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Toll Cross Industry Note: Uranium Update (July 24, 2013)
1.
Industry Research
24 July 2013
TOLL CROSS INDUSTRY NOTES:
Tom Hope, P. Eng
Tom.Hope@tollcross.ca 416.365.1960
URANIUM UPDATE
WHY IS THE SPOT PRICE DROPPING DESPITE THE
POSITIVE JAPAN UPPER HOUSE ELECTION RESULTS?
Current Prices
U3O8
*
Spot/lb
US$
36.50
U3O8
*
Term/lb
US$
57.00
U-T
Delta to
NAV
+6.5%
Recently there has been no shortage of positive news on the
demand side of the uranium industry. This past week Prime
Minister Shinzo -‐nuclear coalition government
308 spot
price has fallen to $36.50, its lowest price since early 2006.
Why are uranium spot prices continuing to fall, despite the
positive news?
Possible factors include unaccounted for selling in the
secondary market, such as if Japan is quietly selling its
contracted long-‐
inventory has grown to approximately 90M lbs. or a 5 year
supply compared with a 75M lbs. or 4.1 year supply prior to
2011. If ultimately 40 out of 50 reactors restart, an inventory
of less than 60 M lbs. would be adequate. But, Japanese utilities
have in place long term supply contracts for approximately 18
M lbs. per year from various sources. They also face financial
pressure to sell extra supplies from their need to buy costly
replacement hydrocarbon fuel.
We believe it is very possible that discrete and unreported
transactions are tak
trading houses. Who could be the lucky discount buyer? China
is an obvious candidate as it needs to grow its inventory to
ENTHUSIASM GROWS FOR EXPLORATION IN CANADA S
ATHABASCA REGION.
Despite the currently depressed uranium spot price, there is
continued faith in the forecasted supply deficit expected to
grow after 2020. Many are looking in the prolific Athabasca
basin for the new supplies needed to fill the projected gap. The
richest mines in the world are located in the northeastern part
of the basin, containing grades of up to 20% U3O8.
Now the focus has turned to the southeast corner, including
the area surrounding Patterson Lake, after Alpha Minerals
(TSXV:AMW) and Fission Uranium (TSXV:FCU) discovered
near surface high grade deposits. Patterson Lake is now
surrounded by claims and multiple companies are conducting
exploration work there.
Figure One: U308 Spot vs U-T Share Price
Figure Two: Difference as a percentage between Market Cap and
Net Asset Value of Uranium Participation (TSX:U).
2.
Recently Skyharbour Resources (TSXV:SYH), Athabasca
Nuclear (TSXV:ASC), Lucky Strike Resources (TSXV:LKY) and
Noka Resources (TSXV:NX) signed a $6M joint exploration plan
on their southeastern Athabasca properties. Other properties
are owned by Nexgen Resources (TSXV:NXE), Aldrin Resources
(TSXV:ALN), Forum Minerals (TSXV:FDC) and Lakeland
Resources (TSXV:LK). Both UEX (TSX:UEX) and Cameco
(TSX:CCO) also have property in the area.
When we began publishing our Uranium Update in mid 2005
the spot and term price had risen to $29.50 per lb., from a
mere $10 per lb. in 2002/3. At that time we listed a total of 33
of 26 early exploration companies with the uranium spot at
$36.50 per lb. and a term price of $57 per lb. Obviously the
faithful still believe.
Please see important disclosures on the last page of this
report.
3.
* simple aggregate composite index, base point 1 Jan '13
Uranium Index & Price Performance - Period ending 23 July 2013
Production EquitiesIndex
Company Tick
YTD
Comp
Index 52 wk H 52 wk L
M arket Cap
(C$ M M )
(aggregate)
NAV
($MM)
M C
delta to
NAV
YTD %
Return
52 wk %
Return
Production Composite Index 110.84
Advanced Exploration Composite Index 96.09
Exploration, with a Resource Comp Index 61.72
Early Stage Exploration Comp Index 202.17
Uranium Participation U 5.29$ 5.80$ 4.69$ 562.6$ 528$ 6.49% -1.30 -6.327
Global X Uranium ETF URA-US 18.65$ 25.02$ 15.90$ 144.9$ -5.58 -14.153
U3O8 Spot Price ($US) Ux Sp 36.50$
U3O8 Long Term Price ($US) Ux Trm 57.00$
Production EquitiesIndex
Company Tick L. Px 52 wk H 52 wk L
M arket Cap
(C$ M M )
U3O8 NI
43-101
(lbs. MM) M C/lb$
YTD
Return
52 wk
Return
Cameco Corp. CCO 21.86$ 23.49$ 16.50$ 8,787.7$ 996.10 8.82$ 16.18 1.83
Paladin Energy PDN 1.07$ 1.52$ 0.75$ 782.2$ 500.18 1.56$ -5.46 -14.75
Energy Fuels Inc. EFR 0.18$ 0.24$ 0.13$ 18.7$ 71.00 0.26$ 2.86 28.57
Uranium Energy Corp UEC-US 2.52$ 3.02$ 1.40$ 215.5$ 14.58 14.77$ -3.91 25.51
Energy Resources of Australia Ltd ERA-AU 1.62$ 1.66$ 0.95$ 168.5$ 161.05 1.05$ 27.56 6.93
AdvancedExploration andDevelopment EquitiesIndex
Company Tick L. Px 52 wk H 52 wk L
M arket Cap
(C$ M M )
U3O8 NI
43-101
(lbs. MM) M C/lb$
YTD
Return
52 wk
Return
Denison Mines Corp. DML 1.34$ 1.68$ 1.04$ 499.8$ 131.37 3.80$ 11.38 3.01
Ur-Energy Inc. URE 1.35$ 1.38$ 0.64$ 141.8$ 25.32 5.60$ 66.27 102.94
Uranerz Energy Corp. URZ 1.36$ 1.82$ 0.92$ 106.1$ 18.36 5.78$ 2.92 3.68
UEX Corporation UEX 0.41$ 0.84$ 0.38$ 89.8$ 82.51 1.09$ -28.81 -31.15
Peninsula Energy (AUS$) PEN-AU 0.03$ 0.06$ 0.02$ 91.5$ 103.80 0.88$ -20.51 3.33
Laramide Resources Ltd LAM 0.61$ 1.10$ 0.47$ 45.8$ 61.20 0.75$ -25.61 -21.80
Forsys Metals Corp FSY 0.48$ 0.89$ 0.47$ 41.8$ 112.30 0.37$ -40.00 -43.53
Mega Uranium Ltd. MGA 0.10$ 0.22$ 0.07$ 29.9$ 43.03 0.70$ -12.50 -43.24
Strathmore Minerals Corp. STM 0.25$ 0.34$ 0.14$ 25.5$ 34.27 0.74$ -9.43 -7.69
Bannerman Resources Ltd. BAN 0.05$ 0.14$ 0.05$ 12.7$ 273.78 0.05$ -41.18 -61.54
Macusani Yellowcake Inc YEL 0.06$ 0.18$ 0.06$ 9.6$ 39.40 0.24$ -58.62 -53.85
Strateco Resources Inc RSC 0.07$ 0.33$ 0.04$ 9.6$ 28.70 0.33$ -67.50 -79.03
Khan Resources Inc KRI 0.15$ 0.21$ 0.09$ 8.4$ 66.70 0.13$ 25.00 3.45
Exploration, with a Resource
Company Tick L. Px 52 wk H 52 wk L
M arket Cap
(C$ M M )
U3O8 NI
43-101
(lbs. MM) M C/lb$
YTD
Return
52 wk
Return
Kivalliq Energy Corporation KIV 0.24$ 0.46$ 0.23$ 28.9$ 43.30 0.67$ -27.78 -22.39
Rockgate Capital Corp. RGT 0.17$ 0.67$ 0.14$ 18.0$ 45.25 0.40$ -69.44 -45.00
U3O8 Corp. UWE 0.14$ 0.45$ 0.13$ 13.1$ 47.60 0.28$ -35.56 -57.97
Vena Resources Inc. VEM 0.09$ 0.42$ 0.07$ 10.8$ 18.61 0.58$ -53.49 -75.00
Continental Precious Minerals Inc. CZQ 0.13$ 0.26$ 0.09$ 8.2$ 10.98 0.75$ -33.33 -47.62
Crosshair Exploration & Mining CXX 0.03$ 0.24$ 0.02$ 4.8$ 4.61 1.04$ -71.43 -85.00
Powertech Uranium Corp PWE 0.06$ 0.17$ 0.06$ 3.4$ 22.80 0.15$ -48.00 -43.48
Bayswater Uranium Corporation BYU 0.09$ 0.15$ 0.01$ 2.1$ 28.91 0.07$ 0.00 -15.79
Silver Spruce Resources Inc. SSE 0.01$ 0.07$ 0.01$ 1.4$ 2.22 0.62$ -50.00 -66.67
Deep Yellow Ltd. DYL-AU 0.04$ 0.10$ 0.03$ 1.3$ 119.30 0.01$ -32.79 -19.61
5.
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Randall Blom Investment Banking Analyst randall.blom@tollcross.ca
6.
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