Uranium Week: Kazatomprom Weighs Up Inventory Purchases

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As the uranium spot price reaches another year high for 2021, Kazatomprom releases half year results and jockeying continues around Exelon Corp’s at-risk reactors.

-Kazatomprom may require second half spot purchases
-Emergency powers sought for Exelon Corp’s reactors
-Uranium spot price rises over 2% for the week

By Mark Woodruff

At half year results last week, Kazakhstan uranium producer Kazatomprom stated it may buy additional material in the spot market during the second half of this year to keep its inventories within its targeted range and to meet sales commitments for the rest of 2021.

CEO Galymzhan Pirmatov also noted that due to the covid-19 pandemic and uncertain market sentiment, the company is extending the -20% reduction of its production against subsoil use agreements for another year, through 2023.

While first half production volumes were similar to the first half of 2020, revenue increased 54% year-on-year, driving a more than a 30% increase in adjusted net profit.

The company noted its inventory totaled 23.4mlbs on June 30, which was -20% below total inventory a year ago. The target is for an ongoing inventory level of approximately six to seven months of annual attributable production or between 58.5-59.3mlbs in 2021. Hence, the company will likely be purchasing material on the uranium spot market in an effort to meet these inventory targets. 

At-risk Exelon reactors 

Illinois congressman Adam Kinzinger has called on President Joe Biden to consider the use of emergency powers to keep the Exelon Corp-owned Byron and Dresden nuclear power plants in operation. 

The request was made for a period until at least the enactment of new state or federal laws to ensure a "level playing field" for such plants. 

Separately, Exelon said its Illinois nuclear fleet, including Byron and Dresden, operated at full power levels during the hottest July on record.

Company news

ASX-listed Okapi Resources ((OKR)) last week finalised the acquisition of Tallahassee Resources and its portfolio of large, high-grade uranium projects in the US.

Tallahassee holds a 100% interest in mineral rights that cover around 7,500 acres in the Tallahassee Creek Uranium District of Colorado. It also has an option to acquire 100% of the Rattler Uranium Project, in north-eastern Utah.

Okapi executive director David Nour said “This acquisition is truly transformational for Okapi and underpins our new strategy to become one of the most prominent uranium developers in North America.”

A JORC 2004 Mineral Resource estimate indicates the Tallahassee Uranium Project contains 26mlbs of uranium, with significant exploration upside.

Uranium pricing 

TradeTech's Weekly Spot Price Indicator is US$33.80/lb, up US$0.80 from the prior week. The Indicator has risen nearly 11% in the last two weeks and sits 10% above the value from one year ago. 

The average Weekly Spot Price Indicator in 2021 is US$30.66/lb, US$0.95 above the 2020 average.

TradeTech's term price indicators are US$33.50/lb (mid) and US$35/lb (long).

At a time when the spot price is on the rise and term competition remains intense, term producers face a conundrum, highlights TradeTech. At the same time as desiring to rebuild their portfolios, current term prices are less than required to cover production costs.

As utility demand is extremely limited to date, sellers continue to submit offers with lower prices and smaller quantities now, in an effort to help underpin their portfolios until term prices adjust to a level more commensurate with production costs.

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