rc research overview, page-8

Uranium price change not expected soon:

by Paula Wallace — created Sep 02, 2009 12:38 PM

The latest research report from Resource Capital Research shows that a key leading uranium price indicator is currently at US$47.50/lb, indicating there is no significant price change anticipated by the market in the near term.

Image courtesy of Paladin Energy Ltd

This Fund Implied Price (FIP) indicator currently carries the same valuation as the spot price for uranium. Since the beginning of July, the FIP has traded in a range from ~US$44/lb to ~US$52/lb. This is up from US$35/lb at the end of March.

RCR’s report of global uranium companies reveals that traders are focused on the uranium supply side with the possibility of increased DOE liquidations leading to modest downside pressure. “We expect equity performance in the sector will be driven by broader equity market trends in the coming months, and in relation to specific stocks, the achievement of significant project milestones.

“Indeed, there are a number of companies moving to production, including Alliance Resources and White Canyon within the coming months, and others set to release significant resource upgrades and economic studies which could result in project rerating.” John Wilson, managing director of RCR said. Industry fundamentals remain strong, said RCR, underpinning support for the contract uranium price, with anticipated growth in nuclear reactors and risk of supply shortage mid term (4-8 years).

The long term contract uranium price is US$65.00/lb down from US$70/lb in December 2008, and relatively stable since peaking at US$95/lb from May 2007 to March 2008.
RCR said the strong uranium production increases continue in Namibia and Kazakhstan.

The Merrill Lynch Uranium Equity Index is down 4 per cent over the past month, down 6 per cent over three months and up 125 per cent from the recent low reached on October 27th last year. The market valuation of Australian companies with one or more uranium projects is up 11 per cent over the past month, up 24 per cent over the past three months, and down 6 per cent over the past 12 months.
This compares with Canadian companies with one or more uranium projects, up 9 per cent over the past month and down 26 per cent over the past 12 months, according to RCR.

Resource Capital Research is an equity research company which focuses on small and mid size resource companies. Its quarterly uranium report typically reviews companies listed in Australia, Canada, USA and UK and active in established uranium districts globally, including Australia, Canada, USA, Argentina, Peru, Mongolia, Zambia, Tanzania and Namibia.

To access the free summary report or to purchase the complete 88 page comprehensive report, go to www.rcresearch.com.au/reports.

RCR also publishes gold, iron ore, and tin-tungsten sector reports.

http://www.theajmonline.com.au/mining_news/news/2009/september/september-3rd-09/top-stories/uranium-price-change-not-expected-soon-analyst