When Will Uranium Emerge from the Shadow of Fukushima?

Joe Reagor of ROTH Capital Partners explains the factors that have kept uranium spot prices down, how much longer they will be in effect, and why uranium should be on investors' radar screens today. He also discusses four uranium companies that are in position to benefit from the looming uranium shortage.

The Energy Report: How do you see the big picture for uranium? Spot prices have dropped recently. Are you still bullish?

Joe Reagor: It's a matter of time horizon. Many analysts, myself included, believed that the uranium price recovery was going to happen in 2014. Then when 2014 didn't happen, we thought 2015. Then when 2015 didn't happen, we said 2016. Here we are in 2016, and uranium is back under $28/pound ($28/lb) again. The recovery isn't happening.

Nuclear Water

There are two parts to why we're not seeing a spot uranium recovery. First is the uranium spot market has been rather tight in terms of overall percentage of production, and there have been some nuclear plant closures in addition to shutdowns in Japan after Fukushima. Add to that a lot of production growth already build into pipelines that has come on-line and ramping up production and creating a larger amount of spot uranium to be sold into a weak market. Cameco Corp.'s (CCO:TSX; CCJ:NYSE) Cigar Lake is an example of that. So we're getting this extra pressure on the spot market, but if you look at contract pricing, it has remained relatively stronger, in the low $40s. Producers are making decisions based on the contract price, not the current spot price. So there is a disconnect between spot and contract pricing. Continue reading "When Will Uranium Emerge from the Shadow of Fukushima?"

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Uranium Got You Down? Better Days Are Ahead

The Energy Report: The uranium spot price balloon has lost air again and is back down in the mid-$30/pound (mid-$30/lb) range. It was stalled there for months last year. What pushed the spot price up in the first place? Why is it falling now?

Rob Chang: The uranium spot market is generally pretty thin, and any number of transactions on either the buy or sell side could push it in any direction. What's moved it higher recently could be the news of Japanese reactor restarts happening this summer. A couple of reactors are set to restart in the next few months or so, and we believe that helped push the price along a little bit.

But the spot price really depends on near-term utility demand. I think that's the key point here. In terms of utility demand, according to the numbers that we've seen, globally about 1520% of uranium requirements for 2016 onward are still uncovered. Between now and the end of 2016, there needs to be some buying, either in the spot market or through some other means, to cover those requirements. We saw a bit of a lift because of that need, but certainly there hasn't been a big rush back toward buying uranium ex-spot yet.

TER: I've heard repeatedly that the deficit is going to occur in 2019 or 2020. Why aren't the mining companies moving ahead to address the deficit they know is coming? Continue reading "Uranium Got You Down? Better Days Are Ahead"

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