GTI Resources (ASX: GTR) will begin a new exploration program next Monday at its Jeffrey uranium project in Utah, with the company citing several factors propelling yellowcake prices.
These include uranium moving from a spot price of US$23 per pound (A$35.30/lb) to US$33/lb (A$50.64/lb) in a matter of 30 days, breaking out of a range that has been dogging uranium hopefuls for years.
Another is last week’s announcement by the Trump administration that it wants the US to once again be the leading uranium producer and is to spend US$1.5 billion (A$2.3 billion) to create a uranium reserve stockpile.
The Jeffrey ground is one of several projects held in Utah by the Perth-based junior in part of what it describes as the “prolific” Colorado Plateau uranium province.
The region contains hundreds of abandoned uranium mines that went out of business when uranium prices collapsed at the beginning of the 1980s, including the Orphan, which has been among the largest uranium producers in the US.
GTI will be following up previous high-grade assay results of 1.39% uranium oxide and 2.46% vanadium oxide and another at 0.12% uranium oxide and 3.89% vanadium oxide.
2018 field program identified mineralisation
GTI undertook a field program in 2018, which identified what it calls high-grade uranium/vanadium mineralisation.
Two months ago, the company announced that Denver-based consultants completed channel sampling within historic mine workings that confirmed the field test results.
The company has identified more than 20 open historical drill holes and will be carrying out down-hole logging.
Shutdowns put floor under uranium
The spurt in spot prices was triggered largely by several mines being shuttered, including Cameco’s huge Cigar Lake operation in Saskatchewan and mining in Kazakhstan, the world’s largest exporter of uranium.
The New York-based financial house Cantor Fitzgerald has calculated the shutdowns have wiped out about 35% of global production capacity.
Far East Capital executive chairman Warwick Grigor was for 10 years a director of Peninsula Energy (ASX: PEN), which has uranium operations in Wyoming, US.
In his latest client note, Mr Grigor said “there is good cause to be short-term bullish on the fundamentals” of uranium.
“The nature of the market is switching from being inventory-dictated to one of production constraints,” he added.
Mr Grigor said uranium is now a momentum play and the price could hit US$40/lb (A$61.37) by the end of May.
Trump backing US-based mines
The US government plans to spend US$150 million (A$230 million) a year over 10 years, buying 3.75 million pounds (Mlb) per annum of uranium at a weighted average price of US$40/lb (A$61.37/lb).
A report released last week by the US Department of Energy said the US government “will take bold action to revive and strengthen the uranium mining industry”.
There are 98 nuclear reactors operated by American electricity utilities.
The US is the world’s largest uranium consumer and needs 40Mlb of supply annually; but by 2018, output from American mines had fallen to just 6Mlb.
Now, 90% of uranium used in the US is imported.