the 100%-owned Honeymoon Uranium Project in South Australia, via a sell-down of its uranium inventory, project finance and operating cash. It’s considered there is exploration upside to the company’s resource base of 72mlbs U3O8.

The company remains on track to be Australia’s next uranium producer with an Enhanced Feasibility Study (EFS) showing Honeymoon will be financially and technically robust.

Lotus Energy announced ore sorting testwork at the Kayelekera Uranium Project in Malawi exceeded expectations with uranium grades increasing by up to 100% compared to the feed grade. It’s expected a Restart Feasibility Study (RFS) for the project will commence in August and completion is anticipated by mid-2022.

A low upfront capital requirement of around -US$50m is considered appealing, and Shaw notes the company is currently term debt free. It’s assumed the company can use its current unrestricted cash of circa $15m and access its environmental bond ($13m), without needing to raise equity for the restart, until FY23.

ASX-listed Bannerman Energy ((BMN)) yesterday announced results from the Pre-Feasibility Study (PFS) completed on its 95%-owned Etango-8 Uranium Project in Namibia.

The study confirmed the strong technical and economic viability of the conventional open pit mining at 8mt per annum throughput, and further upside potential from future life extension and/or scale-up expansion.

Finally, ASX-listed Deep Yellow ((DYL)) said last week that the Tumas Project Mining License Application (MLA) was officially filed with the Namibian Ministry of Mines and Energy on July 21.

Deep Yellow is currently progressing a Definitive Feasibility Study (DFS) at its project in Namibia. The study is focused on evaluating a uranium operation with a minimum 20-year Life of Mine at a production rate of approximately 3mlbs per year. Completion of the DFS is expected in the latter part of 2022. 

Uranium pricing- During the week

TradeTech's Weekly Spot Price Indicator is unchanged at US$32.50/lb.

A total of four transactions, involving almost 900,000lbs U3O8 equivalent, were reported for the week.

Uranium pricing during the month

TradeTech’s monthly spot price rose US$0.10 to close out July at US$32.50/lb.

A total of 5.6mlbs U3O8 equivalent involving 14 transactions traded hands during July, with utilities traders, producers and financial entities all participating as buyers, reports TradeTech.

The market saw little in the way of price movement over the course of the month. Both buyers and sellers avoided taking large positions in order to minimise potential risks due to a combination of summer vacations and uncertainty over how the newly-launched Sprott Physical Uranium Trust (SPUT) may impact the market.

TradeTech’s Daily Spot Price Indicator averaged a 0.01% interday change in July, while the Weekly Spot Price Indicator increased an average of 0.05% per week through the month.

The monthly spot price has increased just over 9% so far in 2021. The Exchange Value currently sits nearly 8% above the 2020 average Exchange Value of US$30.15/lb. The average Exchange Value for 2021 is US$30.60/lb.

TradeTech's mid-term price indicator for July 31 is US$33.50lb, up US$1.10/lb from last month, while the long-term price indicator remains unchanged at US$35.00/lb.

In the term uranium market, seven transactions involving delivery of over 5mlbs U3O8 equivalent in the term delivery window were reported reported in July, notes TradeTech.

In the mid-term delivery window, prices remain flat with little escalation or price increases built in to offers. Although, this appears to be shifting due to the expectation for SPUT to increase near-term demand, and make it more expensive to secure material for a potential “buy and hold” in the mid-term.

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