What lies ahead for the uranium market

The uranium sector’s current pricing doldrums are destined to mother a bull market in the near to short term, according to the boss of one of the world’s largest undeveloped uranium projects.

Addressing the second day of the Paydirt 2017 Africa Downunder conference in Perth, Bannerman Resources’ managing director and chief executive officer, Brandon Munro, says the current decade-low prices are unsustainable. “The uranium spot price is languishing at a decade low price of US$20 per pound,” Munro says.

Image: Bannerman Resources

“While all commodity markets are cyclical - and it is said that the best remedy for low prices is low prices—uranium has unique dynamics that point to an abrupt return to higher prices when its time comes,” he says. He adds that the long-term nature of nuclear power plants and buying timeframes, uranium cycles are longer than other commodities.

“We have been in a long-term bear market since the collapse of the Soviet Union. The recovery in the sector - bolstered by nuclear power’s clean, base load attributes - has been coming since 2006, although the global financial crisis and then the Fukushima accident stalled the recovery. Because of the magnitude and depth of this bear market gestation period, we expect the next bull to be born large and to grow quickly.” Munro believes that now is the time for high growth investment.

Bannerman Resources owns the Etango Uranium Project in Namibia and is one of the world’s largest undeveloped uranium projects. Located in Namibia, southern Africa, the project is among the world’s top five uranium producing nations with substantial mining infrastructure.

Etango is one of the few uranium projects in the world with a completed Definitive Feasibility Study (DFS) and environmental permitting and will be a top 10 producer once developed. Based on the DFS, production is expected to be 7 to 9 million pounds U3O8 per year for the first five years and 6 to 8 million pounds U3O8 per year thereafter.

“During the last structurally driven bull market in the 1970s the real uranium spot price spent four years above USD140 a pound—and with the extent of supply constraints, I don’t see that being a totally unrealistic aspiration for the sector,” Munro says.

It will have a minimum mine life of 16 years with significant expansion potential through the conversion of existing Inferred Resource as well as the deposit being open at depth and along strike. Etango is considered by Bannerman to be a low technical and environmental risk project, with conventional open pit mining and sulphuric acid heap leaching at 20 million tonnes per annum.

“The Etango project has all its environmental and social licences in place. It also has all the necessary infrastructure on its doorstep making if effectively shovel ready when the sector turns around,” Munro concludes.


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