Neal Froneman, CEO Aflease Gold
Send this article to a friend
Print this page

» SA revisits uranium enrichment plans
» Nufcor ups uranium lending to 100%
» SXR weighs gold stake options
» Ux relights SA mining industry
» SXR heading for breakout
» Uranium One creates $5bn company

If you want to share this article, simply sign into one of these sites and select your network. It’s that easy Click here to find out more about how to use this button

Uranium prices will correct soon

Posted: Tue, 24 Apr 2007

[] -- THE uranium price has run too far and will probably record its first retreat in six years, said Uranium One CEO Neal Froneman, who is looking for a further acquisition this year.

TSX-listed Uranium One could also look at lightening its load of exploration targets in non-core areas after its successful acquisition of Canada's UrAsia to create the second largest uranium company by market capitalisation. It will have five operational mines by the end of 2008.

The spot uranium price jumped by $18 to $113/lb earlier in April, the single largest increase in the heavy metal’s price since reporting of prices began in 1968. The price has been driven by rain-reduced supplies from Energy Resources’ Ranger mine in Australia and the flooding of Cameco’s Cigar Lake project.
might be a decrease in the uranium price
“There is no doubt that the last increase in uranium prices was unrealistic and not representative of the market. There might be a decrease in the uranium price. I’m hoping in the next few weeks,” Froneman told Miningmx in an interview.

The price soared on the sale of 100,000 lb of uranium in what is essentially a 100 million lb annual market, he said.

However, expectations for the uranium price are bullish at Uranium One, which has grown rapidly from its single South African uranium deposit at Dominion, with the acquisition of projects in Australia, the United States and the takeover of UrAsia, which has projects in Kazakhstan.

Uranium One will produce 2.3 million pounds of uranium oxide this year and four million next year after the acquisition.

“Although we expect the price to pull back a bit, we are still bullish and we see uranium at $150/lb by the end of this year,” Froneman said.

Click Here to subscribe to our daily newsletter
The 57% increase in the spot price since the start of 2007 has made it difficult to find value when looking for acquisitions, he said.

There is the potential that Uranium One could complete a second large acquisition this year, but the trick would be to find something that is not overvalued in the current market.

“If opportunities present themselves and the assets are of the right quality, I believe they should not be passed over,” Froneman said. “It’s very difficult to find value.”

He declined to say where exactly Uranium One was looking at assets, but it would be fair to say the United States, a country Froneman in the past has pointed to as offering growth potential, and Australia are likely targets.

Uranium One is weighing its portfolio of exploration assets with a view to perhaps selling those that are not core. Uranium One through its UrAsia acquisition has property in Kyrgyzstan, which could be sold to other groups.

“As a combined company, we need to revisit our exploration business plan. We could realise value for some of our exploration assets,” Froneman said. This is unlikely to include the extension of the Dominion project in South Africa or the Kazakhstan assets.

Uranium One is applying for a secondary listing on the London Stock Exchange. Forty percent of its shareholders are now European, with the majority of those based in the UK.

It will retain its secondary listing on the Johannesburg bourse.