Uranium In The News

January 9, 2009
Ux Weekly - www.uxc.com

Uranium Production – A topic that has borne watching almost every year this decade has been uranium production. Ever since the uranium price started its ascent, uranium production has invariably fallen short of producers’ target levels. Last year was no exception, as the planned level of production at the beginning of the year was 124 million pounds, while the actual production is likely to turn out to be more on the order of 115 million pounds. (Total production in 2007 was 107 million pounds.) In past years, this shortfall helped to put or keep upward pressure on price. Last year, hedge fund destocking and previous inventory building on the part of utilities more than made up for the production deficit. Looking forward, what happens with respect to production in Kazakhstan, which stumbled somewhat last year, again will be key, along with the progress (or lack thereof) at Cigar Lake. With lower prices and financing concerns in the wake of the credit crisis, expansion may be more difficult to accomplish going forward. How companies respond to these challenges will be a key determinant in future price formation.

Uranium Price Volatility – While stopping short of a prediction, we noted in last year’s preview that we would not be surprised if the uranium market remained volatile, although not to the degree it was in 2007. This turned out to be the case as 2008 experienced by far the most price volatility of any year except for 2007. We can repeat that same expectation here, as we enter the year in both an uncertain economic climate and also a number of uranium supply uncertainties, including production levels and DOE inventory sales, both key items discussed here.

Uranium fundamentals remain 'really, really positive' – First Uranium
Mining Weekly - www.miningweekly.com/article.php?a_id=143969
By: Martin Creamer
Published on 3rd October 2008

The fundamentals for uranium remain “really, really positive”, says First Uranium CEO Gordon Miller.
He says that this is because uranium is perceived as being a relatively clean fuel for baseload power generation.

He points out that those countries that have a large proportion of nuclear power generation have much lower carbon footprints than countries generating baseload power from coal.

The bottom line, he adds, is that it is relatively easy to determine what the demand for uranium is going to be because of the number of nuclear plants in operation and plans for additional nuclear stations.

Uranium demand growth is thus directly related to nuclear plant growth.

While the energy alternatives like solar and wind are clean, wind does not blow continuously and the sun does not shine at night, giving nuclear a niche as a provider of carbon-free baseload power.

The uranium price has been in the $60/lb to $65/lb range in the spot market, which is effectively the short-term delivery market.

While the spot price of uranium is volatile, the term price is less so for contracts with longer delivery lead times that are more stable.

On the current financial illiquidity leading to the consolidation of the uranium-mining sector, Miller says the large uranium deals of the last few years, after a lull of decades, has resulted in many explorers coming to market only to find that capital for explorers has all but dried up.

With liquidity an issue, the stocks of exploration companies have traded down significantly, given their risk profiles and their times to production.

Against this background, consolidation is a way for troubled companies to survive and Miller believes that consolidation in the junior sector “may well happen”.

The sell-off of uranium equities in the last six months has been significant.

Miller tells Mining Weekly that, while there had been a sell-off of equities in general, the sell-off of uranium equities had been even more pronounced.

While the market still rates the company as a developer, it is about to become a producer in the “very short term”.

“We believe that will change ratings in terms of the risk ratings that investors apply to various equities as we change from developer status to producer status,” Miller says.

Being a “dual” commodity miner is “very significant” for the TSX- and JSE-listed First Uranium from a cost point of view, as it contributes to a lowering of overheads, says Miller.

Moreover, First Uranium’s coproduct advantage is far more significant than the typical byproduct company in which one of the contributions overshadows the other.

In First Uranium’s case, contributions from both uranium and gold are sizeable.

“The advantage is that it costs you the same to mine it. Whether we are mining gold or uranium doesn’t matter; it is only the processing costs that vary,” Miller adds.

Dual mining is, moreover, just one element of First Uranium’s low-cost repertoire; the other element is where it sets its cutoffs, and the margin it is striving to achieve.

“Our objective is to be a low-cost producer, so we have set pretty high thresholds in terms of cutoffs, both for the tailings operation as well as for the Ezulwini start-up,” Miller points out.

First Uranium is producing gold at both Ezulwini and Mine Waste Solutions.

Uranium is currently mined at Mine Waste Solutions, but not recovered, and will be recovered from early next year from new uranium modules under construction.

Mine Waste Solutions is producing about 12 000 oz of gold a quarter, which the company is looking to double early next year.

Ezulwini, which has also started gold production, will be ramping up “very signifi- cantly” from March 2009.

First Uranium’s Ezulwini plant on the West Rand will begin production of uranium before the end of the year.

The company is also currently mining uranium at its Mine Waste Solutions operation nearby, but it has not yet been recovering that uranium, although it is being processed through the gold plant.

“We will begin recovering that uranium from early next year from the uranium plant, which is progressing very well,” Miller reports.

“In the early stages of the subprime crisis, we saw gold coming off from highs of $1 000/oz, and there is every possibility that it could go back there once again,” Miller says.

First Uranium’s long-term forecasts see the gold price coming down to $700/oz, but being pretty robust in the next few years.

“It’s always difficult to speculate as to what gold is going to do. There were a lot of dissenters who said gold would not get to $1 000/oz and it did, so there is every possibility that it could be back there again,” he says.

“At Mine Waste Solutions right now the cash costs are $400/oz and we are selling gold at close to $800/oz, and there’s your margin. “It’s a very, very attractive business at this point in time and much the same will happen at Ezulwini as we start ramping up production,” he says.

NUCLEAR RENAISSANCE: ATOMS TO POWER THE FUTURE
National Center for Policy Analysis - www.ncpa.org/sub/dpd/index.php?Article_ID=17157
Daily Policy Digest - Energy Issues
October 21, 2008

American energy demand is expected to keep growing. This growth is necessary if the economy is to prosper. With greenhouse gas regulation on the horizon, and Americans demanding energy independence, nuclear power can help keep the lights on. Nuclear energy has many benefits: It is reliable, recyclable, clean, sustainable and domestically produced. As such, it uniquely satisfies the otherwise conflicting demands burdening the American power industry, say Ross Wingo, a research assistant, and H. Sterling Burnett, a senior fellow with the National Center for Policy Analysis.

Compared to other significant sources of electricity, nuclear power has many environmental benefits. For instance, nuclear plants produce virtually no air pollution. By contrast:

Coal-fired power plants produce 13 pounds of sulfur dioxide and 6 pounds of nitrogen oxide per million watt-hours (MWh) of electricity produced.
Oil-fired power plants produce 12 pounds of sulfur dioxide and 4 pounds of nitrogen oxide per MWh.
Nuclear power is a CO2-free energy option whereas, for every MWh of electricity produced, coal-fired power plants produce 2,249 pounds of CO2, oil-fired plants produce 1,672 pounds, and gas-fired generators produce 1,135 pounds.
Traditionally, nuclear power critics have focused on two potential threats to human health: 1) the risk that dangerous levels of radiation will escape from a plant due to equipment failure or human error, and 2) the risk posed to human health from nuclear waste. However:

In more than 50 years of experience with nuclear power in the United States, no deaths or negative health effects have been conclusively linked to radiation leaks from nuclear plants or from spent fuel.
In addition, the U.S. Navy has operated nuclear-powered vessels for 50 years; despite the fact that hundreds of thousands of navy personnel have served in close quarters with nuclear power plants and radioactive material, there have been no radiation-caused deaths.
Source: Ross Wingo and H. Sterling Burnett, "Nuclear Renaissance: Atoms to Power the Future," National Center for Policy Analysis, Brief Analysis No. 635, October 21, 2008.

Northern Miner Article on Uranium with mention of Intl. Montoro Resources (.pdf)

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