Article in the Australian

from the ags forum

Uranium stocks set to rock

• THE AUSTRALIAN
• JULY 17, 2014 11:53AM

Tim Boreham

Banking Reporter
Melbourne

LONG forgotten in favour of graphite, rare earths, potash and even nickel, the uranium sector has received its best news since the March 2011 Fukushima disaster sent the sector into meltdown.

Not that local uranium stocks were emulating the stricken plant by blowing their tops off this morning.
Japan’s National Regulation Authority has given approval for two reactors at Kyushu Electric’s Sendai plant to be restarted, signalling the revival of more of Japan’s 48 reactors.

Pre-Fukushima, Japan was one-third reliant on nuclear energy and was entering its first (northern) summer without this energy source.

At $US28 a pound, the spot uranium price is languishing at its lowest level in nine years. Most supply deals are via long-term contracts, which currently average around $US45lb. This is still well off the industry’s accepted break -even price of circa $US60lb for a new project.

The ensuing post-Fukushima carnage saw dozens of uranium projects cancelled and delayed.

The ASX-listed Paladin Energy (PDN, 36c) has put its Kayelekera plant in Malawi on care and maintenance, blaming “reasons beyond our control and depressed uranium prices.’’

Overnight, the news sent Canadian-based global heavyweights Cameco, UEX and Denison Mines up by 5-7 per cent.

Local stocks to watch are our biggest pure-play producer Energy Resources Australia (ERA, $1.18), even though its ever-problematic Ranger mine in the NT has been offline.

Toro Energy (TOE, 6.2c) is seeking approval for its advanced Wiluna project in WA.

Alliance Resources (AGS, 15.5c) has a 25 per cent share of the Four Mile mine in SA, which in June opened for business.

Criterion’s long abiding interest has been in Silex Systems (SLX, 91.5c) which doesn’t mine the stuff but has devised a revolutionary uranium processing method.

The technology has been licensed to a cabal of US nuclear heavyweights who plan to build the world’s first laser enrichment plant in Paducah, Kentucky.

While the Japan restart won’t trigger an immediate demand blip for the glutted uranium market, it’s at least a catalyst for improved sentiment.

We’ll get excited when the restarts flow through to an actual price improvement.

The NRA’s decision potentially has negative repercussions for our big-ticket LNG projects, although any nuclear fallout is hard to determine at this stage