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India Looks to Secure Uranium Supply
Oct 10, 2013 04:30 am
India's nuclear ambitions are among the top in the world. The country has 20 nuclear reactors in place, 7 in construction, 18 planned and 39 proposed, all of which boils down to the fact that India is going to need uranium to feel those reactors. Lots and lots of uranium.
UIN: Does new nuclear plant construction have an impact on uranium prices?
Robert Chang: (Rob Chang, metals and mining analyst at Cantor Fitzgerald Canada Metals and Mining) New nuclear reactor builds will have a positive impact on pricing. And what I can tell you as of right now, based on the planned number of reactors that are currently under construction and the others that we have a reasonable belief that they will be built, we believe no matter what scenario we look at, there is going to be a major supply deficit in 2020. And it’s getting very close to bouncing in and out of supply deficits between now and that point. But definitely becoming very severe by 2020 because that is when a lot of reactors will turn on. And if for some odd reason the uranium spot stays here, we are going to see major gaps of 20 million pounds plus in the future.
think a bit...why would cheap India buy from USU...Russians are too smart to allow it. USU can work only with Uranium from Russia...and Russian will keep an eye on inteligent pricing...USU will get much less Uranium then they were used to get...They declare in their earnings, that they expect remarkably lower revenues...well, future will give a clear answer.
Sorry I miss read the article..MAKE THAT 64 new reactors in India.
Let me think.....oh yeah....
Uranium is a global commodity. Thus as world wide demand goes up...the price goes up. I have no idea where India will buy or make their SWU. IDM as it is MORE uranium demand for energy.
Along with China looking to build out many more nuclear plants and Europe most likely having to return to nuclear as well as increase nuclear infrastructure to support its energy needs, we are very likely looking at much higher uranium prices within five years or so.
URZ and URG are two small mining companies just in their infancy of producing actual uranium that will be in very high demand going forward. As both reach their 2mm allowable production levels along with lowest cost to mine and huge margins, we could be talking about two stocks that move up tenfold or more in a perfect storm.
For example, URZ at 2mm lbs. of production at some high margin of $50 per lb. would mean $100mm before fixed overhead. Even with $30mm in annual costs, that leaves $70mm profit with around 100mm shares outstanding. At .70 EPS and a PE of 20, we are talking about a stock at $14 per share. Even at only 1mm lbs. of production and $40 margin and $16mm in annual costs, you are looking at around $5 per share. URZ is trading under $1 right now. Little risk on downside with great reward on upside. URG is in very similar situation.
BTW, I do believe that USU will be an important player once ACP is built out and ramping up towards full processing. The problem is that USU must undergo major financial changes to get DOE loan and raise billions in capital. Current equity is already in major pain and will endure much more pain before starting to reap rewards from the rebirth of USU. Why buy now when USU can be bought much, much lower later.
India needs far more than that. Their energy is undeveloped enough that many factories spend a few hours per day without energy, and Wednesdays and Saturdays are "power holidays" where they get just enough energy to turn lights on.