Ann: Quarterly Activities Report & Cashflow - 30 September 2018, page-2

Uranium price hits 2.5 year high https://www.ft.com/content/a38cdbcc-e0ed-11e8-8e70-5e22a430c1ad

Uranium has hit its highest level in more than two-and-half years as big producers of the nuclear fuel buy material in the market and China prepares to reaffirm its commiment to build new plants. Uranium, which is used in nuclear reactors to produce electricity, has been one of the best performing commodities of 2018, rising almost 40 per cent from its April lows. One factor helping to support the price has been a string of mine closures, which have forced producers such as Canada’s Cameco to buy volumes in the spot market to fulfil long-term sales contracts. The ruling Chinese Communist party is also likely to recommit to the use of nuclear power at its plenum later this month., a move that will provide a further boost to sentiment. “Cameco should continue to be active in the spot market as it needs to buy 9-11m pounds of uranium by the end of 2019,” said analysts at Berenberg. “Friday’s price jump is probably attributable to other buyers (in addition to Cameco) entering the spot market in order to secure volumes.” Uranium hit $28.75 per pound on Friday, its highest level since March 2016. The uptick in prices comes as Kazatomprom, the world’s biggest uranium producer, looks to raise up to $600m from an initial public offering in the UK and Kazakhstan. “The Company believes that the supply side of the uranium market is undergoing a structural shift, following a prolonged period of depressed spot prices and oversupply, underpinned by the prevalence of legacy long-term contracts, the majority of which were concluded in the period between years 2005 and 2012,” Kazatomprom said in a recent press release. As a significant portion of such contracts are set to expire in early 2020s, many utilities are likely to return to the market in the near-to medium-term to begin covering their future fuel needs through entering into medium- and long-term contracts.” The run-up in uranium prices has also lifted the price of Yellowcake, a London-listed investment vehicle that has stockpiled a large amount of the metal in anticipation of higher prices. Its shares were trading at 245p on Monday, up from a June issue price of 200p.