Another fund has taken a shine to uranium player Vimy
Private boutique fund manager Paradice Investment Management has taken a substantial position in emerging uranium producer Vimy Resources.
Sydney-based Paradice now has a 9.8 per cent stake after sinking about $2.1m on 41 million shares.
The move came just after West Perth-based Resource Capital Funds sold down its stake in Vimy (ASX:VMY) and gave up its substantial position.
The company is advancing its “Mulga Rock” project in Western Australia towards production. The mine is expected to produce 47.1 million pounds of uranium over 15 years.
Vimy is one of only three companies that have been allowed to go ahead with the development of their uranium mines in Western Australia.
The uranium price is continuing its upwards trajectory and is close to hitting $US30 ($41.37) per pound — its highest point in over two and a half years.
The spot price bottomed at $US19.60 per pound in May last year and after a few false starts has now witnessed seven months of increase.
Uranium was trading at over $US70 per pound in 2011 but bombed after the Fukushima Daiichi nuclear disaster that forced Japan to shut down its entire reactor fleet.
But several factors are contributing to the price turnaround, not least of which was Canadian uranium heavyweight Cameco’s decision to mothball its McArthur River mine, the world’s largest uranium operation.
Vimy boss Mike Young says the expected demand for uranium in 2018 is 173 million pounds, which will result in an immediate shortage of 47 million pounds.
“This gap can be managed by utilities in the short-term through stockpile management at the utility level, and secondary supplies on the sell side,” he said.
“However, this is not sustainable and at current production levels, the market is heading towards a structural deficit.”