Uranium spot prices, which have surged nearly 50 per cent since June, may make further gains in the first quarter of next year as utilities come back into the market after an expected quiet period around the year-end, says Sydney-based research firm Resource Capital Research.
The timing of purchases by Chinese utilities to build up stockpiles was expected to influence prices in the short term, as would Japanese and Indian utility buying, which was expected to increase, RCR said in its December quarter review.
Spot prices for uranium oxide have reached about $US60 a pound, compared with just $US40.75 in June and $US48 in September. Long-term contract prices have risen to $US65 from $US60 three months ago.
"There is growing expectation that the contract price will move higher, potentially into $US70-plus per pound territory, necessary to support development decisions at a number of advanced projects, particularly in Namibia," RCR said, pointing to projects planned by Extract Mining and Bannerman Resources, and potentially those by Marenica Energy and Deep Yellow. Gains in share prices in most Australian uranium companies over the past few months had been overshadowed by much stronger advances among Canadian uranium stocks, RCR said. The under-performance was partly due to weakness at Energy Resources of Australia due to production downgrades at the Ranger mine in the Northern Territory and the announcement of a drilling program to review life-of-mine reserve estimates, it added.
The Merrill Lynch Uranium Equity Index, which is based on a global basket of uranium equities, is up 12 per cent over the past month and 44 per cent over three months.
The Australian Financial Review PUBLISHED 10 Dec 2010
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