JOHANNESBURG (miningweekly.com) – Perth-based uranium mining hopeful Vimy Resources is maintaining a positive view on the uranium market and will “actively and energetically” engage in contract negotiations this year, to underpin financing for a new mine in the Great Victoria desert of Western Australia.

The company, which is advancing the Mulga Rock project, north-east of Kalgoorlie, is targeting a final investment decision this year, and is aiming to start construction of the mine in 2019. First uranium oxide production is pencilled in for 2021.

Mulga Rock, for which Vimy is currently preparing a definitive feasibility study, will mine up to 4.5-million tonnes a year of ore from four deposits to produce up to 1 360 t/y of uranium oxide concentrate. The project already has federal environmental approval in the bag.

“With demand for uranium continuing to grow in line with growing global demand for clean energy, it is important to be well-positioned to capitalise on the expected shortfall in supply. Vimy has done just that, consistent with its strategy that it is better to be on your surfboard in the takeoff zone, than sitting on the beach waxing it,” MD and CEO Mike Young said on Tuesday.

In a quarterly update to shareholders, Young reiterated Vimy’s view that the uranium market pricing mechanism was inadequate to meet current global demand.

“Costs at many uranium mines are currently shielded by a portfolio of long-term contracts signed when uranium prices were at historic highs. Over the next few years, many of these contracts come to an end and so the industry is entering a period of readjustment as disconnect between utilities and producers begins to play out. While customers can manage the short-term requirements using existing stockpiles and to a lesser extent, the spot market, this is not a sustainable strategy,” he said.

The “paradigm shift” in the uranium market, according to the company, is demonstrated by the announcements of Cameco and Kazatomprom last year that they are reducing production. Combined, the two companies have slashed global supply by 18% to sustain cash flows.

Meanwhile, given Vimy’s positive view towards uranium, Young said that the company continued to assess nonorganic growth opportunities in Australia and overseas.

“….given that sentiment has yet to catch up with reality in this space, [the team] is finding value in many unloved assets,” he stated.