As you can imagine, here at Azincourt we keep a pretty close eye on overall sentiment regarding uranium – whether it comes from journalists, analysts, producers, explorers and investors. In my opinion, attitude towards uranium as a commodity has been slowly and steadily improving for some time now and I wanted to share a few thoughts on why.

If you’re already familiar with uranium and nuclear energy then the chances are you’ve got a pretty good idea of the demand side because that’s the area that tends to get the most Media attention. Huge growth in China, Russia and India, the increasing certainty that Japan will begin restarting reactors come summer, reactor construction underway in dozens of other countries (including the US)…. What’s less well-known is the supply side.

The fact is, no one is making money at the current spot price of around $35 per lb. Of course, most uranium is actually sold via long-term contracts at somewhat higher price points but regardless, uranium prices are not high enough for many producers to enter into new long term contracts and they are not making enough money to keep certain mines going.  While a handful of mines have come online since 2011, notable delays include Imouraren (11 MM lbs pa), Trekkopje (8 MM lbs pa) and Olympic Dam expansion (32 MM lbs pa). On top of that, the end of the HEU has removed 24MM lbs pa. There are other secondary sources, such as underfeeding and US DoE stockpiles, but not enough to make a difference over the long term. Analysts remain divided on precisely when the uranium shortage will really bite but most believe it will happen in the next two to three years. There is going to be a correction and the more mines we see delayed, the sharper that correction is going to be.

As a business, mining is subject to the same economic rules as everything else which is why for those of us in uranium exploration and development, the opportunity is very clear: any project that combines geology with economics is going to be front and centre for producers when that supply crunch comes. This is the driving force behind our JV with Fission in the Athabasca Basin and particularly with our acquisition in Peru. Uranium deposits in the Basin can be tough to find but, with the highest grades in the world, they are the most valuable. With Peru, we have an emerging uranium district with near-surface, potentially heap-leachable deposits and substantial other resources discovered in the area. More than ever, our Macusani project is looking increasingly favourable.

I urge you to check out our project pages and our latest news releases. Please get in touch with any questions and connect with us on Twitter and LinkedIn to keep up with our latest updates.

Ted O’Connor, CEO of Azincourt