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Posts tagged ‘Uranium One Inc (UUU)’

Uranium’s global perspective

July 5th, 2013

David Talbot discusses the metal’s challenges and potential, and the Athabasca Basin’s excitement

by Greg Klein

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With uranium now “languishing below 40 bucks a pound, these are the lowest prices we’ve seen since 2006 or earlier,” says David Talbot. A former exploration geologist who’s currently vice-president and senior analyst for uranium and iron ore with Dundee Capital Markets, he’s specialized in uranium research since 2007. Talbot found time to speak with ResourceClips.com about supply, demand, prices and why the Athabasca Basin continues to attract attention despite the metal’s poor price performance.

He emphasizes that uranium prices must rise if miners are to meet projected demand. And supply could be a problem as early as 2014. This year ends the highly enriched uranium (HEU) program, in which the United States gets fuel from former Soviet warheads. As megatons to megawatts fades to memory, so does up to 24 million pounds of uranium a year.

David Talbot discusses uranium’s challenges and potential, and the Athabasca Basin’s excitement

David Talbot: “There are more power plants planned, proposed
or under construction today than we had before Fukushima.”

Talbot sees little likelihood of the program being renewed. “The Russians say they’re not going to do it. The Russians aren’t making money downblending uranium and they’ve said they’re going to sell forward a lot of their enrichment capacity…. The last time this HEU agreement came into play, it took I think four years and six governments plus all the agencies to put it in place. It was a very gruelling process. That process is not underway right now.”

But HEU’s demise will be just one factor limiting supply. “A lot of the primary supply that had been expected over the next couple of years is not coming down the pipeline. It has everything to do with the uranium price and whether or not these mines can attract investment to be built.” From the United States to Australia to Kazakhstan, proposed mines have been postponed and previously operating mines have shut down. “All told, that’s about 60 million pounds a year that’s not going forward,” he says. That would have equalled nearly half the production for 2011, the most recent annual total reported by the World Nuclear Association.

Despite that, “there are more power plants planned, proposed or under construction today than we had before Fukushima,” Talbot says.

“What do we need to move forward?” he asks. “We definitely need the uranium price to rise. But having said that, I think we need confidence even more. We’ve had a fairly good uranium price over the last eight years and what have we done? We’ve added 46 million pounds, 91% of it from Kazakhstan…. So what do we need by 2020? We need 90 million pounds extra. That’s twice as much as we’ve done in the last eight years.”

Developments in Japan could prove persuasive. “It’s not whether their reactors are coming back online because I think everybody realizes they are. It’s how many reactors are going to come online and how quickly…. How many of these reactors get up and running by the end of the year is probably one of the biggest questions. Once they start coming back online, I think that’s going to give a psychological push to the entire sector.”

Once that happens, there seems little barrier to higher prices. Uranium itself plays a minor role in the cost of nuclear energy. “The big price is the capital cost,” Talbot says. “I think uranium is about 15% of the total cost, and about half of that is enrichment, conversion, fuel fabrication, delivery on site. So that makes uranium a very tiny portion of nuclear power.”

Looking ahead, “the Americans have roughly a year and a half of supply at their utilities. I would say that’s probably less than most of the world. A lot of the world tends to have multiple years of supply. The Americans aren’t going out and buying companies and projects, they’re not taking a strategic interest in projects, like the Chinese, Koreans, Russians and Japanese are doing, or have been doing in the past several years.

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Athabasca Basin and beyond

June 15th, 2013

Uranium news from Saskatchewan and elsewhere for June 8 to 14, 2013

by Greg Klein

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Cameco’s Cigar Lake granted mining licence

With production slated for Q4, Cameco Corp TSX:CCO got the final go-ahead to mine Cigar Lake uranium on June 13. The Canadian Nuclear Safety Commission issued the mining licence following a 1990s environmental assessment, a stalled construction phase and a one-day public hearing. “The licensed facilities include underground mine workings accessed by two mine shafts, a surface load-out facility, waste management systems, a mine water management system and associated site facilities,” the CNSC stated. Cameco expects jet-boring to begin this summer.

The world’s second-largest known high-grade uranium deposit, Cigar Lake’s bounty holds:

  • proven reserves of 233,600 tonnes averaging 22.31% uranium oxide (U3O8) for 114.9 million pounds U3O8
  • probable reserves of 303,500 tonnes averaging 15.22% for 101.8 million pounds.

Those reserves give Cigar Lake a 15-year lifespan. With full production expected in 2018, it’s expected to give up 18 million pounds annually.

Cameco’s Cigar Lake granted mining licence

A Cameco crew installs freeze pipes at Cigar Lake
to protect against seeping water and leaking radiation.

The peak of construction could employ up to 500 workers, while production would require about 250 people. Jet-boring will extract the highly radioactive material using water pressure to carve underground caverns and push an ore slurry to underground grinding and thickening circuits, then to surface. The ground first must be frozen to prevent water seepage and radiation leakage. Processing will take place at the McClean Lake mill, 69 kilometres away.

Construction actually began in 2005. But the project hit delays due to flooding in 2006 and 2008. Cameco finally dewatered the workings in 2010 and restored the underground infrastructure the following year.

Located near Waterbury Lake on the Athabasca Basin’s eastern margin, Cigar Lake is a four-way joint venture in which project operator Cameco holds 50.025%, AREVA Resources Canada 37.1%, Idemitsu Canada Resources 7.875% and TEPCO Resources 5%. Another JV, the McClean Lake mill is held 70% by operator AREVA, 22.5% by Denison Mines TSX:DML and 7.5% by OURD Canada.

Pele Mountain increases Eco Ridge inferred U3O8 136%, REO 130%

Replacing a previous uranium-rare earths resource in the project’s July 2012 preliminary economic assessment, Pele Mountain Resources TSXV:GEM released a June 10 update for its Eco Ridge project in Elliot Lake, Ontario. The resource now shows:

  • an indicated category of 22.74 million tonnes averaging 0.045% U3O8 and 1,606 parts per million total rare earth oxides for 22.55 million pounds U3O8 and 80.51 million pounds REO, or 49.83 million pounds U3O8-equivalent
  • an inferred category of 36.56 million tonnes averaging 0.047% U3O8 and 1,554 ppm REO for 37.62 million pounds U3O8 and 125.25 million pounds REO, or 81.84 million pounds U3O8-equivalent.

The inferred numbers represent a 130% increase in total REO and a 136% jump in U3O8. The indicated category rose 10% in both REO and U3O8. The update shows “substantial increases in critical REO resources including neodymium, dysprosium, yttrium, terbium and europium oxides, as well as in scandium oxide resources,” the company stated.

Pele Mountain added that two higher-grade zones start at surface, which could allow higher-grade production during the first years of mining.

Working in Elliot Lake between 1956 and 1996 Rio Algom, later incorporated into BHP Billiton, and Denison produced over 300 million pounds of U3O8 and significant quantities of yttrium and heavy REO from deposits similar to that of Eco Ridge, Pele Mountain stated. The mining camp is about 160 kilometres west of Sudbury.

Aldrin increases resolution of PLS-area airborne geophysics

Aldrin Resource TSXV:ALN will add infill lines to an airborne geophysics survey already underway over the Patterson Lake South area. Announced June 12, the decision will increase resolution from 200-metre to 100-metre spacing over conductive anomalies found on the company’s 12,001-hectare Triple M property. Aldrin interprets the anomalies as linear basement conductors over three kilometres long, parallel to a magnetically defined fault.

The company holds a 70% option on Triple M, which sits nine kilometres south and 11 kilometres west of the PLS discovery. High-grade, near-surface results from the Alpha Minerals TSXV:AMW/Fission Uranium TSXV:FCU 50/50 JV excited interest in the area in and around the Basin’s southwestern rim. The helicopter-borne VTEM magnetic and electromagnetic survey already underway is a joint project that’s flying contiguous properties held by Aldrin, Athabasca Nuclear TSXV:ASC (formerly Yellowjacket Resources TSXV:YJK), Forum Uranium TSXV:FDC and Skyharbour Resources TSXV:SYH. Lucky Strike Resources TSXV:LKY and Noka Resources TSXV:NX each hold a 25% earn-in option on Skyharbour’s properties.

Aldrin stated the infill lines will help locate drill targets for early winter 2014.

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Spotlight on the juniors

January 21st, 2013

Companies, investors and pundits converge on the 2013 Vancouver Resource Investment Conference

by Greg Klein

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A marketplace of ideas about the market itself—that partly describes the 2013 Vancouver Resource Investment Conference. This year the Cambridge House event brings several hundred companies together with prospective investors. But the conference also features about 50 speakers with maybe 50 divergent (although often overlapping) perspectives on the state of the juniors.

Cambridge House calls this Vancouver event the world's largest investor-focused resource exploration conference

Cambridge House calls this Vancouver event “the world’s
largest investor-focused resource exploration conference.”

Among those on hand January 20 were Michael Berry speaking on Obamanomics, Rick Rule on his love for bear markets and Chris Berry on specific critical and strategic commodities for 2013.

Canadian-born Michael Berry, co-founder of Discovery Investing, fell just short of doom and gloom in his cautionary tale about the transformation of United States economics, culture and governance. More than ever before, he said, taxation, deficit spending and redistribution of wealth are firmly entrenched as government polices. The purpose, he stated, was to remake America. The program has disturbing implications for Canada and the rest of the world, he added.

“We have now turned the corner with the second administration of Barack Obama. Politics, not economics, is now the driving force—period, end of story.”

When it comes to boosting its power, U.S. government methods are myriad: Executive orders, challenges to the constitution, the appointment of czars who aren’t checked by the constitution, redistribution of wealth, repression of investment and market manipulation of gold, silver and currency. Outright confiscation, Berry warned, has happened historically and could happen again.

Helping rationalize government policies is a government belief that “anyone in government is smarter than anyone else.” Society, meanwhile, becomes ever more polarized. “It’s not violent yet but it could be violent at some point in the future,” he warned. “It’s happened before.”

The market of course went off the cliff in 1997, so there was the ’97-to-2002 bear market, a truly dismal bear market—when my net worth skyrocketed.—Rick Rule, chairman of Sprott Global Resource Investments

But just from an economic viewpoint, the future looks bleak indeed. “Sometime around 2030, which is not all that far in the future, we will have amassed 200% federal debt relative to GDP…. That’s exactly what the Obama administration wants to do…. When that happens, the current structure will not be sustainable and the government will have to step in and reorganize the economy.”

Massive, growing government debt “is the tool the government is using to socialize the economy,” Berry stated. “It’s not a legacy we want to leave to our children. But it is a legacy with great implications for gold and silver.”

To protect themselves, Berry suggested investors “must eschew the dollar and every fiat currency you can think of,” own precious metals and consider other investments including water and infrastructure.

“I think you need to be looking at risk, thinking about risk, and those ten-baggers that will help you tread water as the U.S. moves towards an ultimate socialist state,” he concluded.

Following with good-natured overstatement was Rick Rule, chairman of Sprott Global Resource Investments. “There’s basically nothing I could say that would depress you more,” he quipped. But ever the contrarian, Rule added, “It defines me well that when everyone else seems to be depressed, I’m on my way to being elated.”

He predicted the junior bear market—the “nice, ugly bear market,” as he called it—has another 18 to 24 months to go. And for anyone who wants to make money, “it’s an extremely good thing.” It’s time to do some bargain-hunting, he maintained.

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Uranium consolidation

January 16th, 2013

Fission likes Denison’s offer, wants to “do it all again” in Saskatchewan’s Athabasca Basin

by Greg Klein

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(Update: The spin-out company Fission Uranium Corp TSXV:FCU began trading on April 30, 2013.)

Uranium M&A activity continues with Denison Mines’ TSX:DML move to acquire Fission Energy TSXV:FIS. Both companies back the plan, which would help Denison consolidate its position in Saskatchewan’s Athabasca Basin. Meanwhile Fission management would move into an aggressively “lean and hungry”—but well-financed—spinoff.

A helicopter lands at Waterbury Lake. Under part of the proposal, Denison Mines would get Fission Energy’s 60% stake in the 40,256-hectare uranium project.

A helicopter lands at Waterbury Lake. Under part of the proposal,
Denison Mines would get Fission Energy’s 60% stake in the
40,256-hectare uranium project.

Under the binding letter of intent announced January 16, Denison would get Fission’s 60% interest in the Waterbury Lake uranium project. Fission’s other focal point, its 50% stake in the Patterson Lake South uranium project, would spin out to a new company headed by the Fission team. The deal, which values Fission at $70 million, would offer 0.355 Denison shares for each Fission share. As a result, Fission shareholders would own about 11% of Denison as well as a proportional interest in the newly formed company.

The parties expect consummation by April. The LOI includes a reciprocal break fee of $3.5 million.

Patterson Lake South, located in the western Athabasca Basin, is currently a 50/50 joint venture between Fission and Alpha Minerals TSXV:AMW. The high-grade, near-surface project has seen a steady stream of encouraging results since its discovery last fall.

In the eastern basin, Fission holds a 60% interest and 2% NSR in Waterbury Lake. A consortium led by the Korean power utility Kepco holds the remaining 40%. Waterbury’s J-Zone is an extension of the Roughrider deposit, which Rio Tinto bought from Hathor Exploration last year for $654 million. Cameco’s TSX:CCO McArthur River and Rabbit Lake mines, as well as its Millennium deposit, lie on the same trend.

Denison would also pick up the rest of Fission’s eastern basin assets, a few more in Quebec and Nunavut, and Fission’s share of two JVs in Namibia.

Denison already commands a strong position in the eastern basin, with 26 projects covering over 330,000 hectares. Included is Denison’s 60% interest in Wheeler River, a JV in which Cameco and JCU Exploration hold 30% and 10% respectively. Also in the eastern basin, Denison holds a 25.17% interest in the Midwest high-grade uranium deposits and a 22.5% stake in the McClean Lake near-surface deposits and mill, one of the world’s largest uranium processing plants.

Last November Denison acquired 13.9% of International Enexco TSXV:IEC, whose assets include Athabasca’s Mann Lake project, a JV in which Cameco holds 52.5% and AREVA 17.5%. Other Denison assets are located in Mongolia and Zambia.

Speaking to ResourceClips, Fission chairman/CEO Dev Randhawa says, “I think Denison’s corporate strategy is to be a dominant player like Cameco and Rio, so they acquired [JNR Resources TSXV:JNN] last fall and now they’re acquiring our asset next to Rio, which is just north of Denison’s Midwest project.”

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Athabasca bound

December 11th, 2012

Clermont Capital and NexGen Energy have big plans for Saskatchewan and Nunavut uranium exploration

by Greg Klein

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(Update: With the reverse takeover of Clermont Capital complete, NexGen Energy Ltd TSXV:NXE began trading on April 23, 2013.)

When boiled down to basics, the formula for exploration success seems simple—all you need is brains, money and projects. In reality, of course, each of those qualities can be elusive. But in northern Saskatchewan’s Athabasca Basin, companies are joining forces to create what they believe will be the region’s “premier uranium exploration company.” That’s the ambition of Clermont Capital Inc TSXV:XYZ.P and NexGen Energy Ltd.

The events began with work on NexGen’s Radio project, continued with Clermont’s capital pool IPO in August and further progressed with NexGen’s November 15 acquisition of 10 Canadian projects from Mega Uranium TSX:MGA. Further progress came with an LOI announced November 30, in which NexGen and Clermont would amalgamate to create a new TSXV-trading entity. That, in turn, would follow NexGen closing a minimum $6.6-million private placement. (For more details, as well as comments from Clermont president/CEO/director Arlen Hansen, click here.)

The newly expanded portfolio means “we now have a very dominant position in the Athabasca Basin,” explains NexGen CEO/director Leigh Curyer. “Our strategy is to find assets that are at the shallower sections of the basin and have existing geophysical signatures that make them prospective. While there are 10 properties in the Mega portfolio, each of them made that criteria. They predominantly straddle the unconformity, they’re in the shallower part of the basin, they’ve got existing but not extensive work and we thought they had very strong technical merits.”

Clermont Capital and NexGen Energy have big plans for Saskatchewan and Nunavut uranium exploration

NexGen’s Radio project is one of three Athabasca Basin
focal points in the company’s recently expanded portfolio.

Now with a total of 12 properties, NexGen’s three focal points are Radio, Rook 1 and Northwest Athabasca. “One property has mineralization on it, another two are directly adjacent to significant discoveries. The geological trends that host those discoveries are interpreted to go into our properties. Our properties are even shallower than those with the existing deposits. If they prove to have a discovery, the economics should be comparatively more favourable.”

Although Radio resides in a crowded neighbourhood with prominent neighbours, it’s never been drilled. That’s scheduled to change in January with an approximately 40-hole campaign. Adjacent to the Roughrider deposits that Rio Tinto bought from Hathor early this year for $654 million, Radio is interpreted to sit on the same east-west corridor hosting Roughrider and Fission Energy’s TSXV:FIS J-Zone. Roughrider’s indicated resource totals 17.2 million pounds triuranium octoxide while the inferred category shows 40.7 million pounds U3O8. The J-Zone at Waterbury Lake has an indicated resource of 10.28 million pounds and an inferred resource of 2.74 million pounds U3O8.

NexGen has an option to earn an initial 70% interest in Radio, then the additional 30% subject to a 2% NSR.

Rook 1 borders Patterson Lake South, a Fission Energy and Alpha Minerals TSXV:AMW JV near-surface discovery that’s generated considerable market interest. The NexGen property could be on trend with PLS and, according to some interpretations, might host the bedrock source of a high-grade boulder field associated with the Fission/Alpha discovery. Rook 1 geophysics are underway and, if completed in time, will determine a drill campaign to start this winter.

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After Japan

April 8th, 2011

Other Uranium Stocks Have Recovered, But Uranium One Lags Behind

By The Highgrade Review

The Japanese disaster, now approaching its one month anniversary, continues to be the only topic of discussion for investors in uranium stocks. The spot price of uranium fell 10%, to $60 per pound immediately after the earthquake and tsunami created a nuclear incident at the Fukushima reactor, sending low levels of radiation drifting south to Tokyo. Prices eventually fell as low as US$49.25 per pound. Perhaps a lesser known fact amongst casual observers is that the price has almost completely recovered. By March 24, it was back to $61.13.

What’s behind the speedy recovery? Many analysts point to a lack of real options for replacing nuclear energy, which supplies 13.5% of the world’s electricity generation. Independent analyst Peter Strachen says the situation will “basically blow over in the next 12 to 18 months, as people realize that there’s no real alternative in the short to medium term, for large, baseload power supply.” Strachen points to a number of new plants being built in India, China and Brazil.

Other Uranium Stocks Have Recovered, But Uranium One Lags Behind

Analysts with The Bedford Report agree. They say that China is currently in the process of quadrupling its uranium consumption to 50 million to 60 million pounds a year and says it plans to build 10 nuclear power plants a year for the next decade. Even as the Japanese crisis hit its darkest hour, with the crisis at Fukushima still not contained, the Obama administration said that “nuclear power will remain a key component of America’s energy mix, despite worldwide anxiety over the safety of reactors.” The US currently has 104 reactors in 31 states.

Raymond James mining analyst Bart Jaworski told the Globe and Mail the disaster has created an opportunity for investors to buy quality uranium stocks at a discount. He said, “We expect this situation to be no different than what happened after the Three Mile Island [1979] and Chernobyl [1986] accidents, where reactor growth continued quite strongly due to the large amount of reactors already in construction phase.”

Two of Jaworski’s favorite picks are Cameco and Paladin Energy. Cameco is down just over 19% since the Japanese disaster, from $36.32 March 11 to $29.25 April 6. Paladin Energy is down about the same, from $4.66 March 11 to $3.82 April 6. A look at other TSX-listed uranium plays reveals similar, or better, numbers. Denison Mines has forfeited a shade over 20% of its pre-Japan price, while First Uranium is down just 8%.

And then there’s Uranium One. Despite a modest recent rally, the Vancouver based miner is still down nearly 33% since the Japanese quake, from $5.96 March 11 to $4.04 April 6.

To read more, “Uranium One lags peers in sector recovery”, Click Here

Uranium shares fall over Japanese Nuclear Concerns

March 14th, 2011

The Financial Post reported March 14 that shares in uranium miners fell dramatically today over concerns that the recent nuclear disaster in Japan will affect uranium demand. Stock in uranium company Cameco Corporation TSX:CCO fell as low as 20% today, Uranium One Inc TSX:UUU dropped 30%, and Mega Uranium Ltd TSX:MGA fell 34%.

Adam Schatzker and Fraser Phillips, analysts at RBC Capital Markets, expect that the spot price of uranium will be affected, but not to the extent of the market chill experienced after the Three Mile Island and Chernobyl disasters. They commented, “We believe the outlook for new nuclear builds is still positive. The reactors that are being proposed for construction are of a much newer design than the ones that are failing in Japan.”