As we round out the first eight days of the new year, uranium spot prices are faring much the same according to uranium consultancy firm UxC. On January 6, U3O8 spot prices checked in up slightly from the previous week at $34.65 per pound. And though the market has been relatively quiet in the first week of 2014, there has been some activity in the uranium space.
More mine closures
January kicked off with yet another mine closure, this time in Niger, as Areva (EPA:AREVA) and the Nigerian government look to negotiate a new agreement following a 10-year license lapse on December 31. With renegotiations happening, Areva has advanced the maintenance schedule on Somair and Cominak, closing both mines for the next month. According to a research note dated January 3 from Cantor Fitzgerald’s Rob Chang, the mine closures are a positive sign for uranium.
“While Niger-based production accounts for more than one-third of Areva’s total uranium production we note that it is telling that Areva can afford to shut down two of its mines during negotiations while it still has contractual obligations to meet,” Chang wrote, adding “This tells us that either Areva has a comfortable amount of stockpiled material to meet these obligations or that it is reasonably economic to acquire the material in the spot market and deliver that into the contracts as opposed to producing the uranium from its mines in Niger.”
Talks for a renewed license between the Nigerian government and the French company have been going on for two years and it appears that the government is attempting to extract increased royalties from Areva. Despite Niger being the world’s fourth largest uranium producer, it also falls on the higher end of the spectrum when it comes to costs. That being said, Chang does not think it is likely that Areva will be accepting a license agreement that would have it paying more to the government in royalties.
Reuters reported in December that license negotiations would be extended by up to three months after an agreement failed to be reached ahead of the year-end deadline.
Cantor Fitzgerald has the combined forecast of uranium production from Cominak and Somair slotted in at 12 million pounds, or 6.5 percent. The firm sees the shutdown as favorable for uranium as it means some of the excess global inventory could be used to deliver to Areva’s committed deliveries.
Greenland and Denmark: A go for uranium?
It looks like by the end of the year we could see an agreement in place for uranium mining in Greenland.
“I’m confident that we will get a cooperation agreement in place in the second half of 2014,” Danish prime minister Helle Thorning-Schmidt said in a press conference. Though she and her Greenlandic counterpart Aleqa Hammond don’t agree on all issues, they have made progress in coming to an agreement for uranium extraction.
The two parties met to discuss the issue of how much say Copenhagen should have on the issue of uranium mining in Greenland. The Global Post wrote that under Greenland’s home rule, the former colonial power Denmark still holds control over foreign affairs and its defense policy. That being said, Thoring-Schmidt believes that a cooperation agreement between the two nations is necessary to begin mining uranium.
In late October 2013, Greenland’s parliament removed a uranium mining ban as a means to pave the way for an industrial boom that it hopes will gain it independence from Denmark.
Lakeland Resources (TSXV:LK) and option partner Declan Resources (TSXV:LAN) have successfully completed a land-based RadonEx survey at the Gibbons Creek property which showed a peak of 9.93pCi/m2/sec, which it believes is one of the highest reported RadonEx values in the Athabasca Basin. The companies’ ground-prospecting and sampling program have confirmed the existence of a historic radioactive boulder field on the property. The work has brought eight boulders to Lakeland’s attention that showed assay results greater than 1.0% U3O8 with a high of 4.28% U3O8.
The work conducted so far on the property show a potential for a significant uranium discovery. “Of particular interest are the extremely high ‘Radon’ values reported by RadonEx, which to our knowledge, are the highest ever reported for the Athabasca Basin area,” Jonathan Armes, President of Lakeland Resources Inc said in the company’s statement.
Pistol Bay Mining (TSXV:PST) announced that its joint venture partner, Rio Tinto Canada Uranium Corporation (RTCUC), has mobilized a camp with intention to start drilling in the C-5 Block in the Athabasca Basin. According to the latest press release, 2,500 meters of diamond drilling is proposed for the 2014 winter program at C-5 Block with a budget of $1.2 million. The program is designed to test five to six holes west of the Corridor A target as a followup to the 2013 exploration program. The company’s winter program is expected to last six to seven weeks.
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.