uranium may have hyper price run

By Bloomberg News

March 30 (Bloomberg) -- Uranium prices may start to rise at the end of the year as demand from utilities improve, Uranium Energy Corp., an explorer for the nuclear fuel, said.

Prices may jump to $100 a pound from about $40 a pound now, Amir Adnani, president and chief executive officer of the U.S.- based company, said today in an interview in Hong Kong, without giving a timeframe for the target price. Prices may average about $75 a pound in the next 5 to 10 years, he said.

About 200 gigawatts of atomic capacity are planned or under construction globally, and China, India, Russia and South Korea are set to be the main drivers of uranium demand growth, according to Nomura International. Atomic-power plants risk running short of fuel within a decade because suppliers cant build enrichment facilities or recycle Soviet-era warheads fast enough, the World Nuclear Association said in a 2009 report.

Towards the end of this year, uranium prices will start to move higher because the utilities that have uncovered forward demand will come back in the market to buy uranium either in the spot market or in the term market, said Adnani. We are going to see some hyper activity. Prices will have a similar run-up movement witnessed in the summer of 2007 when uranium shot up to a record, he said.

Uranium oxide, also known as yellowcake, rose for a third week last week, after declining for 13 consecutive weeks, as demand improved, according to Ux Consulting Co. Prices peaked at $136 a pound in 2007.

Uranium oxide concentrate for immediate delivery climbed 2.4 percent to $42.25 a pound from a week earlier, the Roswell, Georgia-based company said in a March 23 report.

Any development stage uranium project thats in the pipeline right now with a prefeasibility or scoping study, on average everyone is quoting $50-$55 a pound production cost, Adnani said. So all these uranium mines cant be brought on stream at current spot price at $40 a pound now.

Uranium Energy will start production in the fourth quarter this year, with about 1 million pounds of output in the following 12 months, he said. The company plans to increase production to about 2.5 million pounds to 3 million pounds in 3 to 4 years, he said while attending the Mines and Money conference.