MiningNews.net + Uranium price to hit $140/lb: analysts

Uranium price to hit $140/lb: analysts

[ whooa - hang on there ?! ]

EQUITY researcher Resource Capital Research has released a report suggesting that the spot price for uranium could reach $US125 a pound some time this year and $140/lb by September 2008 – an increase of 47% over the current spot price of $95/lb.

RCR managing director and analyst John Wilson said the main factor driving the price higher was a strong growth in new nuclear reactors, and with at least 48 new power reactors expected to be commissioned by 2013, the price indicators all suggested that uranium would be heading to even further record highs. "Uranium price indicators continue to strengthen and are currently at all-time highs," Wilson said. "Sector fundamentals are being driven by new reactor announcements, reactor power uprates and life extensions, investor and producer buying, and supply disruptions at Ranger and Cigar Lake."The Cigar Lake floods are expected to delay production at Cameco's Canada mine until 2010, while Energy Resources Australia's Northern Territory Ranger uranium mine was also hit by heavy rains earlier this year and production is anticipated to be down some 20-30% in the first quarter of this year.On the upside for future uranium production, RCR said it anticipated the three mines policy of the ALP would be reversed in April, which would benefit companies with advanced projects especially in Queensland and South Australia. The Western Australia stance banning uranium mining was also "unsustainable" in the mid-term future.Hartley's resources analyst Andrew Muir told MiningNews.Net that these price forecasts were not out of line."Considering where [uranium] has come from, going up an extra $40-50 a pound within one to two years is not unreasonable, given supply and demand issues," he said."Supply is tight and there aren't many significant new mines coming onstream, and there are a lot of new reactors being proposed and built."He also indicated that the future was looking good for uranium plays in Australia, especially companies with advanced projects, with the proviso that the ALP will need to reverse its three mines policy. Muir said the market had priced in the expectation that the politics will change and did not expect overheated market prices for uranium stocks in the wake of the potential Labor policy change. "Obviously, companies which are closer to production when this happens will gain a premium," he said.RCR's figures from 140 Australian uranium juniors showed that they had jumped up 23% over the past three months and 122% over the past 12 months, compared to a selection of Canadian juniors, which were down 2% over the past month and up 75% over the past 12 months. The majority of the 48 new reactors under development will be located in Asia – 13 in China, eight in India, six in South Korea and three in Japan. Russia is also commissioning eight new reactors, RCR said. The total power output of the reactors will be 43.5 gigawatts electric, compared with 435 nuclear reactors currently in operation with an aggregate generation capacity of 370GW electric – representing an 11% increase in power generation over the next six years.