Nuclear renaissance tipped to spur uraniumThe Australian...

Nuclear renaissance tipped to spur uranium

The Australian Financial Review
PUBLISHED: Online 10 Feb 2011 10:23:00
Dan Hall

Uranium bulls are stampeding and the exuberant Southern Cross Equities head of dealing, Charlie Aitken, is leading the charge.

In his latest research note, Mr Aitken predicts the uranium price record of $US1 37 a pound will be challenged, and eventually exceeded, over the next few years.

The price of uranium has increased more than 71 per cent in the last 12 months and is now around $US73 a pound.

"The world is poised for a nuclear renaissance driven by unrealistic expectations of the role for traditional renewable energy sources such as solar and wind power," Mr Aitken said.

The comment comes as the US and Australia move towards overturning a ban on uranium export to India, the United Arab Emirates joins the wave of European and Asian nations pushing for nuclear power, and Russian supply diminishes.

"Currently, 20 per cent to 25 per cent of global uranium demand is supplemented by secondary supply (approximately 15,000 tonnes), of which a large part is sourced from Russian weapon stockpiles of highly enriched uranium," Mr Aitken said in research notes on Thursday.

Chinese stockpiling has increased as the Asian giant moves to bolster supplies for its planned nuclear power facilities, driving up demand and prices.

"Just two years of inventory at the current 2020 nuclear power target of 112 gigawatts, would require approx 40,000 tonnes of uranium inventory. This compares to Chinese inventory estimates of just 13,000 currently," Mr Aitken said.

"Therefore, I believe China may still have to import at least another 27,000 tonnes of uranium which will further tighten global supply."

Mr Aitken's top uranium stock picks are Paladin Energy and Extract Resources.

Paladin Energy shares could be worth $6.00 per share in the next 12 months, according to Southern Cross Equities. The stock is trading around $5.28.

"Paladin has significant earnings leverage to the rising spot price with 50 per cent of production currently uncontracted," Mr Aitken said.

Southern Cross believes Extract shares, trading around $9.38, could be worth $13 per share in the next 12 months.

"Extract has highly prospective exploration potential and very experienced management," Mr Aitken said.

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