Despite the uranium spot price losing another 1.8 percent for a second week in a row, now at $40.50 a pound, analysts and others in the industry are confident that uranium miners are poised to do well.
"Uranium has done pretty well overall and certainly I think it's a general feeling it will go back up," says Ron Matthews, managing director of Cameco's Kintyre project in Western Australia. "There's a definite demand out there and people are actively looking for new sources of uranium as the world looks at nuclear power increasingly."
Mineweb's Ross Louthean points to the promising announcements from uranium companies at this year's uranium conference in Adelaide and the release of Resource Capital Research's (RCR) latest quarterly report as strong indicators of uranium's recovery in the commodities market.
The RCR report, which Louthean calls "a benchmark for uranium company watchers in Australia," details a number of advancing projects and underscores the sector's strong fundamentals.
Australia already has three producing mines in the regions of Southern Australia and the Northern Territory. There are a number of projects advancing in the uranium-rich nation, particularly in Western Australia (WA) where the government recently lifted a six-year ban on uranium mining.
Mega Uranium's Lake Maitland Project
Earlier this year, Mega Uranium [TSX: MGA] became the first miner to submit a lease application after WA lifted its ban in November 2008. The company plans to develop the Lake Maitland project located in the Eastern Goldfields, a deposit potentially valued at $1.3 to $4.6 billion.
Mega recently entered into an agreement to sell a 35 percent stake in the property for $49 million to a consortium of Japanese utilities companies.
On Tuesday, shares of Mega Uranium on TSX the were trading at $1.78, down from a 52-week high of $2.72.
Toro Energy's Wiluna Project
Toro Energy [ASX: TOE] may just beat Mega Uranium for the title of first uranium producer in WA. The company recently submitted its own mining lease application to the state government for its wholly-owned Wiluna project.
The project contains the Lake Way deposit and the Centipede deposit with a reported 23.9 million pound JORC-compliant resource. This month, the company commenced drilling on the property and says it will continue drilling on both the Lake Way and Centipede deposits to further develop Wiluna's resources. There is also an optimization study being conducted on the property.
Depending on the results of the drill work and the optimization study, Toro will decide later this year whether to begin a definitive feasibility study on the property. The company has hinted it may commence mine construction in late 2010. Toro will still have to apply later for a formal mining license if it wants to develop the mine.
On Tuesday, shares of Toro Energy on the ASX were trading at .17 cents, down from a 52-week high of .40 cents.
BHP's Yeelirrie Project
There are reports that BHP Billiton [ASX: BHP; NYSE: BHP] is advancing development of its Yeelirrie project, the world's largest calcrete-hosted uranium deposit, located in the Goldfields. The mining giant began working on the project again once the ban was lifted.
On Tuesday, shares of BHP Billiton on the ASX were trading at $33.04, down from a 52-week high of $50. Shares on the NYSE were trading at $47.91, down from a 52-week high of $95.61.
Impact Minerals' Nowthanna Project
Impact Minerals [ASX: IPT] is deliberating what to do next with its Nowthanna project, a calcrete deposit located near Meekatharra in WA of which it is a majority holder.
The deposit contains around 10 million tonnes of U308 at an average grade of 0.45 kg/t at a cut-off grade of 0.2 jk/t, for a contained JORC-compliant inferred resource of 4,600 tonnes of U308.
Impact is considering several options including beginning a scoping study, advancing exploration to further develop resources and reserves, consolidating ownership of the deposit, or selling the property, said Managing Director Dr. Michael Jones.
"There has been no firm decision as to the preferred course at this point in time other than all owners recognize the need to reach a consensus and discussions are in progress to ensure this happens," said Dr. Jones. He added that any decision would come with consideration of Mega's recent agreement with Japanese utilities companies over its Lake Maitland project.
On Tuesday, shares of Impact Minerals on the ASX were trading at .066 cents, down from a 52-week high of .17 cents.
Cameco's Kintyre Project
Cameco [TSX: CCO; NYSE: CCJ] has announced it will be opening an office in Perth, Western Australia.
About 2000 km north east of Perth is the Kintyre deposit, which was acquired by Cameco (70 percent) and the Mitsubishi Development Pty Ltd. from Rio Tinto last year for nearly $700 million. The deposit is reported to contain approximately 36 million kilos of uranium and may be of similar grade to Energy Resources' Ranger mine.
On Tuesday, shares of Cameco on the TSX were trading at $22, down from a 52-week high of $44.38. Shares on the NYSE were trading at $18.11, down from a 52-week high of $44.
EXT Price at posting:
$3.88 Sentiment: LT Buy Disclosure: Held
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