Optimism about a recovery of the U3O8 spot price, after production has been curtailed by major uranium producers Cameco and Kazatomprom, has appeared to be premature since a recovery from a November 28, 2016 low of $ 18.00/lb to an interim high of $ 26.50/lb on February 6, 2017, was followed by a new correction to a current level of $ 20.00, This feeds growing scepticism on a full recovery of U3O8 prices within the next few years to a pre-Fukushima level of $ 65-70/lb.
Consequently, with economically viable feasibility studies calculated at a 100% plus price level compared with today’s U3O8 prices, the Net Present Value of advanced development projects does not show a fair value and this should be adjusted accordingly.
I already referred earlier to the negative operating cash flow of Cameco, as the world’s largest and Canada’s only uranium producer, as well as the original four US-focused producers including Uranium Energy, Energy Fuels, Ur-Energy and Peninsula Energy. Of these companies Uranium Energy had to stop production in 2016 and was not able to derive income from long-term delivery contracts like the other three companies
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Marino G. Pieterse, publisher and editor
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