amibia has two uranium mines. One is a biggie Rio Tintos Rossing...

amibia has two uranium mines. One is a biggie Rio Tintos Rossing Mine, which kicks in 8% of the worlds uranium production all by itself. This is an old mine. Its been producing for 34 years. As with dog years, thats a lot older than it seems. Its getting tougher to massage the ore out of the Earths crust. Labor costs are rising. Water and electricity are also getting expensive. And the geology of the mine itself is changing worsening as it goes deeper.

The Rossing Mine is clearly strained, Mitchell writes, approaching the current pits end of life and marginally profitable at todays term prices and highly unprofitable if dependent upon todays spot. The spot price, meaning the price for immediate delivery, is about $42 a pound. Term prices are the longer-term prices and hover around $60. Mitchell estimates all-in costs for Rossing are north of $50 per pound. Meaning its barely profitable as is. And those costs have doubled in the last five years.

(That spot market, by the way, is artificially held down by foolish sellers, he argues. The Uzbeks sell 6.5 million pounds a year into the spot market because the term market is closed to them. They didnt honor their contracts a few years ago and no one has forgotten it. The market for spot uranium is thin. And he argues that buyers are holding producers hostage by referring to this spot price. Sooner or later, uranium producers will realize the folly of selling uranium in the spot market.)

Namibia is also supposed to be an important source of new supply with a number of new projects. Yet these suffer from the same issues. Electricity is costly and unreliable. Electricity demand in sub-Saharan Africa has doubled during the last 20 years while the capacity has grown 10%, Mitchell notes. Water is hard to find. No surprise there, as most of Namibia is a desert. Then there is the matter of the quality of the deposits. Grades are low, meaning you have to chomp through an increasing amount of ore to get the uranium out. That means high costs.

In summary, Mitchell concludes, Namibias current uranium mine production has unfavorable economic metrics It is barely profitable at best, or not profitable at worst. Well need to see a lot higher price to make these projects a go.

Kazakhstan the No. 2 producer has problems too. Kazakhstan is one we talked about before, but Mitchell confirms what we found.
I have been thinking of buying EXT but the above article by Mitchell has got me worried a bit. Do you any comments please, especially about problems with water and electricity in Namibia. Thank you.