ADVERTORIAL
Not Enough New Uranium Mines to Keep Up with Nuclear Revival
Editorial | Feb 8, 2023 | Industry
As the Nuclear Energy Market Gains Momentum, One Company is Developing an Elite Tier 1 Uranium Project in a World-Class District
Nuclear power is making a comeback. Several of the world’s most developed nations have been announcing their plans to extend the life of their existing nuclear power plants, with some even expanding their fleets instead of shuttering them as had already been scheduled.
Whether or not it’s being done quietly/sheepishly, the result has accelerated the robust recovery in the uranium market over the last two years, after nearly a decade of low prices.
But, after so many years in a slump during which mines were shuttered and most undeveloped projects struggled to advance, uranium production is faced with falling reserves and grades.1 Supply looks set to struggle as demand continues to increase. With uranium commentators suggested the required incentive price for new supply is over $70 per pound2 and even up to +$90 /lb – an approximate 80% increase on today’s prices – an exceptional tightening of the already thin uranium market looks set to happen as early as 2025.
Perfectly positioned within a World-Class uranium district is a company that specializes in the strategic development of the Patterson Lake South (PLS) uranium property, which hosts the class-leading, high-grade Triple R deposit. They have a clear development path at PLS, having just completed the much-coveted Feasibility Study (FS) at the property which revealed robust economics including the potential to become one of the lowest cost operators in the uranium industry (more on that shortly).
This nuclear shift is relatively new, as up until 2020, uranium producers had little reason to believe that long-term demand would begin to accelerate, and that public sentiment would begin to change even in countries that had decided to reduce or phase out nuclear energy.
This renaissance includes Japan, which has announced a nuclear energy plan to tackle energy prices and decarbonization, including extending its current reactor life and constructing new reactors.3
According to Sprott Asset Management, the renewed focus on energy security will provide long-term support for the uranium market and continue the bull run.4
Some analysts are even calling it the start of a 10-year uranium bull market and the “Coming of the Second Atomic Age”.5
Enter the 10-Year Uranium Bull Market
According to Sprott Asset Management, uranium and nuclear energy’s critical role in energy security could provide long-term structural support for uranium and uranium miners in 2023 and beyond.6
Prices for uranium conversion and enrichment services more than doubled last year, a significant outperformance relative to the U3O8 uranium spot price, and according to the report the upward price pressure could flow down to the uranium spot price in 2023.
At the same time, analysts at The Oregon Group believe we are entering the start of a 10-year uranium bull market, and the “Coming of the Second Atomic Age”.7
It’s worth noting that The Oregon Group has a wealth of experience in the uranium sector, with connections going back over a decade.
These analysts point to a significant, continuing increase in global nuclear reactors, which require uranium as fuel—and as the demand for clean energy increases and more countries shift towards nuclear power, so is the demand for uranium expected to rise.
This scenario provides a unique opportunity for observant investors as the yellow metal is driving the uranium sector to outshine other sectors in the market.
But choosing which uranium project to follow and support can be difficult among a field of choices.
Saskatchewan: World-Class Uranium District
Comprised of 17 mineral claims totaling 31,039 ha, the 100%-owned PLS Property is located on the southwest margin of the Athabasca Basin in Saskatchewan, the world’s 2nd most attractive jurisdiction for mining investment, according to the 2021 Fraser Institute survey.8
This marked the second year in a row Saskatchewan ranked in the Fraser Institute’s Top 3—a testament to the province’s strong mining industry and its commitment to fostering a supportive environment for mining companies.
Saskatchewan supplies almost a quarter of the world’s uranium for electrical generation,9 making it a significant global supplier. The region is arguably even more important when you consider that the number one supplier is Kazakhstan. The company as such is well-positioned to capitalize on Canada’s advantages as a mining nation.
Strategically, their decision to set up shop in this top-tier uranium sector is advantageous. The Athabasca Basin is well-known for its well-established infrastructure, skilled labor force, and friendly local mining communities.
This makes it a prime spot for any future mining endeavors, facilitating the unimpeded and effective extraction of uranium ore.
Additionally, with its strict but clear permitting procedures, Saskatchewan makes it straightforward for companies to navigate the regulatory landscape and obtain the necessary approvals to proceed with the project.
The Triple R Advantage
In the PLS project, the company has secured the Athabasca Basin’s only shallow, large, high-grade, undeveloped deposit.
In fact, the PLS project boasts a grade of 10-20x the global average, making it one of the highest-grade uranium projects in the world—further enhanced by its shallow, more easily accessible depth.
Being so shallow – with significant, high-grade mineralization starting at just 50m from the surface, helps to minimize the environmental footprint and means a shorter construction time compared to the famously deep deposits in the region.
The deposit, which is a part of a 3.18 km mineralized trend at PLS, is not fully explored and remains open in several directions, with the potential to add to the resource estimate in all zones.
Attractive Economics: The PLS Project
The PLS Project has been thoroughly evaluated in a recent Feasibility Study (FS) that has further enhanced the PLS project’s robust economics and includes several key factors that make it an attractive investment opportunity.10
The PLS project boasts a very low projected OPEX cost of US$9.74 per lb U3O8, making it one of the most cost-effective uranium operations in the world. This low cost of operation is due to the high-grade ore and the efficient mining methods that will be used.
On top of that, the FS increased the after-tax NPV by 70% to $1.204B at 8% discount which clearly indicates the project’s long-term value. For those who may not know, the NPV is the single most important factor in the evaluation of any mining project.
The FS also revealed a higher after-tax IRR of 27.2%, a strong indicator of the project’s profitability.
Once greenlit, the project is expected to come with an incredibly short construction of just three years with an estimated initial capital cost of $1.155 billion and a payback period of just 2.6 years—adding even more to the project’s economic attractiveness.
What to do now…
This is an ideal time to follow the ongoing story—because with an upgraded resource, and a recently completed Feasibility Study, the company’s PLS project is turning heads with its high-grade, shallow-depth resource that’s primed and ready for major development towards potential production in the not-so-distant future.
So don’t forget to subscribe to learn more about this junior explorer and make sure you don’t miss out on any news and milestones.
1 https://www.uxc.com/p/products/rpt_umo.aspx
2 https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/nuclear-revival-buoys-uranium-sector-but-new-mines-not-on-horizon-72602064
3 https://www.reuters.com/business/energy/japans-restart-nuclear-reactors-will-help-europes-winter-energy-supply-iea-chief-2022-09-27/
4 https://www.mining.com/chart-uraniums-third-bull-market-since-1968-has-further-to-run/
5 https://theoregongroup.com/the-uranium-bull-market-and-the-coming-of-the-second-atomic-age-the-oregon-group-special-report-subscribe/?utm_source=partner&utm_medium=pressreach&utm_campaign=uraniumreport
6 https://www.mining.com/chart-uraniums-third-bull-market-since-1968-has-further-to-run/
7 https://theoregongroup.com/the-uranium-bull-market-and-the-coming-of-the-second-atomic-age-the-oregon-group-special-report-subscribe/?utm_source=partner&utm_medium=pressreach&utm_campaign=uraniumreport
8 https://www.fraserinstitute.org/studies/annual-survey-of-mining-companies-2021
9 https://www.saskatchewan.ca/residents/first-nations-citizens/saskatchewan-first-nations-metis-and-northern-initiatives/northern-saskatchewan-environmental-quality-committee
10 https://fissionuranium.com/news/fission-announces-tier-1-economics-for-pls-with-fe-4908/
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