Best of the Week
Most Popular
1. Dollargeddon - Gold Price to Soar Above $6,000 - P_Radomski_CFA
2.Is Gold Price On Verge Of A Bottom, See For Yourself - Chris_Vermeulen
3.Dow Stock Market Trend Forecast 2018 - Nadeem_Walayat
4.Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - P_Radomski_CFA
5.Why The Uranium Price Must Go Up - Richard_Mills
6.Dow Stock Market Trend Forecast 2018 - Video - Nadeem_Walayat
7.Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - GoldCore
8.More Signs That the Stock Market Will Rally Until 2019 - Troy_Bombardia
9.It's Time for A New Economic Strategy in Turkey - Steve_H_Hanke
10.Fiat Currency Inflation, And Collapse Insurance - Raymond_Matison
Last 7 days
Golden Sunsets in the Land of U.S. Dollar Hegemony - 20th Sep 18
5 Things to Keep in Mind When Buying a Luxury Car in Dubai - 20th Sep 18
Gold Price Seasonal Trend Analysis - Video - 20th Sep 18
The Stealth Reason Why the Stock Market Keeps On Rising - 20th Sep 18
Sheffield School Applications Crisis Eased by New Secondary Schools Places - 20th Sep 18
Precious Metals Sector: It’s 2013 All Over Again - 19th Sep 18
US Dollar Head & Shoulders Triggered. What's Next? - 19th Sep 18
Prepare for the Stock Market’s Volatility to Increase - 19th Sep 18
The Beginning of the End of the Dollar - 19th Sep 18
Land Rover Discovery Sport 'Approved Used' Bad Paint Job - Inchcape Chester - 19th Sep 18
Are Technology and FANG Stocks Bottoming? - 18th Sep 18
Predictive Trading Model Suggests Falling Stock Prices During US Elections - 18th Sep 18
Lehman Brothers Financial Collapse - Ten Years Later - 18th Sep 18
Financial Crisis Markets Reality Check Now in Progress - 18th Sep 18
Gold’s Ultimate Confirmation - 18th Sep 18
Omanization: a 20-year Process to Fight Volatile Oil Prices  - 18th Sep 18
Sheffield Best Secondary Schools Rankings and Trend Trajectory for Applications 2018 - 18th Sep 18
Gold / US Dollar Inverse Correlation - 17th Sep 18
The Apple Story - Trump Tariffs Penalize US Multinationals - 17th Sep 18
Wall Street Created Financial Crash Catastrophe Ten Years Later - 17th Sep 18
Trade Wars Are Going To Crash This Stock Market - 17th Sep 18
Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - 17th Sep 18
Financial Markets Macro/Micro View: Waves and Cycles - 17th Sep 18
Stock Market Bulls Prevail – for Now! - 17th Sep 18
GBPUSD Set to Explode Higher - 17th Sep 18
The China Threat - Global Crisis Hot Spots & Pressure Points - 17th Sep 18 - Jim_Willie_CB
Silver's Relationship with Gold Reaching Historical Extremes - 16th Sep 18
Emerging Markets to Follow and Those to Avoid - 16th Sep 18
Investing - Look at the Facts to Find the Truth - 16th Sep 18
Gold Stocks Forced Capitulation - 15th Sep 18
Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - 15th Sep 18
Trading The Global Future - Bad Consequences - 15th Sep 18
Central Banks Have Gone Rogue, Putting Us All at Risk - 15th Sep 18
Gold Price Seasonal Trend Analysis - 14th Sep 18
Growing Number of Small Businesses Opening – and Closing – In the UK - 14th Sep 18
Gold Price Trend Analysis - Video - 14th Sep 18
Esports Is Exploding—Here’s 3 Best Stocks to Profit From - 13th Sep 18
The Four Steel Men Behind Trump’s Trade War - 13th Sep 18
How Trump Tariffs Could Double America’s Trade Losses - 13th Sep 18
Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - 13th Sep 18
Trading Cryptocurrencies: To Win, You Must Know Where You're Wrong - 13th Sep 18
Gold, Silver, and USD Index - Three Important “Nothings” - 13th Sep 18
Precious Metals Sector On a Long-term SELL Signal - 13th Sep 18
Does Gambling Regulation Work - A Case Study - 13th Sep 18
The Ritual Burial of the US Constitution - 12th Sep 18
Stock Market Final Probe Higher ... Then the PANIC! - 12th Sep 18
Gold Nuggets And Silver Bullets - 12th Sep 18
Bitcoin Trading - SEC Strikes Again - 12th Sep 18

Market Oracle FREE Newsletter

Trading Any Market

Why Uranium Will Make Someone Rich

Commodities / Uranium Jun 17, 2010 - 01:53 PM GMT

By: OilPrice_Com

Commodities Best Financial Markets Analysis ArticleUranium is a very unusual sector. For one, it's small. So small, that at one point in history top-producing nations like Canada and France tried to form a uranium cartel to control prices for the metal.

The "uranium OPEC" failed. But production today is de facto controlled by a handful of companies.


Consider this. The world's top ten uranium mines account for 59% of global production. (The top mine, Saskatchewan's McArthur River, alone puts out 15% of the world's supply.)

This is very concentrated, compared to other sectors. In the copper sector, the top ten mines turn out just 30% of global supply. For gold, the number is even lower. About 19%.

This means that what happens at a just few uranium mines around the world makes a big difference to the price for the metal.

For this reason alone, good uranium projects are interesting. Any deposit that could become a significant supplier will garner a lot of interest. From would-be producers who want to break the stranglehold existing suppliers have on the market. And from same existing suppliers, who want to keep as much control as possible over the sector.

But the severe concentration of global production is just one reason to look at uranium projects. Another (perhaps better) reason is the extremely skewed grade distribution of the world's uranium mines.

Let's look at some charts. The first two show average reserves grade at the world's top ten biggest-producing copper and gold projects (thanks to Dan Edelstein and Micheal George from the U.S. Geological Survey for help in putting these together). The grade distribution for both is fairly even, forming an orderly curve.

For gold, the world's highest-grade mine (West Wits in South Africa) is 230% higher in grade than the second richest mine. And 1,970% higher in grade than the tenth richest.

Copper grades are even more clustered. Russia's Taimyr Peninsula runs 2.6% Cu, which is 250% higher-grade than the second-richest mine. And 960% richer than the tenth richest mine.

The point being: there is about an order of magnitude difference in grade amongst the world's top gold and copper mines.

Now look at the same chart for uranium.


Top producer McArthur River grades a towering 17.7%. After this, the world's other top mines barely show up! McArthur is 2,360% richer than number two Rabbit Lake. And a staggering 59,000% higher than the number ten mine, Rossing.

In fact, four of the world's top ten uranium mines (Budenovskoye 2, Tortkuduk, Olympic Dam and Rossing) grade less than 0.1%. (Although mines like Olympic Dam make up for some of this shortfall by producing by-product metals.) The grade discrepancy across the top ten mines is over two orders of magnitude. Significantly more out-of-whack than copper or gold.

Here's another way of looking it. This chart shows the grade of the world's top ten mines in all three sectors, presented as a percentage of the highest-grade mine. Gold and copper ramp down fairly smoothly. Uranium grades, however, cliff-dive into low numbers very quickly.


All of which is to say that there is a big disparity across uranium deposits. The world has one very rich production center (Saskatchewan), and a bunch of much, much lower-grade mines.

This has some important implications for price. I've shown the chart below before, but it's instructive to look at it again here.

The cost "curve" for uranium is more like a hockey stick. We have a good deal of low-cost production in the world, which can be extracted for $10 to $15 per pound. Much of this comes from Saskatchewan, where high-grade ore makes for lower costs.


But once demand pushes past what these mines can deliver, costs ramp up fast. The move from $20 to $50 uranium (and even higher) comes quickly.

And we are pushing that curve right now. The World Nuclear Association estimates 2010 global uranium requirements at 81,000 tonnes. Putting us squarely on the far right side of the chart above.

Here's the project opportunity. The disparity in grade and production cost across the global uranium sector creates a chance to "poach the curve".

Most current uranium projects are focused on low-grade deposits that come in at the high-end of the cost curve. A number of such deposits are known globally (and have been known for decades), so the exploration work required is minimal.

But what the world is lacking is low-cost production. Anyone who can come up with a sub $30 deposit capable of producing on any kind of scale will have something very valuable to the world's uranium producers, most of whom are still skeptical about buying projects with costs above $40. The successful team is going to make a lot of money.

(The majors' fear of high-cost deposits is largely due to uncertainty over Saskatchewan's Cigar Lake deposit. Cigar would rival McArthur River in terms of grade and scale, producing a projected 8,200 tonnes yearly at 17% U3O8. Except that it flooded in 2006, and the development timeline has been unclear since. If Cigar does come on-line, it will displace the need for a good chunk of higher-cost production, likely lowering prices. If it goes bonk, the need for new uranium projects is going to be all the more urgent.)

Finding new, low-cost deposits requires some work and fresh thinking. A few ideas spring to mind. Go after high-grade, Athabasca-basin look-alikes (or near look-alikes) in under-explored places like West Africa. This is capital intensive, and would likely key off of new technology.

Or, take the Olympic Dam approach and go after low-grade deposits that come with significant credits from other metals, lowering the attributable uranium production cost. This is my personal favorite. North African phosphates are a great candidate.

The case is there for pursuing good, new ideas in uranium. The next step is to pick out some specific plays for a more detailed economic and technical evaluation. Over the next few weeks, I'll be putting together an "idea sheet" and directions for future work.

Source: http://oilprice.com/Metals/Commodities/Why-Uranium-Will-Make-Someone-Rich.html

Dave Forest

By Dave Forest for OilPrice.com who focus on Fossil Fuels, Alternative Energy, Metals, Crude Oil Prices and Geopolitics To find out more visit their website at: http://www.oilprice.com

© 2010 Copyright OilPrice.com- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules