New uranium development needs price range up to US$90 per pound

AFRICA DOWNUNDER: Perth – An incentivised price range of between US$75 and US$90 a pound is needed to drive any new investment in greenfields uranium mines according to Perth-based uranium developer, Bannerman Resources.

Speaking in Perth at the 2012 Paydirt Africa Downunder conference, Bannerman chief executive officer Len Jubber said that while the industry had been through some turmoil following the Fukushima incident last year, there were significant signs of demand upturn and reactor development activity.

“Any examination of the price and supply trend of the past ten years shows a generally upward trend,” Jubber said.

“What we have come to recognise is that uranium will have its price spikes but it is the longer term trend that is the real sector indicator.

“In this mix is the increasing tiredness of a lot of uranium mines globally, historic inadequate pricing, the need for renewal for some existing operations such as Ranger mine in the Northern Territory going underground, project swaps, and sudden market impacts such as the deferral of the Olympic dam decision – an event that has ended much market speculation about potential future cheap volumes of uranium flooding the market.

“The market has to look seriously at those companies that have taken their projects to definitive feasibility stage because this is where the cost realities come in for future uranium projects.

“It gets rid of the blue sky numbers at the scoping study levels and sets the range at where new uranium mines can be viable.

“Our assessment of all current projects shows this price range will need to be in the US$75-90 a pound-range to see incentive decisions for new uranium mine developments.”

Jubber went on to say that any resurgence globally in the uranium space this year could be measured by better valuing the fact 433 reactors continued to operate worldwide, in 30 countries, 63 new plants were under construction and a significant 489 were planned and proposed.

“Add to that China’s stated intention to increase its nuclear output from 12 gigawatts to between 60 to 70 gigawatts by 2020 and you can see that demand will not be easing as that target only represents six to seven per cent of China’s total requirement to replace some of its fossil fuels – and course India is a sleeper at this stage,” he said.

Bannerman is developing the Etango uranium project in Namibia, with a Definitive Feasibility Study completed in April this year for the 119 million pound uranium reserve inventory.

The DFS outlined a 16 year mine life for Etango with a capital expenditure development cost of US$870 million.