Uranium Juniors Defy Bear Market Pricing

Uranium (Nuclear Minerals) / Exploration, Mining, Marketing, & Acquisitions

Date posted: 06/01/16

Frik Els reports that U3O8 prices are down more than 20% in 2016 with the UxC broker average price sliding to $27.25 a pound in late May, 2016. Current levels are the cheapest spot uranium price since 2005. In contrast, the long-term price, where most uranium business is conducted, is hovering at around $44 a pound, where it has been since July 2015. Haywood Securities in its May 9 (2016) metals and mining outlook indicates that there has been a striking divergence in how uranium stocks have reacted to the price movements this year. In the first half of 2016, while the producers continue to be dominated by near-term uranium price movement, explorers and developers have benefited significantly from a very strong tow in the junior mining sector, lead by gold and base metals junior mining companies. The TSX Venture exchange has risen more than 29% YTD in 2016. With less immediate uranium price leverage, the exploration and development companies continue to benefit from what Els sees as strong long-term fundamentals for the uranium industry, underpinned by a deep global reactor construction pipeline of more than 60 reactors. The TSX Venture exchange has risen more than 29% YTD in 2016. With less immediate uranium price leverage, the exploration and development companies continue to benefit from what we see as strong long-term fundamentals for the uranium sector, underpinned by a deep global reactor construction pipeline of more than 60 reactors. While investors in uranium juniors are clearly taking the long-term view, producers and developers have been punished as uranium production failed to respond to low prices 5 years after Fukushima altered the fundamental landscape and secondary supply due to underfeeding of enrichment plants has resulted in inflated global inventories. Haywood anticipates a more predictable and normalized supply and demand response will emerge in the coming years, beginning in 2017 through 2020 as the nuclear fleet expands worldwide.