TALK about a nuclear reaction.
TALK about a nuclear reaction.
The spot uranium price, having already risen nearly tenfold during the past four years, is expected to break through the $US100 ($125)-a-pound barrier for the first time, possibly as early as this week.
In a case of perfect timing, Perth's Paladin Resources on Friday hosted 200 guests at the official opening of the world's newest uranium mine, Langer Heinrich in Namibia. Paladin stands to be the biggest Australian beneficiary of the increased uranium price, which has risen as a supply shortage has coincided with a huge jump in demand.
A spot price of even $US100 a pound would not be particularly helpful to long-time producers such as Energy Resources of Australia and BHP Billiton unless it stayed that high for years, because they locked in long-term contracts when uranium was trading at record lows.
But Paladin has positioned itself to be the world's fourth-largest uranium producer by 2010, despite competition from emerging rivals around the globe.
"A new exploration cycle is now very much under way and significant new discoveries will be made," Goldman Sachs JBWere analyst Malcolm Southwood said. "But it takes several years to evaluate and prove reserves, and once the economic reserves are defined, it takes 10 years or more to licence and develop a project and bring the mine into production."
Paladin has already approved development of its next project, the $US185 million Kayelekera mine in Malawi. And the company's managing director, John Borshoff, is today expected to make an announcement regarding its recent $1 billion scrip offer for Queensland explorer Summit Resources. A successful bid would give Paladin full control of its half-owned Valhalla and Skal deposits near Mt Isa.
Paladin has additional prospects in the Northern Territory and Western Australia, and Macquarie Equities thinks it may consider an overseas acquisition to enable it to get a third mine in production by 2010.
Paladin's Langer Heinrich mine could benefit immediately from any increase in the spot price. Although contract terms are kept confidential, Macquarie analysts believe Paladin has contracted about half its production from Langer Heinrich with a ceiling of about $US50 a pound and a floor of $US30 a pound. The remaining production is uncontracted and uranium last week was selling at a record spot price of $US91 a pound.
Analysts from Macquarie, RBC Capital Markets and Goldman Sachs JBWere all predict uranium prices could hit $US100 a pound this year.
But BHP, which owns the world's largest uranium resource at Olympic Dam in South Australia, is not expected to benefit from higher uranium prices until legacy contracts paying less than $US20 a pound run out in 2010. Even worse, BHP has been forced to purchase high-priced third-party uranium to meet the terms of some of its contracts.
The pricing terms of Rio Tinto subsidiary ERA's contracts are confidential but Goldman Sachs JBWere said it assumed ERA sold its product through a mixture of spot sales and long-term contracts, with the majority weighted towards long-term contracts.
The spot uranium price, having already risen nearly tenfold during the past four years, is expected to break through the $US100 ($125)-a-pound barrier for the first time, possibly as early as this week.
In a case of perfect timing, Perth's Paladin Resources on Friday hosted 200 guests at the official opening of the world's newest uranium mine, Langer Heinrich in Namibia. Paladin stands to be the biggest Australian beneficiary of the increased uranium price, which has risen as a supply shortage has coincided with a huge jump in demand.
A spot price of even $US100 a pound would not be particularly helpful to long-time producers such as Energy Resources of Australia and BHP Billiton unless it stayed that high for years, because they locked in long-term contracts when uranium was trading at record lows.
But Paladin has positioned itself to be the world's fourth-largest uranium producer by 2010, despite competition from emerging rivals around the globe.
"A new exploration cycle is now very much under way and significant new discoveries will be made," Goldman Sachs JBWere analyst Malcolm Southwood said. "But it takes several years to evaluate and prove reserves, and once the economic reserves are defined, it takes 10 years or more to licence and develop a project and bring the mine into production."
Paladin has already approved development of its next project, the $US185 million Kayelekera mine in Malawi. And the company's managing director, John Borshoff, is today expected to make an announcement regarding its recent $1 billion scrip offer for Queensland explorer Summit Resources. A successful bid would give Paladin full control of its half-owned Valhalla and Skal deposits near Mt Isa.
Paladin has additional prospects in the Northern Territory and Western Australia, and Macquarie Equities thinks it may consider an overseas acquisition to enable it to get a third mine in production by 2010.
Paladin's Langer Heinrich mine could benefit immediately from any increase in the spot price. Although contract terms are kept confidential, Macquarie analysts believe Paladin has contracted about half its production from Langer Heinrich with a ceiling of about $US50 a pound and a floor of $US30 a pound. The remaining production is uncontracted and uranium last week was selling at a record spot price of $US91 a pound.
Analysts from Macquarie, RBC Capital Markets and Goldman Sachs JBWere all predict uranium prices could hit $US100 a pound this year.
But BHP, which owns the world's largest uranium resource at Olympic Dam in South Australia, is not expected to benefit from higher uranium prices until legacy contracts paying less than $US20 a pound run out in 2010. Even worse, BHP has been forced to purchase high-priced third-party uranium to meet the terms of some of its contracts.
The pricing terms of Rio Tinto subsidiary ERA's contracts are confidential but Goldman Sachs JBWere said it assumed ERA sold its product through a mixture of spot sales and long-term contracts, with the majority weighted towards long-term contracts.
Normal font
Large font
When news happens
No comments:
Post a Comment