The uranium sector’s pricing doldrums are destined to mother a bull market in the near to short term, according to Bannerman Resources managing director Brandon Munro.
Speaking at the Africa Downunder conference in Perth yesterday, Munro said the current decade-low prices for uranium were unsustainable.
“The uranium spot price is languishing at a decade low price of $US20 per pound,” Munro said.
“While all commodity markets are cyclical – and it is said that the best remedy for low prices is low prices – uranium has unique dynamics that point to an abrupt return to higher prices when its time comes.
“Due to the long term nature of nuclear power plants and the accompanying buying timeframes, uranium cycles are longer than most other commodities.”
Munro said the uranium industry had been in a long-term bear market since the collapse of the Soviet Union.
“The recovery in the sector – bolstered by nuclear power’s clean, base load attributes – has been coming since 2006, although the global financial crisis and then the Fukushima accident stalled the recovery,” Munro said.
“Because of the magnitude and depth of this bear market gestation period, we expect the next bull to be born large and to grow quickly.”
ASX-listed Bannerman owns the Etango project in Namibia – one of the world’s largest undeveloped uranium prospects.
Etango is one of the few uranium projects in the world with a completed definitive feasibility study (DFS) and environmental permitting. It is expected to be a top 10 producer of uranium once developed.
Production, based on the DFS, is expected to be 7-9 million pounds U3O8 per year for the first five years and 6-8 million pounds U3O8 per year thereafter.
It will have a minimum mine life of 16 years with significant expansion potential through the conversion of existing inferred resource as well as the deposit being open at depth and along strike.
“The Etango project has all its environmental and social licences in place,” Munro said.
“It also has all the necessary infrastructure on its doorstep making if effectively shovel ready when the sector turns around,” he said.
“During the last structurally driven bull market in the 1970s the real uranium spot price spent four years above $US140 a pound – and with the extent of supply constraints, I don’t see that being a totally unrealistic aspiration for the sector.”