BHP warns Australian mining not ready for low-cost competitors
The boom in demand from China’s industrialization is now “past the period of aggressive growth,” BHP’s Australia President said.
More bad news for the uranium market this week did not deter bargain hunters from returning in a big way on Friday with across the board gains for miners and explorers following the brutal correction in the sector since March-April.
Uranium investors have been waiting for a very long time for a restart of nuclear reactors in Japan to ignite the market, but yesterday those hopes were dashed.
A Japanese court halted plans to restart two idled nuclear reactors near Osaka – the first such intervention since the Fukushima disaster three years ago and also the first time a lawsuit brought by anti-nuclear plaintiffs has been successful in Japan’s forty-year history of nuclear power.
Even before the Japanese news the U3O8 spot price continued to slide, hitting a fresh nine-year low of $28 a pound on Monday and down 31% over 12 months.
The long term price, where most uranium business is conducted, stayed at $45, the lowest since 2008 and down 21% over the past year.
That compares to $67 prior to the Fukushima disaster in 2011 and all-time highs of $135 in 2007.
Canada’s Cameco (TSE:CCO, NYSE:CCJ), the world’s number one listed uranium producer, added to industry gloom announcing this week it’s putting its Millennium project in Saskatchewan on hold due to poor market conditions.
But with supply contracts measured in decades, uranium mining requires very long term investment horizons and on Friday investors were taking the long view:
Units in industry behemoth Areva (OTCMKTS:ARVCY) trading over the counter in New York gained 2.2%, building on its advance in Europe earlier in the day. The state-owned French company has stakes in various projects and producing mines in Canada and Africa.
Given its size, $8.3 billion Cameco’s gains were modest, but further down the market cap list shares jumped.
Denison Mines (TSE:DML) gained 4.3%, returning the counter’s 2014 market value to positive territory following a sharp correction in May.
Denison, now worth $582 million on the Toronto big board, holds exploration and development projects in Canada, Zambia, Namibia, and Mongolia including high grade Phoenix deposits discovered in 2008 located on its 60%-owned Wheeler project. The Toronto-based company also owns 22.5% of the McClean Lake mill.
Energy Fuels (TSE:EFR), the US’s largest uranium miner supplying 25% of the country’s output with mines in Utah, Arizona, Colorado and Wyoming surged 8% after electing a new board.
$381 million Paladin Energy (TSE:PDN) climbed 2.6%. Australia-based Paladin operates a uranium mine in Namibia and various exploration projects on the continent.
Explorers which have descended on the super high-grade Patterson Lake area in Saskatchewan abutting the Athabasca Basin had mixed success on Friday.
Nexgen Energy (CVE:NXE) advanced 2%, while Fission Uranium (CVE:FCU) was the odd one out on the day with a decline of 2.5%.
Vancouver-based Fission is one of the few counters in the sector still showing gains for 2014 although the stock is well below its March-April peaks. A 10% run up in Fission shares has lifted the explorer’s market value above $400 million.
Emerging producer with in-situ recovery Lost Creek project in Wyoming Ur‐Energy Inc. (TSE:URE, NYSE MKT:URG) cut its sales guidance for 2014 and 2015 which boosted the stock. The depressed spot price makes mining anything more than under contractual obligations a losing proposition. The Colorado-based company is valued at $135 million.
Uranium Energy Corp.(NYSEMKT:UEC) gave up earlier gains to trade flat by early afternoon. The $144 million explorer with a number of properties across the US have been picking up projects in Texas, including the Longhorn Project which already have some permitting in place, earlier this month.
Image of traders at Sao Paulo stock exchange by Rafael Matsunaga
