ENERGY

URANIUM MARKETS & STOCKS

Uranium prices, and stocks, bleed again

The uranium spot price has now declined by $31/pound in just 7 weeks; stocks are down by some 40%.

Author: Barry Sergeant
Posted: Tuesday , 14 Aug 2007

JOHANNESBURG -

The uranium spot price fell $5/pound in the past week, to $105/pound, according to Ux Consultants, and by $15/pound according to TradeTech, also to $105/pound. The uranium spot price has now declined $31/pound in just seven weeks, leaving a trail of bloodied stocks in its wake.

Listed uranium stocks have declined by a rough average of 40% in the past two months. Cameco (CCO.T, C$15.99 a share), the market leader, is down just over 30%. The stock price for Paladin (PDN.AX, A$3.66) has fallen by 45%, while losses for developers have been far more severe; Forsys (FSY.T, C$0.35), for example, is off by 60%.

According to a market roundup by analysts at RBC Capital Markets, Ux has highlighted where the market stands in terms of production at mid-year, compared to forecasts; annual production is now expected to be 112m pounds, down from 117m pounds previously. Technical difficulties and delays were responsible for the majority of lower production volumes in the first half of 2007.

While the price decline was smaller this week compared to prior weeks, Ux cautions that this does not indicate that the market is near bottom. Ux believes that current weakness in the spot price is due to illiquidity in the current market. Looking forward, Ux forecasts that the price is very vulnerable to continued weakness, with "small" demand being met by motivated sellers.

Ux and TradeTech have both maintained long-term price forecasts at $95/pound. RBCCM believes that the uranium market "will be weak until late-September to early-October, trading sideways to down with support at the $95-100/pound level". The analysts believe that the spot market could return to a deficit in the first half of 2008, "which should result in a strengthening spot market".

*Selected listed uranium stocks*
	Market value	From
	bn	12-month high
*Producers*
Cameco	C$15.99	-30.1%
Uranium One	C$4.48	-38.1%
Paladin Resources	A$3.66	-45.4%
ERA	A$3.37	-38.3%
Denison Mines	C$2.01	-40.7%

*Developers*
Energy Metals	C$1.25	-31.0%
First Uranium	C$1.12	-32.9%
Mega Uranium	C$0.83	-47.4%
Aurora	C$0.96	-32.1%
Laramide	C$0.40	-59.5%
Tournigan Gold	C$0.35	-39.6%
Forsys	C$0.35	-60.4%
Ur-Energy	C$0.29	-44.6%
Strathmore Minerals	C$0.18	-56.9%
Western Prospector	C$0.21	-30.9%
Khan Resources	C$0.21	-30.0%
Berkeley Resources	£0.08	-26.3%
Simple average		-40.2%