Uranium price tipped to reach $100/lb David McKay Posted: Wed, 26 Apr 2006 [miningmx.com] -- NEARLY two billion people don’t have access to electricity. In fact, roughly half of Africa’s fuel requirements are satisfied by biomass (burning wood). But that’s going to change, according to the World Nuclear Association (WNA).
The WNA forecasts a 40% jump in worldwide electricity demand over the next five years, with some of the increase stemming from China and India. It believes nuclear power could reduce the strain on fossil fuels, estimated to have a life of about 300 years, to bridge that gap. Though estimates vary, planned new nuclear facilities range between 30 to more than 150 before 2050.
That’s one reason the price of uranium oxide, crucial in the production of nuclear power, has shot through the roof. From about $10/lb several years ago, uranium oxide now costs about $38/lb. Sprott Asset Management says that the price could increase well in excess of $100/lb, according to an interview with StockInterview.com, an Internet publication.
However, Sydney-based Resource Capital Research says the price could increase to $50/lb, mostly driven by “...end users in the power generation market urgently trying to secure supply into the future”.
It’s for that reason there’s an almightily sc r a p to find uranium oxide resources. One uranium exploration company with the ability to supply to the growing deficit is SXR Uranium One (Uranium One), a firm with South African, Australian and Canadian uranium assets listed on the Toronto Stock Exchange.
Speaking at the BMO Nesbitt Burns conference earlier this year, Uranium One CEO Neal Froneman said that the company had reached critical mass in South Africa, where it hoped to begin producing 2 million lbs/year of uranium oxide from its Dominion mine by first quarter 2007. But it was also seeking consolidation opportunities in North America.
With total measured and indicated reserves of 30.5 million lbs in its portfolio, future production from Uranium One is a drop in the ocean of the supply deficit. Over the next decade, US utilities will on average need to buy 36 million lbs/year of uranium oxide to keep their nuclear power plants running, equal to a new Uranium One mine every year, according to Resource Capital Research.
It’s significant that Lonrho Africa, which was unbundled from its mining assets in 2000, bought a stake in a uranium exploration company. There are many other miners like it hoping to jump on to the uranium bandwagon.
Homeland Uranium, which is seeking a listing on the Alternative Investment Market and possibly a secondary listing on the JSE, is one new entrant. Simmer & Jack Mines is a gold development company with exploration in uranium. Wits Gold, due to list in Johannesburg this month, has applied for a prospecting licence for its uranium properties. Free news alerts: click here to subscribeAccording to resource Supply Research, about four uranium producers supply 56% of the world’s uranium and two of them about 35% (Cameco and Cogema). “Once the world’s largest uranium producer, the estimated recoverable reserves in the US now ranks but eighth in the world, with 4% of known global reserves,” StockInterview.com reported. “Those 125,000 tons would supply 250 million pounds of uranium, far less than the unfilled maximum requirement for US utilities over the next decade.”
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