A global consultation is how to balance the developing demand for cost-effective and reliable power with our preference for our particular carbon footprint.
Methods such as hydro, wind, sun, wave and hydrogen are often championed, but the elephant in the room (which despite its proven delivery is raised only in hushed tones) is uranium.
Since the structure of the first nuclear reactor in 1942, persistent questions about the protection of uranium have prevented its acceptance in Australia.While proponents will highlight their reliability, base load capacity and advanced technology, errors such as Three Mile Island, Chernobyl and, more recently, Fukushima is weighing heavily on the australian psyche.
But demand for nuclear force continues to grow and power plants are under structure in many countries, adding the United States, Russia, China, and India. Demand for long-term accumulation, along with expected relief in the uranium source over the next 20 years, means an expected source hole will appear.
In this context, the value of uranium has increased by 30% this year to US$33 ($46) in line with the pound and is at its point in 4 years. However, it is a little desirable for long-term bullishers who have noticed that the value of “yellow cake” plummeted by about 80% since the heady days of 2007, when the hypothesis about source scarcity sent value to the bubble territory.
This dramatic fall of the last decade had made many uranium manufacturers unviable here and around the world, leading most of them to engage in “maintenance and maintenance.”
Australia is the third largest manufacturer of uranium, mainly Olympic Dam in South Australia and the Ranger mine that will soon expire in the Northern Territory. The timing is Canada and the largest manufacturer so far is Kazakhstan, which accounts for about 40% of all of the world’s production. The country’s unrest with COVID-19 and the desire to close mines for 3 months are the recent increase in uranium prices.
The recovery and progress of the outlook have led to optimism in this woeful sector. Beyond Rio Tinto (RIO) and Energy Resources of Australia (ERA), here are 3 uranium operators who have reassessed their prospects.
PDN is a uranium manufacturer in Namibia, with exploration sites in Australia, Canada and Africa. It also holds a 13% stake in Lotus Resources Limited (LOT), formerly Hylea Metals, whose sale of Kayelekera’s uranium allowance ended in March.
The company recently completed a plan to restart its Langer Heinrich mine, which has been suspended since 2017. Production is expected to be $27/lb.
PDN aims at a 17-year mine life for the site with a maximum production of 5.9Mlb of U308 consistent with the year for seven years. It is estimated that the charge for reinstateing Langer Heinrich will be $81 million and with $34.2 million in loose money flow, more investments will be needed to re-start the consistent stocks. It seeks to secure long-term value contracts to invest in reopening.
LOT owns 65 per cent of Kayelekera’s allocation in Malawi, the remaining 20 corresponds to the penny held through its spouse JV Chichewa and 15 corresponds to the penny through the Malawian government. With this acquisition, LOT has a proven manufacturer that, according to estimates, will contribute $49 million to be re-on tracked.
It has a production plant, exploration concessions and the help of a government of solidarity. In a recent presentation to investors, LOT said that with limited exploration for more than 20 years in the region, and with many known radiometric anomalies in the region, an improvement in exploration is a genuine possibility.
Activity at the mine was suspended in 2014, so the procedure began to complete a restart study, which will come with a load investigation and engineering design paints earlier. Although the final touch date is still doubtful given COVID outages, production is expected to resume some time later. Any restart resolution is subject to a continuous resumption of uranium prices.
BOE is engaged in the exploration of its HoneyMoon uranium mine in South Australia. This is a promising emerging Australian uranium miner who, after completing an earlier viability this year to restart production, believes this can be achieved within the next 12 months, especially as there has been historic infrastructure spending. The estimated all-inclusive maintenance charge of US$27.4/lb, if achieved, will make it one of the cheapest manufacturers in the world.
It is estimated that the resource exceeds 70Mlb, however, part is in the restart zone, so it is very likely that this is a very short-term manufacturer.
With the South Australian government, BOE is optimistic. He used the COVID-19 suspension to identify long-term targets in a drilling position. With seven known exploration goals around the existing resource and 3 west of Honeymoon, there is more chance of improving the resource.
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