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Uranium Week: See You In Court

Weekly Reports | Mar 14 2017

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

By Greg Peel

To recap, three of 45 Japanese nuclear reactors are currently back in operation, six years after the Fukushima disaster, being Sendai units 1 and 2 and Ikata unit 3. Takahama units 3 and 4 also made it to restart, only to be shut down again by a district court injunction that remains in place. Twenty reactors are currently moving through the restart process.

To that end, the restart of Genkai units 3 and 4 received the approval of the local mayor last week. Sounds promising, except that restart also requires the approval of all municipalities within a 30km radius of the plant. No matter, there’s only seven of them.

Tokyo Electric Power Company is not one of those among Japan’s myriad of electricity providers that has an operational reactor at present. Perhaps TEPCO thought it likely would have by now, given only now has the company claimed force majeure in cancelling its supply contract with Canada’s Cameco. Not a lot of point in continuing to stockpile more uranium.

Cameco has vowed to fight the cancellation hard in court. The company has to date suspended operations at Rabbit Lake in Canada and will shut down McArthur River for six weeks this summer. Cameco has also curtailed its US mining operations and last week declared that it may sell its assets in Wyoming and Nebraska, due to low uranium prices, unless clarity can be sought on Donald Trump’s plans for nuclear power.

Funny how Trump just seems to make his way into every story.

It is perhaps no surprise the Senators of Wyoming and Nebraska were vocal in their strong support for reform of the US Nuclear Regulatory Commission’s licencing framework at Senate Environment and Public Works committee meeting last week. A bipartisan bill introduced to the Senate aims to promote innovation in the US nuclear sector and bring transparency to Department of Energy’s process of disposal of excess government uranium stockpiles.

We recall that last year the DoE came under fire for dumping such stockpiles into an already weak market.

And if all of the above isn’t sufficient, news is that China’s CNNC Overseas Holdings has requested Australian-listed Paladin Energy ((PDN)) begin the process of determining the fair market value of the company’s Langer Heinrich operation in Namibia. CNNC acquired a 25% stake in Langer Heinrich in 2014 with, supposedly, an option to acquire the remaining 75%.

The fair value assessment is the first step in the process of exercising that option, if indeed that option proves to be valid. With the support of its bond holders, Paladin intends to fight the option’s validity in an arbitration process in Singapore.

One wonders where uranium miners and consumers find the time for the normal course of business.

The uranium spot market was quiet last week after a burst of strength the week before. Industry consultant TradeTech reports five transactions concluded totalling 500,000lbs U3O8 equivalent. Traders and speculators dominated activity as prices dipped through the week. Trade Tech weekly spot price indicator is down -US1.00 at US$24.00/lb.

TradeTech’s term price indicators remain at US$28.25/lb (mid) and US$35.00/lb (long).

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