Tuesday, December 31, 2013

Ur-Energy makes $5.7M Uranium Sale

Published on Tuesday December 31 2013 (AEST)  
New production in-situ wells in progress at Ur-Energy's Lost Creek facility in central Wyoming. Mark Wilcox photo.

Interesting to note that 
 Yellowcake sales sold for $62.92 per pound, far above 
current spot prices
CASPER – The newest producing in-situ uranium mine has completed its first major sale, infusing the market with 90,000 pounds of yellowcake, or U3O8.

The sale produced gross revenues for the company of $5.7 million, putting a dent in the approximately $100 million in capital invested into the Lost Creek facility near Jeffrey City. The yellowcake sold for $62.92 per pound, far above current spot prices, which have hovered in the mid-30s for most of the year.

CEO Wayne Heili told the Business Report recently that the company had negotiated long-term contracts, even after the March 2011 Fukushima disaster that devastated uranium spot prices, to get the most for their product. The pricing is based on multi-year supply agreements between Ur-Energy and the two U.S. based utility companies that purchased the poundage, who Heili said must remain contractually anonymous.

However, he said uranium actually has very few buyers, meaning sales of uranium are few and far between and don't fluctuate as wildly as spot prices suggest. He said the spot prices are set by a third party that basically approaches uranium producers and asks what they'd be willing to sell their product for before approaching buyers to ask what they'd be willing to pay for the product. The spot price, he said, is basically an average of the two answers.

"Recording our first revenue as a company is indeed a milestone event," Heili said in a statement. "Ur-Energy has achieved tremendous growth in the past year."

The company recently acquired two abandoned mines from Pathfinder Mining Corp. – a $6.6 million deal.

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Sunday, December 8, 2013

Rio Tinto Uranium Mine Spills Radioactive Acid in National Park

Published on Sunday December 08 2013 (AEST)  

Rio Tinto Group (RIO)’s Energy Resources Australia (ERA) said a tank at its Rangers uranium mine in Kakadu National Park split, spilling a mixture of acid, ore, mud and water.

The 1,450-cubic-meter leaching tank developed a hole, which caused it to split and release slurry today, the company said in an e-mailed statement. Processing at the facility will be suspended while a clean up takes place, it said.

Operations at the mine must be suspended indefinitely and the company should conduct a full audit of the operations at the plant, the Australian Greens party said in an e-mail that described the spill as radioactive. ERA doesn’t dispute that the slurry is radioactive, company spokesman Dan Hall said by phone today.
“Containment systems stopped the flow, and this has meant there is no impact to the surrounding environment,” Tim Eckersley, general manager of operations at ERA, said in the company statement. “ERA is focusing on clean up and recovery.”

World heritage-listed Kakadu National Park, located in Australia's Northern Territory, is the nation’s largest national park, and more than half of it is Aboriginal land.
The Gundjeihmi Aboriginal Corporation, which represents the traditional owners of the land, called for an independent investigation of the spill.

Justin O’Brien, chief executive officer of GAC, said photographs and descriptions from eye witnesses showed the tank burst with such force that it bent and twisted nearby infrastructure and coated equipment in the slurry. 

“What could be safely described as one of Australia’s biggest nuclear accidents has occurred,” O’Brien said. “No one has demonstrated to us that there hasn’t been contamination.”
Rio Tinto owns 68.4 percent of Energy Resources.

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Monday, December 2, 2013

The Uranium Bull Market Rick Rule's Strategies for Making Money

 Published on Monday December 02 2013 (AEST)


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Sunday, December 1, 2013

Uranium The Investment Opportunity Of A Lifetime

Published on Sunday December 01 2013 (AEST)  

Remember, "bad to less bad" situations are an incredible source of low-risk profits...

"Bad to less bad" is a phrase coined by True Wealth editor Steve Sjuggerud. It involves buying assets that have suffered through horrible times...

In this kind of "bad" condition, you can often buy an asset for well below "normal" levels. If you step in and buy amid the pessimism, you can double your money if a bit of optimism returns to the market.

That's the situation right now in Uranium

Uranium fuels nuclear power stations... And like most commodities, it enjoys huge "boom and bust" cycles.

From 2003 to 2007, uranium saw a huge boom. It ran from $10 per pound to $130 per pound. And the share prices of uranium producers skyrocketed. Canada-based producer Cameco, for example, returned more than 1,200%.

But in March 2011, the disaster at Japan's Fukushima power plant helped turn the boom to bust. Japan was one of the world's biggest consumers of nuclear power, and it shut down more than half of its reactors. Several other countries also scaled back their nuclear programs.

While global sentiment has since improved, the damage was done. Uranium prices now sit at about $36 per pound... their lowest levels in more than seven years.

Right now, uranium producers need to sell their product for about $75 a pound to break even... That's more than twice the spot-market price. In other words, most producers are losing money on every pound of uranium they sell. Eventually, some of them will be forced to shut down.

In short, it's "bad" for uranium right now. Take it from Rick Rule...

Rick is the founder of Sprott Global Companies and chairman of Sprott U.S. Holdings. He has spent decades in the resource markets, making himself and his clients many millions of dollars in the process. He has also financed several of the most important resource companies in the world.

He's a brilliant trader, a genius investor, and a walking encyclopedia of business knowledge.

Here's what Rick told our colleague Frank Curzio in a recent episode of Frank's excellent S&A Investor Radio podcast:

The industry is in fact in liquidation. It sounds like it couldn't possibly get any worse, so sentiment with regards to uranium is really, really bad.

It might be hard to stomach the thought of buying uranium here. But as we've noted in these pages before, when things can't get any worse, they can only get better.

And Rick believes a double in uranium prices is a "near certainty."

Uranium Participation Corp. tracks the spot price of uranium (like GLD does for gold). In the chart below, you can see the big 2011-2012 bust. But you can also see that it has "ground out" a bottom at around C$4.80. Over the last year, it has refused to fall below that level.

You can also see that in the last three weeks, it has gained 12%. On Friday, it hit a new four-month high.

There's no guarantee this is the start of uranium's recovery. But the upside potential is enormous. And it's inevitable. It might take a year... or two... or three to play out. But uranium prices will head higher.

Keep in mind, it doesn't take great news to double the price of a cheap, hated asset... things just need to go from "bad to less bad." And it looks like that's starting to happen in uranium.


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