This is how much uranium prices have to rise for the industry to revive
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Will this be another disappointing year for uranium explorers and producers or will this be a break out year?
Having been over $US140 ($204) per pound in 2007, prices have lulled in the $US20s for the last few years.
While only time will tell if 2020 will be uranium’s year, explorers and producers are preparing for the day prices pick up.
One explorer readying for the next uranium run is South Australia-focused Boss Resources (ASX: BOE).
“We’re waiting for the right [uranium price] to enter into contract with offtakers and that’ll underpin financing,” managing director Duncan Craib told Stockhead.
“You’d want the spot price to be in the [US]$30s. It is currently [US]$25 and that can move quite quickly.
“I would like to think it’s going to happen this year, that’s based on economic analyst forecasts to the best of our knowledge.”
This morning, Boss released a feasibility study (FS) on its Honeymoon project.
The company said the study positioned Honeymoon as “one of the world’s most advanced uranium development projects, that can be fast-tracked to re-start production in 12 months with low capital intensity”.
But the company will only restart operations once an “anticipated upswing in uranium fundamentals occurs”.
Boss Resources has had the Honeymoon project in its portfolio since 2015. The previous owners operated the mine between 2011 and 2013, but it was mothballed due to low prices and has laid dormant ever since.
It is only one of four fully permitted uranium projects in Australia.
Boss anticipates exporting its product to nuclear power operators, although it can only sell to countries permitted under proliferation laws. A quarter of the world’s demand comes from the US.
But while prices around the $US30 per pound mark might be ok for past producing mines to come back online, a much higher price point is needed to spur more uranium explorers into the market.
Craib told Stockhead prices adequate for Boss to restart production wouldn’t be sufficient for aspiring explorers.
This is because there is existing infrastructure at the Honeymoon project, whereas companies buying projects may have to build from scratch and if so, the payback price would be higher.
“$US60 per pound is the incentive price for new mines to come onto the market,” Craib said.
“They [newcomers] will need to build plants from scratch – we have one. We’re a restart project and that saves a bit a money on capex.”