planets still aligned - awaiting japan, page-3

Cigar Lake and Olympic Dam are cited frequently GT and demand/supply is a tricky area to get arms around with all sorts of numbers flying around, complicated by pounds and tonnes used in different analyses. For convenience am using global data from one source: http://www.uraniumparticipation.com/s/Uranium_Market.asp as difficult to reconcile various analyses:

"1. Current demand of 180M lbs in 2012 expected to be 200M lbs by 2020.

As reported by the World Nuclear Association as of May 1, 2013, there are 435 nuclear reactors operable worldwide in 30 countries. 66 nuclear reactors are under construction in 13 countries with the principal drivers of this expansion being China, India, South Korea and Russia, which have a total of 49 reactors under construction.

Primary mine production currently supplies approximately 84% of demand. The balance of demand is supplied from secondary sources such as remaining excess commercial inventories, reprocessing of spent fuel, inventories held by governments and the downblending of highly-enriched uranium ("HEU") from nuclear weapons programs. By far, the most significant of the secondary supplies currently is the 18 to 24 million pounds per year being provided from the HEU downblending program."

Then from http://www.miningweekly.com/article/after-several-delays-cameco-starts-production-at-cigar-lake-2014-03-13

"2. Cameco on Thursday confirmed that the mining system and underground processing circuits were operational and ore was being transported to the mill, which is located 70 km north-east of the mine site.

The mill would produce between two-million and three-million pounds of uranium concentrate this year, ramping up to 18-million pounds by 2018."

So Cigar Lake won't cover the gap from the terminated missile program until say 2018 assuming they have no more problems. In the meantime, the demand for uranium will grow by another 20M lbs by 2020, and at a time when supply from the other secondary sources fall.

So production needs to increase at a decent clip to meet future demand. There is plenty of uranium around, but some mines in Kazakstan are nearing depletion and new projects around the world have been shelved or placed on hold. Many still require approvals and others are uneconomic at present.

Pundits talk about the looming U shortage, but can't lay my hands on a good one with a complete analysis of supply and demand over the next say 6 years. There are also complicating issues like the extra amount of uranium to start (or restart) reactors and no-one seems to know the details of the current stockpiles.

Suffice to say I am not concerned by Cigar Lake coming into play. If they encounter any further problems as they ramp up, expect that would present an upside for the sector.

Btw - My focus on Japanese restarts isn't for the supply/demand side but the sentiment as believe the U spot price has a lot of built in sentiment, might be wrong. Anything that involves traders, usually involves sentiment from my experience.

Also let's not forget PEN won't be reliant on spot price per se - expect pre sales from Wyoming at the LT price will be achieved (another topic :), but the spot obviously has an effect on the sector sentiment and bonus SP movement (as I believe PEN is/will re-rate to Wyoming peers as we near production).