posted on EXT site;Thanks for the reply depthtrader.
You said..."No one is going to build a nuclear power plant just because there's some Uranium lying around!"...
That may be true,HOWEVER.... It is known that nuclear reactor builders (eg Areva,Westinghouse) are supplying uranium as part of the deal.
The more supply they have,the more reactors they can build.They will be able to supply any increased demand. Utilities will be able to go ahead with construction plans knowing they are assured supply.
In the case of EXT...
We all know it's a takeover target,we just don't know by who yet. We do know that EXT has a large,high quality,low cost resource that will soon be huge.Thus guaranteeing any suitor many years production!
Here's an article addressing possible supply problems:-
....... "It is conceivable that the uranium industry may need to expand annual mine production by more than 50% during the next decade in order to meet demand from new reactors.
In the ten–year period to 1997 the industry was only able to grow annual production by 14%, despite a spike in prices and significant spending on exploration and development. Today, the industry faces financing challenges in addition to the regular geological, regulatory, and operational hurdles. Should the mining industry come up short, the incremental supply will have to come from larger draws on finite government inventories.
OTHERWISE NUCLEAR POWER PROJECTS WILL BE CANCELLED FOR LACK OF FUEL.(my caps)
Meanwhile, today’s uranium price provides limited incentive to explore for and develop new mines, while existing operations and known deposits face a myriad of challenges.
The marginal cash cost for the uranium industry is believed to be in the US$45–$50/lb range, higher than today’s spot price. Adding in a reasonable return on investment suggests a minimum US$60–$65/lb contract price to justify investment in a typical new project.
GIVEN THAT REACTORS ARE FAR MORE CONCERNED WITH SECURITY OF SUPPLY (my caps) than the actual price of uranium, there would seem to be little resistance to higher prices should market conditions tighten.
Can the uranium mining industry meet the challenge and significantly expand output? Yes. But not in a US$40/lb uranium environment. Pricing has to move significantly higher. And we believe it will"..........
