The price of uranium on the international market is expected to remain low for years to come, John Borshoff, Chief Executive Officer of Deep Yellow, one of the companies exploring for uranium in the Erongo region has said.
The uranium industry is currently in a downturn, with the uranium spot price at near 12-year historic lows. The spot price was trading at about US$25 per pound on Tuesday, according to cameco.com.
“There is general sector disillusionment - major producers are just hanging on and junior uranium companies along with some emerging producer hopefuls will fall away as uranium prices refuse to move far away from a narrow trading band locked in the low US$20 per pound. Uranium has become unpopular and is a commodity in the wilderness leaving very few investors interested in the sector,” Borshoff said in a Deep Yellow 2017 Annual Report posted on the Namibian Stock Exchange this week.
He said the continued depressed uranium price is creating despondency in the industry.
“The uranium price will continue to languish in the low range for some years to come and, for some uranium companies, this timeframe will possibly be beyond the limits of their staying power.”
Borshoff said although the supply and demand fundamentals indicate supply shortfalls will occur in the mid-term, with an attendant high uranium price response; this is not likely to happen until the early 2020s, meaning there is still room for more corporate pain and uncertainty to come.
“Although these dire circumstances will have negative impact for some, they can be a positive for those that anticipate correctly as opportunities will arise from a situation such as this.
“I am hoping that Deep Yellow will be able to capitalise from this and will have a sufficient time window available within which to get its growth plan underway and completed.”
He said when the uranium price does move from the influence of supply shortage, the price-rise will be swift and strong enough to create a highly rewarding situation for those few companies that would have anticipated this outcome and have aligned their growth strategy to fully accord with this-once-in-a-several-decade opportunity.
The company has a large landholding in the Erongo region and is targeting deposits of the Rössing, Husab and Langer Heinrich types.
“Expansion of the resource base on our Namibian projects and the clear objective to build a global uranium project pipeline will give Deep Yellow diverse growth and production options.”
Namibia has three operating uranium mines at the moment - Rössing Uranium, Langer Heinrich and the Husab.
According to the Chamber of Mines of Namibia 2016 Annual Report, Rössing produced 1,850 tons of uranium in 2016, a 48.6 percent increase from 1,245 tonnes of uranium oxide produced in 2015.
Production from the Langer Heinrich mine was sustained during 2016, posting a marginal increase from 2,228 tons in 2015 to 2,236 tons due to ongoing efforts to achieve operational efficiency while trying to curb the costs of production.