VANCOUVER (miningweekly.com) - "The disconnect between price and value is as stunning as I've ever seen," founder of The Stock Catalyst Report Michael Alkin told attendees at the Vancouver Resource Investment Conference (VRIC) on Sunday.

Industry participants seemed to agree.




"If you're on the fence on getting into uranium... Do you want it for free? The value proposition is so compelling for uranium, it is bound to return in the future. It requires some homework on the investor's part, but once you do your homework, you'll realise that you are buying future value for a song," US uranium miner Uranium Energy Corp president and CEO Amir Adnani told a panel.

"We can sit here and beat up about utilities not contracting. The fact remains, they have always acted counter intuitively, thinking uranium prices will remain so low for long. As Rick Rule says it best: 'It's not a matter of if, but when'," noted Fission Uranium president and CEO Dev Randhawa.




The industry is dealing with a sideways-crawling uranium price around the $20/lb-mark, amid low demand and an acute oversupply of yellowcake for several quarters now, despite a slew of production cuts and mine closures by the world's largest producers – Kazakhstan's Kazatomprom and Canada's Cameco.

According to Randhawa, Fission's 20% Chinese-based partner CGN – which he describes as the 'mothership' of the nuclear power industry – expects the market to be in balance this year, or to tip into deficit territory.

He does not see any suspended production coming back online below a uranium price of $40/lb, by which time the equities of most uranium companies present at the VRIC 2018 would probably have tripled, he quipped.

Skyharbour Resources president and CEO Jordan Trimble noted that the lowest-cost producers are taking production offline. This means that, when the lowest-quartile of production gets taken out, it is very telling that prices will soon rise.

"We're talking a doubling in prices from $23/lb now," he says.

Trimble pointed out that about 70% of the higher-priced long-term contracts roll off in the next five years, which means that, with uranium prices at their current historic lows, the higher-priced contracts will be executed at much lower, unsustainable prices. For that reason the majors are taking out supply with meaning to force prices back up to sustainable levels; otherwise, they risk shutting down.

GoviEx Uranium CEO Daniel Major added that the uranium enrichment side is in the same hot water as the uranium producers, staring down the spectre of lower-priced long-term contract prices.

"We are never going to see another buying window like this ever again. If you are willing to bet on global population growth, you cannot bet against nuclear growth," UEC's Adnani advised. "We need electricity in increasing intensity for everything going forward."

He added that there was a significant opportunity for uranium production opening up in the US. "The US has the best supply/demand fundamentals of any commodity. With 99 commercial nuclear power reactors, the US has more nuclear reactors than China and India currently have combined.

"A market that demands about 50-million pounds of uranium a year, and produces less than 5% of its own supply, spells opportunity," he said.