Resource Capital Research (RCR)
PERTH (miningweekly.com) – The market valuation of Australian companies with one or more uranium projects grew faster than that of their Canadian peers over the last 12 months, research by Resource Capital Research (RCR) has shown.
In a report on global uranium companies, released on Wednesday, RCR said that the market valuation of Australian uranium companies had risen by 48% over the last 12 months, compared with Canadian uranium companies, which recorded a 29% increase.
However, the market valuation fell over the past month, with Australian companies suffering a 4% decline and Canadian uranium firms a 2% drop.
Over the past three months, the market valuation fell by 16% for Australian miners and 15% for Canadian miners.
RCR said in its June uranium report that in the past month, the uranium mining majors have had mixed share price performance.
The share price of the biggest-listed uranium-miner, Cameco, fell by 6%, while Denison Mines’ stock share price dropped by 1% .
Uranium One’s share price surged by a 24%, on the back of a deal with Atomredmetzoloto, or ARMZ. The Russian company will increase its holding in Uranium One to at least 51%.
Share prices for Energy Resources of Australia (ERA) were up 7% while Paladin’s share prices remained unchanged.
However, most companies had seen share prices drop over the last three months.
ERA suffered a 27% drop in its three-months share price, which RCR attributed to a number of factors, on of which was the super profit resources tax that Australia plans to implement.
Both Cameco’s and Denison’s share prices fell by 13%, when measured over a three-month period.
RCR noted that the Merrill Lynch Uranium Equity Index was up 6% over the past month, down 15% over three months and down 16% over the past 12 months.
RCR said that it expects the uranium price to continue to trade at around $40/lb mark over the next few months.
With the fund implied price (FIP) currently trading at $40,50/lb the spot price outlook was relatively flat.
Since April, the FIP has traded in a range of between $35/lb and $46/lb, with the low of $35/lb coinciding with equity market weakness in April.
The gradual downward drift in spot and contract prices over the past 12 months reflected, in part, the growth in new mine supply from Kazakhstan’s ISR projects.
“Uranium mine supply growth in Kazakhstan threatens to weigh down the sector cost curve in the short- to medium-term. Production growth from Kazakhstan has been phenomenal in recent years with production reaching 36-million pounds U3O8 in 2009 up 62% from 2008 levels of 22-million pounds, said RCR MD John Wilson.
He noted that production for 2010 was forecast to reach 47-million pounds.
“Production is low cost and frequently below $20/lb. As evident earlier in the year, a floor price of around $40/lb seems to be holding well but there is no significant utility demand to drive the market up.”
Utility purchases remain discretionary, Wilson noted, though timing of demand from long-term Chinese inventory build remains a factor with potential to influence short-term market trends.
Currently there are 439 nuclear power reactors in operation and 57 under construction. There are 496 new nuclear reactors planned or proposed globally as of June 2010, up from 435 in December 2009.
A total of 67 new reactors are scheduled to be commissioned by 2016.
Since December last year, the largest increases in planned and proposed new nuclear reactors are in India, taking its total from 38 to 60, and China taking its total from 125 to 154.