WOOF-WOOFNEW POSITIVE STUDY Uranium price could hit $US105/lb by...

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NEW POSITIVE STUDY
Uranium price could hit $US105/lb by September
Market interest in Australian-listed uranium stocks has continued to wane but a positive sign ahead is a prediction by Sydney-based research group Resource Capital Research that the uranium price may elevate by September to $US105 per pound.

Author: Ross Louthean


PERTH -

Respected Australian Research Group Resource Capital Research (RCR) said the uranium price has been on a cartwheel having achieved $US210 in the second quarter of 2007 and a low in the third quarter of last year of $US70/lb and indicators suggest the market expectation is for an uranium price of $US105/lb by this September.

A study on the March 2008 quarter showed that the capitalisation of Australian companies with more than one uranium prospect - 263 companies - was down over March but down 27% over the past three months and down 12% over the past 12 months.

This compares with a selection of 285 Canadian companies with one or more uranium projects, up 11% over the past month, down 1% over the past 3 months, and down 16% over the past 12 months.

RCR's principal, John Wilson said the junior end of the market has been disproportionately hurt by the sub-prime market fall out and earlier than expected peak in the uranium price.

However, juniors are making solid progress advancing through important project milestones. "Of particular note is the number of companies and projects in Namibia, elsewhere in Africa and Australia that continue to announce new resources or project studies," he said.

The study said global uranium production in 2007 was 107 million lb U3O8, up from 103 M lb in 2006, an increase of 4Mlb U3O8 and "short of industry expectations."

Kazakhstan reported uranium production of 7,827t U3O8 in 2007, up 25.7% on 2006. A new sulphuric acid plant at Balkhash with a capacity of 1.2 Mtpa is expected to be operational in mid 2008.

Planned and proposed new nuclear power reactors worldwide continue to increase. From early 2007 to this January there was an increase of 93 reactors to 315 reactors -- an increase of 42% in 12 months.

China announced plans this month to increase its target for installed nuclear power capacity to 60 GWe by 2020, up from a 40 GWe target previously, and 120-160 GWe by 2030. The country currently has 11 nuclear reactors in operation generating 8.6 GWe, and 116 reactors planned or proposed.

On the global corporate side issues included:

· More delays to commissioning of Uranium One's Dominion mine in South Africa, with a contributing factor being power supply issues which have hit the country and equipment breakdowns. Production in 2008 is now expected to be 3.15 M lb U3O8 which follows previously revised production cuts to 4.6 M lb (from 7.4 M lb). Forecast production for 2009 has been cut to 6.8Mlb U3O8.

· Cameco announced it had successfully plugged Cigar Lake, which has potential to produce ~7.5kt pa U3O8from or after 2011.

· The Trekkopje heap leach uranium project in Namibia is targeting a July commissioning, subject to Areva securing a firm power supply agreement with NamPower. (UraMin production target is 8.5 M lb pa).

· Junior and mid cap companies continue to advance new projects. Equinox Resources (ASX: EQN) is expected to release its updated feasibility study for a standalone uranium plant at Lumwana, Zambia; African Energy Resources (ASX: AFR) is expected to release a PFS for its Chirundu uranium project in Zambia in Q2; Contact Uranium (ASX: CTS) may announce a significant upward revision to its resource base at Corachapi in Peru next quarter)/

· An enhanced scoping study is expected at Bigrlyi in Australia's Northern Territory (owned 53% by Energy Metals (ASX: EME) while Extract Resources (ASX: EXT) expects to announce an initial resource at Ida Dome in Namibia) by mid year.