It certainly is a fascinating time for those in the uranium space.
Last month, the first shipment of Australian uranium left our shores for India, three years after a supply deal was signed. This comes after India announced a $14 billion plan to build 10 new reactors in the country.
News of the shipment was a much-needed boost to a sector which had been struggling significantly since the 2011 Fukushima nuclear accident which cause the evacuation of 100,000 people.
The Uranium spot price has fallen 75 per cent since then.
Earlier this year, there was more bad news for uranium hopefuls in WA, when the new Labor State government stood true to its pre-election vow of banning new uranium mines.
To date no mined uranium has been exported from WA.
Over the years, WA has witnessed significant opposition to uranium and nuclear industries from anti-nuclear groups as well as the Greens and Labor.
While WA Labor’s latest decision spells trouble for those yet to apply for uranium mining permits, the government has held out an olive branch to uranium plays that received approvals under the previous Liberal government.
Those immune from the recent State government decision include Toro Energy’s Wiluna project, Cameco’s Kintyre and Yeelirrie projects, and Vimy Resource’s Mulga Rock project.
The Minerals Council of Australia welcomed the exemptions, but said it was “disappointing to see the ban re-instated on newly granted mining leases.
“The uranium industry has already contributed significantly to WA with over $300 million invested in the State by companies since the ban on uranium was removed.
“While market conditions for uranium remain subdued, the prospect of future demand for Australia’s significant uranium resources are strong as nations around the world look to build very low emission baseload power,” the Council said.
What next for banned WA uranium miners?
Junior explorer Energy Metals (ASX:EME) is one of the companies facing uncertainty.
EME’s WA uranium projects including Manyingee, Lakeside, Lake Mason, Anketell and Mopoke Well are subject to retention licences — a ‘holding’ title for a mineral resource that has been identified but is not able to be further explored or mined.
The licences “allow the company to maintain tenure over the project areas with minimal expenditure until economic and political conditions permit future mining developments to proceed”, the company said in a statement.
While the likes of Energy Metals have had to convert their resource areas to retention licences, for those four uranium hopefuls whose projects are immune from Labour’s decision it’s business as usual.
Vimy’s (ASX:VMY) Mulga Rocks project, which received the go-ahead in December by the former Liberal-National government, is one of Australia’s biggest undeveloped uranium resources. It is located 240km north-east of Kalgoorlie in the Great Victoria Desert of Western Australia.
The project comprises 78.5 Mlbs of U3O8 and will have the capacity to produce 1360 tonnes per annum of uranium oxide for up to 17 years. The project is expected to result in the creation of 490 new jobs and payments of around $19m per year to the State government in royalty payments and payroll tax.
“We look forward to working with Minister Johnston in becoming WA’s first uranium mine and in the process, not only create new jobs in Western Australia but contribute to an industry that represents a real solution to the problem of global carbon emissions,” said Vimy Resources Managing Director and CEO Mike Young.
If used in nuclear power plants to displace coal-fired electricity, uranium from Mulga Rocks could offset more than 50 million tonnes of carbon dioxide equivalent emissions or about 10 per cent of Australia’s total greenhouse gas emissions, according to Mr Young.
Meanwhile, Toro Energy’s (ASX:TOE) Wiluna project received State government approval in January.
The State government has provided assurance to investors and stakeholders that the Wiluna project can proceed, according to Toro.
Since the WA Labor government’s announcement, Vimy’s shares have gained ground trading as high as 20c while Toro has been trading around 3.2c.
Below is a list of ASX-listed uranium stocks with projects in Australia:
|NAME||CODE||PROJECT NAME||PROJECT LOCATION||SHARE PRICE (17/07/2017)||52 HIGH||52 LOW||MARKET CAP|
|Energy Resources of Australia||ERA||Ranger||Darwin, NT||0.485||0.77||0.325||251.1|
|Paladin Resources||PDN||Valhalla, Valhalla North, Skal, Odin and Isa North Uranium Projects||Queensland||suspended last price 09/06/2017: 0.047||0.245||0.045||80.5|
|Alliance Resources||AGS||Wilcheery Project||Southern part of the Gawler Craton in the northern Eyre Peninsula, SA||0.082||0.11||0.08||8.6|
|Alligator Energy Ltd||AGE||The Camp Creek and Beatrice||Alligator Rivers Province - approx 250km east of Darwin||0.011||0.028||0.009||5|
|Arafura Resources Limited||ARU||Nolans Bore||Northern Territory||0.063||0.105||0.05||34.5|
|Boss Resources||BOE||Honeymoon Uranium Project||75Km NW of Broken Hill, in the Curnamona Region of South Australia||0.051||0.087||0.041||51.6|
|Cauldron Energy||CXU||Yanrey Project||85km south of Onslow in the northwest of Western Australia||0.04||0.08||0.031||13.2|
|Crossland Uranium Mines||CUX||Kalabity and Charley Creek Project||West-north west of Alice Springs||0.005||0.01||0.004||5.1|
|Energy Metals Limited||EME||Bigrlyi Project, Ngalia Regional project and||Northern margin of the Ngalia Basin, approximately 350km northwest of Alice Springs||0.079||0.275||0.071||16.6|
|Impact Minerals Limited||IPT||Mulga Tank Project||South West WA||0.014||0.036||0.013||11.9|
|Maximus Resources||MXR||Millers Creek Project||NW of Lake Torrens in the Eromanga Basin within the Woomera Prohibited Area (WPA) in central South Australia||0.002||0.005||0.001||5.7|
|Summit Resources Limited||SMM||Isa North whivh covers Valhalla, Skal and Bikini deposits||Mount Isa region of northwest Queensland||0.17||1.63||0.08||37.1|
|Southern Cross Exploration||SXX||Bigrlyi (5% stake)||Ngalia Basin, approx 350km NW of Alice Springs||0.01||0.011||0.005||10.8|
|Toro Energy||TOE||Wiluna||30km from Wiluna, central WA||0.033||0.064||0.027||66.3|
|Vimy Resources||VMY||Mulga Rock ProjecT||240km northeast of Kalgoorlie in WA||0.16||0.36||0.105||50.7|
|Laramide Resources||LAM||Westmoreland||NW QLD, near the NT border (Mt Isa)||0.5||0.69||0.2||N/A|
The uranium price and market
Uranium is the world’s heaviest naturally occurring element and, in its natural state, is only weakly radioactive. Enriched uranium is used primarily as fuel for nuclear power stations.
Uranium ore is extracted at the mine and refined into uranium oxide before being exported.
Since the halcyon days a decade ago when its price hit $US130 a pound, uranium has slid to a 12-year low of $US18 a pound in November 2016, recently trading slightly higher at $US20 a pound.
Concern over future demand has been raised with three European Union member states – Belgium, Germany and Switzerland – seeking to phase out nuclear reactors in the wake of the Fukushima nuclear incident in 2011. In the US and Europe, premature retirements of reactors continue to outstrip the rate of capacity addition.
However, there is mounting optimism that the sector will turn a corner based on the number of nuclear power plants currently under construction and slated for construction.
In its World Nuclear Performance Report 2017, the World Nuclear Association said there were 61 nuclear reactors under construction worldwide of which 20 are in China, with a further 15 spread across India, Pakistan and Russia.
As these plants come online uranium demand is expected to increase – but that is not expected to take place for another few years. In the meantime, uranium market may be in a holding pattern until there is increased buying appetite as these plants come on stream.