TSX-V-listed GoviEx Uranium reports that, with nuclear energy having shown resilience in 2020, the spot uranium price has been in a “gentle uptrend” for the last four years after having reached its cyclical low of $18/lb of U3O8 in December 2016.
The company notes that despite 2020 having been strongly dominated by the Covid-19 pandemic, the company nonetheless adapted to this challenging environment and made progress by improving its financial position, advancing its pipeline of uranium mine development plans, specifically in Niger, and beginning the assessment of “compelling” gold prospects in Mali.
In addition, GoviEx says the positive momentum of its activities in 2020 has continued into this year.
During 2020, the spot uranium price rose from $25/lb at the start of the year to $30/lb at the end – a 20% increase.
GoviEx states that the increase in prices is being supported by progressively stronger demand for nuclear energy, with yearly generation now above that prior to the Fukushima disaster of March 2011.
Also, it comes at a time of new demand growth rates, which are forecast to be between 2% and 3%, supported by new reactor builds, predominately in Asia.
However, GoviEx also notes that, while energy consumption is forecast to drop by 12% in the US and by 8% in Europe, the reduction has been focused on reductions in carbon-related fuels.
In this vein, the company points out that increased levels of competitively priced renewable energy are coming on line from wind and solar, and “more dirty carbon baseload” is being taken off line.
This, GoviEx says, will lead to increased dislocations and destabilisations to national grids that will need to be supported by a reliable baseload alternative to “burning dirty carbon”. As such, this deficit can be filled using “perfectly suited . . . emission-free and reliable” nuclear energy, the company posits.
At the same time, GoviEx anticipates accelerated global competition for the development of small, modular reactors (SMRs), which have potential benefits of speed, scale, safety, simplified logistics and improved economics.
SMRs open the door for nuclear energy in new markets and new applications, the company states.
However, even though demand for nuclear energy and uranium fuel has been steadily growing and the supply of uranium has been declining, GoviEx says producers have had to contend with an oversupplied market, attributable to past years of over-production.
Nonetheless, GoviEx says the resolve of the uranium industry leaders appears strong, with public statements of their commitment to maintain production restraint until uranium prices increase to more sustainable levels to justify long-term production decisions.
“Analysts and industry agree that higher uranium prices are required to incentivise both restarts and necessary new production in the 2020s. This is good reason to be bullish on the future of uranium mining,” state GoviEx executive chairperson Govind Friedland and CEO Daniel Major in a statement.
As such, throughout 2020, GoviEx continued to focus on advancing its mineral projects while focusing on fiscal discipline to maintain balance sheet strength.
GoviEx completed two private placements in 2020 that raised an aggregate C$7.3-million, and in January completed a private placement that raised C$8-million. These financings provide GoviEx with a “healthy balance sheet”, that the company says is designed to support it in funding the potential accelerated development of its mine-permitted projects as the anticipated uranium market recovery continues through the year.
In anticipation of a strengthened uranium market and the potential development of its uranium projects, GoviEx, on February 22, appointed Salma Seetaroo and Eric Krafft to its board. Both complement the existing GoviEx team, bringing unique skillsets and considerable experience in commodities, investment banking and, “most importantly”, a focus on environment, social and corporate governance, the company states.
In addition, GoviEx was included in the Solactive Global Uranium & Nuclear Components Total Return Index, effective February 1. This is an index used by the Global X Uranium exchange -raded fund.
The company was also included in the Solactive Global Uranium Pure-Play Index, which is used by the Horizons Global Uranium Index exchange-traded fund.
These “important” index inclusions, GoviEx says, have the potential to bring important increased liquidity to the company’s trading on the TSX-V as well as new direct and indirect shareholders.