Biden’s clean energy plan fuels high expectations for uranium price
Uranium is the coil spring of the cargo space. At some point, the price of nuclear fuel will take off. That’s the general expectation there. Find out what to watch for over the next 12 months and the answer is coming back more and more in the form of uranium.
AUTHOR: Barry FitzGerald (Resources: Rising Stars)
Maybe, but the reality is that at US $ 32 / lb (spot) the price of uranium remains well below the price of US $ 60 / lb deemed necessary to induce investment in a new offering. necessary to close the ever-growing gap between supply and demand in the long term.
This has been the theme of uranium for years. But thanks to Joe Biden, uranium’s coil spring status is now attracting more enthusiasts day by day. And that’s because hidden in its $ 6 trillion budget request, there was strong confirmation that nuclear power is key to its zero emissions goal in 2050.
As it stands, nuclear power accounts for 20% of the United States’ electricity supply, or more than 50% of its zero-emission energy.
Biden’s Department of Energy said nuclear power was “a key part of our clean energy future.” To that end, there was a record $ 1.85 billion in Biden’s budget request “to support existing and advanced nuclear technologies.”
The coil spring has just been tightened.
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However, the uranium market continues to wait for higher priced long-term supply contracts to be entered into by power companies. Once that happens, it will be gambling in ASX’s uranium stocks, most of which have leveled off in recent months after achieving Biden’s earlier approval of nuclear power as a zero-emission target. for 2050.
Now is the time to invest in uranium?
Ahead of the release of the reel, investors will seek out ASX uranium players with a short-term flow of information that could trigger a reassessment while the wait for uranium to take off continues. On this point, a journal entry notes that Boss Energy (BOE) previously said that the improved feasibility study on restarting its Honeymoon uranium project – it should indicate increased production rates at reduced costs – should be released in the June quarter.
And here we are, it’s June 11th.
While uranium tops the commodity list for junior sector investors, copper lags behind, with one difference. The difference is that while it’s the short-term production that punters want from uranium stocks, the sexy exploration results of copper juniors are quite the order of the day.
This manifested itself loud and clear over the week with the leveraged response to an impact of 50m of “moderate to intense” copper sulfide mineralization (assays in progress) on the Emmie Bluff project in the province. from Olympic Dam in South Australia. The stock market performance of Coda (COD, operator at 70%) and Torrens Mining (TRN) at 30%, speaks volumes.
Both were mentioned here on March 26 on the strength of the Emmie Bluff drill program.
Coda was a stock of 39c. It is now $ 1.13. Torrens was a 16c stock, he is now 26c. Plus, Emmie Bluff’s excitement had a swallowing effect on other South African copper explorers. As mentioned here in March, Emmie Bluff is a household name as drilling by others has confirmed deep mineralization of iron oxide and copper and gold (IOCG).
Olympic Dam is an IOCG, as are OZ Minerals’ (OZL) Prominent Hill and Carrapateena mines in the province. They are all a little different, including Emmie Bluff. As a large-scale IOCG target, it has long been viewed as a “technical” success based on the drilling done by others.
Thus, the 50m hit in the first deep diamond hole by the Coda / Torrens joint venture is promising, as delivered by Coda’s new era exploration model, perhaps beyond the level of technical success. . There will be intense interest in follow-up work, just as there is now in the second stage of the joint venture’s exploration program – the search for the Zambian copper belt style copper / cobalt mineralization encountered at some point. Shallower depth of about 400m in the Tapley Hill Formation.
As operator, Coda previously worked on an exploration target of 44 to 77 mt grading 0.5 to 2.3% copper equivalent for the narrow but laterally extensive mineralization in the Tapley. Confidence in the exploration target was increased following a recent 17 hole drill program achieving mineralization in each hole, with a best result of 7.58 m grading 1.51% copper equivalent. Drilling continues.
Coda plans to incorporate the results into a first resource estimate for the third quarter of this year. So while a big potential gain from IOCG at depth has excited the market, there is also a lot of upside potential for the Zambian-style target to watch out for.
Sovereign Metals (SVM):
In recent times, the junior resource sector has been characterized by the fact that intensified exploration efforts have resulted in world-class discoveries such as Julimar de Chalice (CHN) and Hemi de De Gray (DEG). There is another that should be added to the list – the discovery of natural rutile from Kasiya in landlocked Malawi – often referred to as the warm heart of Africa – by ASX-listed Sovereign Metals (SVM).
Kasiya did not appreciate the fanfare Julimar and Hemi received, more than likely due to his situation in Africa. Without fanfare perhaps, but Sovereign’s share price rose nonetheless. Mentioned here in June of last year when it was a stock at 19.5 cents, and again in April of this year when it was at 59 cents, Sovereign is now trading at 70.5 cents , which gives it a market cap of $ 320 million.
The rationale for the price strength came this week with Sovereign’s release of the project’s first resource estimate – 644 million tonnes grading an impressive 1.01% rutile, with a high grade component of 137mt grading 1, 41%.
The scale of the resource estimate ranks the project as the second largest rutile-dominant deposit in the world, and the resource is certain to continue to grow over time. The resource estimate is remarkable, as Malawi was originally a graphite story for Sovereign, with the potential of rutile not becoming apparent until 2018.
The fact that the resource estimate gives a contained resource of 6.5 million tonnes of rutile is quite interesting as rutile has traded higher to around US $ 1,600 per tonne in China. Rutile is the highest value mineral titanium dioxide, 90% of which is destined for the pigment market for paints, plastics and coatings. An additional 5% is devoted to welding rods, the rest being devoted to titanium.
The supply of natural rutile is structurally in deficit, which means the world has looked away and met its titanium dioxide needs from the less environmentally friendly options of synthetic rutile and titanium slag. Thus, Kasiya must be seen as both a major project and disruptive powers.
Yet the story has remained largely ignored in this market, despite Sovereign’s growing market capitalization.
Aside from the African location – it doesn’t matter when you remember that the world’s two largest producers of natural rutile, Sierra Rutile in Sierra Leone and Kwale in Kenya, are owned by Iluka (ILU) and Base (BSE, respectively). ) – The lack of fanfare around the stock has a lot to do with Canada’s Sprott Capital Partners racing in the stock.
Sprott liked the first resource estimate, that’s for sure. “The current resource of 644 Mt at about 1.0% is more than double our estimate, a phenomenal result. With only 49 km² of 114 km² drilled to date, a simple prorated assessment of the existing resource suggests upside potential of 1.5 Bt, ”Sprott said in a research note, in which he noted his goal of share price of 95c at $ 1.20 per share.
“Being in the form of ‘ESG-compliant’ low-CO2 rutile, with a raw material graphite credit for VE, it just doesn’t get any better than that.”
“While there is much to be done as the engineering shift moves into engineering, including mining methods, mine development, IGR and basin design settling, the work encountered, including variability and ESG studies, we see no fatal flaws, but quite the contrary with the best metallurgy, quality profile and size of any asset in the world, ”said Sprott.
Black Canyon (ASX: BCA):
Pilbara-focused manganese stocks continue to warm in response to world record steel production and the surge in demand from M in preferred NMC lithium-ion batteries. Future producer Element (25), from a stage 1 development of his Butcherbird project, now has a market capitalization of $ 344 million.
Today’s interest, however, is in a junior looking to emulate that kind of success, the recently listed Black Canyon (BCA). The 20c shares from its IPO are now trading at 30c. The share price boost was the encouragement of reconnaissance work at its Carawine area joint venture, where it is gaining a 75% stake in Carawine Resources (CWX).
It builds on recently discovered historical drill results that included 18m at 11.2% of surface. Drilling is scheduled for the coming quarter.
ABOUT THE AUTHOR:
Barry FitzGerald has covered the resource industry for 30 years. The first recipient of the Diggers & Dealers Media Award in 2003, Barry is a board member of the Melbourne Mining Club, a non-profit organization created to promote debate in the industry.