Recently, a single announcement from Kazatomprom, the Kazakh state-owned uranium mining company, sent the spot price up more than $2 in a single day and created substantial positive momentum for most uranium stocks, including Fisison. How can the actions of one company can have such an impact on an entire industry? It’s simple: Kazatomprom owns, solely or by joint venture, every mine in Khazakhstan, which supplies 43% of total worldwide production.
The announcement, as you are probably now aware, is that the company will be reducing production by 10% in 2017, which is approximately ~5.2Mlb U3O8. That’s 3% of global mined uranium production.
Unlike companies such as Cameco, which sells most of its production via long-term contracts, Kazatomprom sells most of its uranium into the spot market. In previous years, the company has increased production relentlessly. These increases have been one of the biggest reasons the spot price has remained suppressed, despite rising demand. This production cut signals to the market that there is a floor – a level below which the company will not allow prices to fall.
Wil this move alone lead to radically higher prices? It’s unlikely. However, the uranium market is very thin and Kazatomprom has just made it even more so. As more reactors come online in countries such as China, Russia and India, and we see more restarts in Japan, it won’t require much more of a push before we see the big upturn. In short, Kazatomprom’s actions are a very positive move for those of us in the uranium sector.
Dev Randhawa, CEO of Fission Uranium
Forward-Looking Information: Some of the posted entries on the CEO Corner may contain forward-looking statements. Forward-looking statements address future events and conditions which involve inherent risks and uncertainties. Actual results could differ materially from those expressed or implied by them. Examples of forward looking information and assumptions include future estimates of the worldwide supply and demand for uranium and the effect that these changes could have on the short term and long term price of uranium on the world markets, statements regarding the future operating or financial performance of Fission including the net present value, metal recoveries, capital costs, operating costs, production, rates of return and payback. Forward looking statements involve known and unknown risks and uncertainties which may not prove to be accurate. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Among those factors which could cause actual results to differ materially are the following: market conditions and other risk factors listed from time to time in our reports filed with Canadian securities regulators on SEDAR at www.sedar.com.
In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operations and various components thereof affecting the economic performance of Fission. Undue reliance should not be placed on these forward-looking statements which are based upon management's assumptions and are subject to known and unknown risks and uncertainties, including the business risks discussed above, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.
Links: Some of the posted entries on the CEO Corner may include links to 3rd party websites. Fission has not reviewed all websites linked to or from this Site and is not responsible for the contents of any such websites. The inclusion of any link does not imply endorsement by Fission of the linked website or its content. Use of any such linked website is at the user's own risk.
For further information we refer you to our legal notice.