Demand will drive uranium growth with M&A activity to rise

THE CONFERENCE CALLER: Adam Myers corporate finance partner with tax and advisory firm BDO opened his presentation at the Australian Uranium Conference with a quote from Reserve Bank of Australia Governor Glenn Stevens.

“The global economy is likely to record growth a little below trend this year, before picking up next year. Among the major regions, the United States continues on a path of moderate expansion and China’s growth is running at a more sustainable, but still robust, pace.”

Myers said he considered that quote to still ring true with the US showing definite signs of growth and China growing at a realistic pace with inflation not as much of a concern as it would have been had the country continued down the path it was following.

Myers presented the results of a global mining study BDO conducted last year, which involved interviewing executives located around the world.

 

Source: Company presentation

“There were some common themes to emerge and factors seen to be driving growth within the mining industry were the demand for resources,” he said.

“So we’re back to fundamental demand driving projects.”

Another aspect to emerge from the study was accessing capital or credit.

“So really you have to look at are you in an area where you have underlying demand, and have you got the capital to move forward,” Myers surmised.

“Uranium, I think, is something – in the long term – that does have that underlying demand.”

Myers gave his reasons for thinking this way down to global energy needs still not being met and that uranium and nuclear energy would play a large part in meeting that demand.

Like many other analysts are predicting, one area Myers anticipates a lot of action in next year is the Mergers and Acquisitions space.

Equity capital markets are currently very tight and there is no reason at present to think they will loosen up to by any great amount in the near future.

This is presenting some great opportunities for those companies in the position to do so.
 
“The majors are moving on some of their other projects, but there are certainly opportunities to pick up good quality projects, because companies are really running out of cash,” Myers said.

“So it is worth having a look at the market and seeing if there is a strategic deposit you could pick up.

“It really will be, I think, the theme of 2013.”