JOHANNESBURG (miningweekly.com) - Consolidation of the junior uranium sector “may well happen” at a time when the fundamentals for uranium remain “really, really positive”, says TSX- and JSE-listed First Uranium CEO Gordon Miller.

After a lull of decades, the uranium renaissance resulted in many uranium exploration companies entering the market in the past few years, but many of these are now facing liquidity challenges as a result of the global credit crunch and an inability to access growth capital.

While there has been a selloff of equities in general, the selloff of uranium equities has been even more pronounced, and the stocks of exploration companies have traded down significantly, given their risk profiles and their times to production.

As consolidation is a way for troubled companies to survive, Miller believes that consolidation in the junior sector “may well happen”.

But this scenario does not take away from the fundamentals for uranium remaining “really, really positive”, owing to uranium continuing to be perceived globally as a relatively clean fuel for base-load power generation and countries with a large proportion of nuclear power generation having much lower carbon footprints than those generating base-load power from coal.

The bottom line is that it is relatively easy to determine what the demand for uranium is going to be, because of the number of nuclear plants in operation as well as the number of plants planned, Miller adds.

Uranium demand growth is thus directly related to nuclear plant growth, which continues on an upward trajectory.

While the energy alternatives like solar and wind are clean, both are unable to provide nuclear power’s continuous carbon-free base-load electricity.

Even though the spot price of uranium has been volatile, the term price for contracts with longer delivery lead times has been far less so, says Miller.

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