Nasdaq-listed Westwater Resources, which owns uranium project in Texas and New Mexico, is upbeat about the uranium market and says he believes that prices will continue to rise in the near term.
In a news release on Friday, CEO Christopher Jones laid out a case for higher prices detailing how spot market prices and volumes for uranium concentrate are outperforming this year.
Citing information from Ux Consulting, he noted that the spot market prices for concentrate had increased from $17/lb in 2016 to $27.50/lb this year, with an almost $5/lb increase so far in 2018.
Spot market volumes for uranium concentrate were almost 57-million pounds so far in 2018 – already the highest spot market volume since 1992. The next highest “whole-year” spot market volume was just under 45-million pounds in 2013.
“This shows positive interest in securing uranium supplies at lower prices as a hedge to rising prices,” he said.
The forward looking uranium concentrate price indicators were also at the highest seen since 2011, when the price was about $60/lb.
The market conditions are supported by less uranium in the market. Companies in Kazakhstan, as well as by Paladin and Cameco that are putting in fewer pounds of uranium concentrate into the market, while reduced underfeeding of low-grade uranium tails and reduced sales of uranium by the US Department of Energy also contributed.
Jones said that heavy investor purchasing by firms apparently intent on holding physical uranium suggested a coming price rise.
At the same time that the uranium industry is reducing concentrate production, demand is increasing. The Westwater statement indicates that 451 nuclear power plants are operational, including eight that were recently restarted in Japan, and that a further 58 nuclear plants are under construction.
This growth will increase demand for uranium concentrate by an estimated 13% as these plants come on line.
Jones said that the positive market developments should mean higher valuations for Westwater, which holds one of the largest uranium mineralisation positions in the US.
“Our properties in New Mexico and Texas, including two licensed processing facilities, as well as our royalty portfolio and our investments in other uranium firms, make Westwater ideally positioned to enjoy the fruits of any rise in the price of uranium,” he said.
Westwater traded 5% higher on Friday morning at $0.19 a share.