In the news: The Alchemist, Amani Gold & Sula Iron and Gold
FROM THE BROKING DESK
We have our latest issue of The Alchemist out, focusing this time on uranium. In January 2017 we finally saw a significant pick-up in spot market uranium prices. This commodity has been on a downward trend since a 2007 peak of US$136.22/lb; the current price sits at US$25.50/lb, a fall of 81% from there. Increasing supply, the devastating Japanese tsunami of March 2011 and advances in alternative energy supply continue to plague the industry. We look at these concerns and whether the recent spike in uranium interest is signalling the bottom of the market by providing an update on the current supply and demand dynamics, counterbalanced by market perceptions and a look into investor activity.
In summary, we conclude that the spot price rise was a reaction to a low-cost operating company choosing to keep ‘pounds in the ground’ rather than continuing to oversupply the market. It might not be sustained. Investment in uranium should be approached via a ‘preparation for growth’ strategy; as and when interest returns to the market due to higher demand, transactions are likely to attract significant premiums for good assets.