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Uranium Week: Still Falling

Weekly Reports | Dec 21 2021

This story features PALADIN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: PDN

Volumes in the spot uranium market ticked up slightly last week as sellers conceded to lower prices.

-Speculative demand eases off for uranium
-Sellers reduce prices
-Paladin Energy back in the ASX200

By Greg Peel

The findings of a Coordinated Research Project conducted by the International Atomic Energy Agency (IAEA) indicate that several nations show significant potential for using nuclear energy to lower greenhouse gas emissions and meet climate change goals, industry consultant TradeTech reports.

About 30 countries include nuclear energy in plans submitted under the 2015 Paris Agreement — including both near-term (2030) targets in Nationally Determined Contributions and longer-term strategies for net zero-emission — and the CRP results reflect growing interest in nuclear among additional countries seeking to adopt more ambitious climate goals, the IEAE reported.

It is this global interest in nuclear energy that has brought the likes of the Sprott Physical Uranium Trust to the market – not the first but certainly the most dominant recent uranium speculator. The fund has nonetheless backed off its buying since the omicron scare sparked a general sell-off in all financial markets, leading to lower prices.

Last week saw sellers conceding to lower their offer prices, which affected a slight pick-up in volume from the prior to weeks to 900,000lbs U3O8 equivalent in eight transactions. This drew in some interest from utilities, as well as the usual traders and speculators.

Spot uranium price levels fluctuated throughout the week from a low of US$42.50 to a high of US$43.25/lb at week’s end, leaving TradeTech’s weekly spot price indicator down -US$1.50 from the week before.

The indicator has declined -8% in the past the weeks on lower volumes but is still up 58% from the 2021 low and 42% year to date.

TradeTech’s term price indicators remain at $44.00/lb (mid) and US$45.00/lb (long).

Paladin Energy

Paladin Energy ((PDN)) was once a leading uranium hopeful on the Australian stock exchange with its Langer Heinrich mine in Namibia and Kayelekera mine in Malawi. Then along came Fukushima.

It’s been a decade since but with the help of a 25% stake in the Langer Heinrich mine taken by the Chinese, and notwithstanding covid delays, Paladin’s flagship is ready to restart. The project is fully licensed, in a known uranium jurisdiction and has a near-term path to market buoyed by rallying uranium prices, notes Macquarie.

Macquarie gave up on Paladin eight years ago but in line with the stock being re-included in the ASX200 index, after a long hiatus, Macquarie has reinstated coverage with an Outperform rating and A$0.74 target.

The broker’s outlook for a 17-year multi-staged mine life, producing 78.5mlb of U3O8 at a cash cost of US$27.00/lb, is based on Paladin’s restart plan.

Last year Paladin off-loaded Kayelekera to a joint venture of Australian-listed Lotus Resources ((LOT)) and Lily Resources (not listed).

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