Column: Demand weakness helps cushion tin from supply problems
Tin demand last year was weaker than expected and is on course for only a modest recovery in 2024, according to the International Tin Association.
Fission Uranium (TSX: FCU) discovered the Triple R uranium deposit at its Patterson Lake South (PLS) project in Saskatchewan in 2012 – a year after the Fukushima nuclear plant disaster in Japan decimated the uranium market.
But following a decade in the “wilderness,” uranium stocks are now finally on the upswing, benefitting from growing recognition of nuclear energy’s place in limiting global temperature rises, reducing emissions of greenhouse gases and countries’ looming net zero goals targeted between 2030 and 2050.
“A few years ago, you were always trying to convince people they should be contrarian and look forward, but they really couldn’t see their way out of the weeds,” said Fission CEO Ross McElroy in mid-September.
“When we talk to investors now, there is rarely anybody that I have to convince that nuclear’s the place to be and that it plays a key role in the energy mix and particularly in green energy.”
The Sprott Physical Uranium Trust Fund, launched in mid-2021 has helped support uranium prices, while Russia’s ongoing war in Ukraine has stoked efforts to source the critical energy metal from friendly sources. Japan’s announcement that it will renew its investment in nuclear power, as well as similar moves from other countries, have solidified that positive sentiment.
This, just as the company prepares to complete a feasibility study for the project by the end of the year.
It will build on a positive 2019 prefeasibility study that outlined a capex of C$1.2 billion for an underground mine with a life of 7.3 years. The operation would produce 11.3 million lb. U3O8 per year at low operating costs of $7.18 per lb.
Despite its short mine life and large capex, the study forecast a 25% internal rate of return after taxes, using a long-term uranium price of $50 per lb. The net present value (at an 8% discount rate) was C$702 million.
