The uranium heavyweight’s much maligned low-grade Trekkopje project has seen its resources revised from 45,200 tonnes of contained uranium to 26,000t.
Following a Euro 426 million impairment booked in 2010, an additional EUR1.46 billion of assets has been written down from the UraMin acquisition in 2007. The net carrying amount of capitalised assets (Trekkopje, Bakouma, Ryst Kuil) now amount to EUR410 million ($US530 million) compared with the 2007 acquisition price of about $US2.5 billion.
“What is clear is that Areva production plans will be postponed significantly and expected yields/ultimate delivery will be pared back,” Merrill Lynch said. “Areva's EUR1.46 billion impairment on its upstream UraMin mining assets plus group capex scale back should serve as a warning against complacency on the mine supply side.
“Although the risk to timing of long lead mine supply is acknowledged, not recognised in our view is the technical and economic challenges faced by a number of greenfield projects the market is banking on.
“We maintain our view that pressures have become far more tangible in the past 12-18 months and are not simply a function of producers ‘talking their own book’.
“In addition to Trekkopje, we see the key growth contributors being Husab (Extract), Langer-Heinrich (Paladin), Mkuju River (ARMZ/Uranium One) and a recovery at Rossing (Rio Tinto) aided by eventual (circa) one million tonne per annum heap leach project.”
Significantly Merrill Lynch expects further “come clean/revised timing” announcements through 2012.
EXT Price at posting:
$8.44 Sentiment: LT Buy Disclosure: Held
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