Industry needs much higher uranium price to fund new production

Comment: Virginia is pushing for uranium mining at Coles Hill. Why the push when the price of uranium is so low? Local people, wake up, the state of Virginia wants the uranium! The state of Virginia only cares about the profit and not her people!

By: Liezel Hill
Published: 10th August 2009

TORONTO (miningweekly.com) – The uranium-mining industry will likely need to see prices lift “considerably” before lower-grade, higher cost mines can be brought into production, Jean Nortier, the CEO of Vancouver-based Uranium One, said on Monday.

Uranium One also announced earlier in the day that it had agreed to buy additional assets to speed up its production plans in the US, and that it is in negotiations to sell its shuttered Dominion mine, in South Africa, for about $38,5-million in cash, net of transaction costs.

Speaking on a conference call, Nortier refused to speculate on the short-term outlook for the price of the nuclear fuel, but said he remained “as bullish as ever” on the medium- to long-term prospects.

Uranium One produces uranium from mines in Kazakhstan, and owns 51% of the Honeymoon project, in Australia, as well as some processing facilities and deposits in the US.

“If you look at our results – and we have probably the cheapest producing uranium mines in the world from a public company perspective – and you say our cash costs are $16/lb to $17/lb, plus we sit with noncash costs of $14/lb to $16/lb. So it's $30/lb to $32/lb before you start making an operating profit,” Nortier said.

“And if the cheapest uranium mines in the world are producing at those numbers, then your marginal cost of production is a number significantly higher.”

Pricing service TradeTech reported on Monday that uranium-oxide for immediate delivery rose 1,1%, to $47,50/lb last week, the first gain in eight weeks.

The increase was linked to new demand from a non-US utility.

Nortier said lower-grade deposits, such as in Namibia, or some conventional mining projects in the US, will need much higher prices to be economically mined.

“We continue to think that the uranium price needs to lift considerably before you will start to see enough production come online to fill the market.

“My view is that we need to see $80/lb to $100/lb before we are going to see marginal mines being brought into production,” he said.

http://www.miningweekly.com/print-version/industry-needs-much-higher-uranium-price-to-fund-new-production-2009-08-10