Global uranium supply deficit bodes well for Wiluna project: Toro Energy

The company vying to develop Western Australia’s first uranium mine say uncertainty around the future supply of uranium places its Wiluna project in the perfect position to meet world energy demands.

Addressing shareholders at the company’s 2013 general meeting today, Toro Energy’s managing director Dr Vanessa Guthrie said the uranium industry was on the edge of an uptrend which will see demand rise along with long-term prices.

Demand for yellowcake is set to outstrip supply from 2016, and with an expected shortfall of 60,000 tonnes of U308 expected by 2018, Guthrie said the $269 million Wiluna project was well-placed to fill some this void.

“Some 80% of the world’s primary uranium supply is coming from just 10 current mines and future global supply is dependent on five major new proposed projects. However, all five of these projects, including Olympic Dam in South Australia, are uncertain and it is smaller projects like Wiluna that will be required to meet the wider demand.”

These projects include Honeymoon mine which has been put into care and maintanence, production at Cigar Lake that is delayed until late 2014 and water supply issues at Namibia which is causing delays.

Additionally, the last shipment of former military sourced secondary uranium processed under the HEU (Highly Enriched Uranium) Agreement between Russia and the United States has now been completed with no more available.

“Against this background, Wiluna remains one of the most progressed, undeveloped, independent uranium only projects globally so will be market ready when the supply squeeze hits,” Guthrie said.

 “There are some clear signals right now that we think will shift sentiment.”

One of those signals is the number of nuclear power plants being built around the world. The World Nuclear Association said there are 28 plants being in built in China with a further 266 planned or proposed plants around the globe.

While the other signal centres around the Japanese reactor restart program which is expected to be open for business in twelve months.

“This will shift sentiment towards the back end of this year towards a more positive one,” Guthrie said.

A highlight for Toro this year has been the acquisition of the Lake Maitland Project from Canada’s Mega Uranium for 414 million Toro shares.

The terms of the deal saw Mega emerge as a 28% shareholder of Toro.

The acquisition combined with upgraded drilling at Wiluna delivered a 76.5 million pound resource of which 36.7 million pounds is considered high grade.

The resource increase gives Toro the option to expand the processing scale of Wiluna above 1.3 Mtpa, with plans to eventually integrate he two projects.

Guthrie said the new association with Mega would further boost the company’s credentials in its ongoing negotiations on project financing and off-take agreements which will help fund the Wiluna project.

Today the company said discussions with a number of key strategic parties with longer term interests in emerging and reliable sources of U3O8 supply were ongoing.

“Local and offshore debt financiers also remain interested in supporting development,” the company said.

Guthrie has remained bullish that uranium prices will improve, telling Australian Mining earlier this year that the resource could be the next big export out of WA.

“We see Wiluna as the first of a number of new emerging mines in WA and we think it’s a fabulous opportunity for WA to get on the map as a uranium exporter,” she said

Toro has previously stated if financing arrangements go to plan the mine will be in production by the end of 2015.

Wiluna set to become Western Australia’s first ever uranium producer after the federal government approved final environmental grants in April 2013.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.