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Uranium stocks worth a closer look Friday, March 07, 2014 by Proactive Investors
Uranium stocks worth a closer look
Uranium stocks are starting to turn the corner with countries increasingly committing to either new nuclear power facilities or restarting existing facilities and the over supply of uranium looks to be on the wane in 2015/16.
Most recently, China has reportedly approved at least six nuclear power facilities with construction possibly starting on at least some of them this year as the country seeks to increase its use of nuclear energy.
Its installed nuclear capacity of 14.61 million kilowatts equates to about 1.17% of its total installed power.
Of more immediate interest and leverage for the uranium outlook is Japan’s push to restart 10 of its nuclear reactors by summer.
The Japanese government is scheduled to release its new basic energy plan before the end of March, with a document expected to identify nuclear energy as a key component of the national energy mix.
Japan's Nuclear Regulation Agency is currently carrying out extensive studies on the state of the 48 reactors to ensure they meet the new safety standards introduced after the Fukushima disaster in March 2011.
While not the most politically popular fuel in Japan for obvious reasons right now, it is likely to be the most expedient to deliver sufficient base load power to consumers without higher costs of importing energy.
While uranium prices remain weak-ish, some 70 reactors are under construction globally boding well for long-term pricing.
Uranium Stocks
Local uranium stocks have enjoyed a revival and renaissance of sorts. The following are some interesting uranium "plays" listed on the Australian Securities Exchange.
Peninsula Energy (ASX: PEN) has the wind in its sails recently, rising 39% since 25 February 2013 to the current price of $0.32.
This advanced uranium development company had earlier this week received the key final Supplemental Environmental Impact Statement for its Lance Central Processing Plant and Ross Permit Area of its Lance Uranium Projects in Wyoming.
It now expects to receive on 31 March the Source and Byproduct Material Licence that will allow it to complete full construction and commence uranium production.
Deep Yellow (ASX: DYL) has made gains, climbing 126% to the current price of $0.043 from the close of $0.019 on 21 February 2013.
The company has a 65% interest in the Nova Joint Venture in Namibia. Its partners are Toro Energy (ASX: TOE) with 25% and Namibian empowerment partner Sixzone Investments with 10%.
It had in 2013 demonstrated that its Omahola project had encouraging heap leach potential.
A-Cap Resources (ASX: ACB) is continuing Feasibility work on its Letlhakane Uranium Project and is designing an infill drilling program to establish mining scale continuity and to better define the areas that have been identified as higher grade with potential to be developed early in a mining plan.
This drilling program is planned to commence early in 2014
Shares in ACB, which also owns the Mea coal project in Botswana, have climbed 58.33% since the beginning of this year.
Cauldron Energy (ASX: CXU) had in February highlighted preliminary testwork results of over 96% uranium extraction using acid and carbonate/bicarbonate leaching methods on samples from its Bennet Well deposit in Western Australia.
Notably, the recovery of uranium with low acid consumption indicates the potential for lower operating costs.
Thundelarra (ASX:THX), which had recently extended zinc mineralisation at its Little Mount Isa prospect in Western Australia, had late last year intersected wide high grade uranium at its Allamber Project in the Northern Territory.
Notable results from the Cliff South prospect are 49 metres at 787ppm U3O8 from 58 metres including 17 metres at 1,286ppm U3O8 and 17 metres at 974ppm U3O8 from 70 metres.
Eclipse Metals (ASX: EPM) has also highlighted the uranium potential of its West Arnhem, South Alligator and North Arunta projects in the Northern Territory.
A ongoing open file desktop review has noted the Devil’s Elbow uranium-gold-palladium prospect at West Arnhem had high grade surface uranium assays of up to 5.8% U3O8 along with 38.1 grams per tonne gold and 28.02g/t palladium.
South Alligator hosts extensive radiometric anomalies in one uranium occurrence within an area that is a favourable host for unconformity style and high grade vein uranium deposits while North Arunta is highly prospective for calcrete hosted uranium deposits.
So while some stocks have had upticks in valuations recently, for long term investors there is likely to be more in store. But patience will need to be a virtue.
As uranium prices will remain leveraged to the news of the Japanese reactor restarts and a return to term contracting by utilities. The spot price is still uncomfortably low at circa US$35.10 a pound. Long term prices are considerably higher.
Supply remains a wild card. Clearly with low current prices there will not be significant quantities of uranium supply or projects coming on stream to supply likely demand in 2015/16.
For the long term investor, it could be time to look at uranium stocks again.
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PEN Price at posting:
3.3¢ Sentiment: Buy Disclosure: Held
