World's largest uranium miner mothballs all mines for 3 months, small caps rally

Uranium might be poised for a breakthrough with a recent production disruption due to the impact of the COVID-19 pandemic likely to highlight the global uranium production deficit.

Kazatomprom, the world’s largest uranium producer, has announced that all uranium mines in Kazakhstan will cease production for a three month period to slow the spread of the virus.

The shutdown is expected to reduce 2020 uranium production by up to 10.4 million pounds of U3O8, or almost 8 per cent of forecast global uranium production this year.

While this would be significant by itself, the production disruption is likely to compound the deficit of about 20 million pounds per annum.

Simply put, uranium end users will have to fight harder to get their supplies.

And there’s more, Canaccord Genuity notes that after under purchasing uranium for over five years, US utilities are now approaching less than three years of feed requirements held in inventory with over 50 per cent of supply to be re-contracted by 2023.

Unsurprisingly, uranium spot prices have been on a tear, rising 17.9 per cent over the past month to the current price of $US28.70 ($46.81) per pound.

READ: Barry FitzGerald: Confidence is brewing, is the uranium renaissance upon us?

Bannerman Resources (ASX:BMN) has successfully completed a membrane study testwork for its Etango project that confirms its economic and operational advantages.

This includes over 80 per cent acid recovery from the concentrated eluate stream of the ion-exchange plant.

It also confirms that the optimised flowsheet consists of ion exchange followed by iron reduction before nano filtration to recover uranium.

Shares in Bannerman were up 9.4 per cent to 3.5c on Wednesday.

Shares in Boss Resources (ASX:BOE) were also up, rising 18.9 per cent to 4.4c.

The company continues to progress the restart of its shovel-ready and low-cost Honeymoon project in South Australia and is now looking to secure offtake agreements.

The project is currently expected to produce 2 million pounds of uranium per annum over its 12 year mine life, though investigations are being carried out to ramp up production to 3 million pounds per annum.

Former uranium producer Paladin Energy (ASX:PDN) recorded a 16 per cent gain to 5.8c on Wednesday.

The company is angling to restart its previously producing Langer Heinrich operation in Namiba.

Langer Heinrich benefits from existing infrastructure and mine development, allowing for a rapid restart of operations if warranted compared to a greenfield mine.

Meanwhile, shares in Peninsula Energy (ASX:PEN) climbed 18.2 per cent to 13c.

Earlier this week, the company noted in March a customer had requested that a sale of uranium originally scheduled for April 2020 be brought forward.

This resulted in the sale of 116,000 pounds of U3O8 at an average price of about $US35 per pound.

Peninsula currently has a portfolio of uranium concentrate sale and purchase agreements up to 5.5 million pounds with a weighted average future sales price that sits at the upper end of the guided $US51-$US53 per pound range.

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