Uranium production is on another steep rise for the third time in history
Demand is piqued by the need for nuclear energy’s low CO2 emissions
ASX juniors are racing into the uranium-rich Athabasca Basin in Canada
Besides the usual bulks, copper, nickel and gold, we’ve seen nascent yet adjacent commodity cycles crop up in the last couple of decades, including lithium, a bunch of critical minerals and rare earths riding price waves due to the lack of ex-China supply chains and fears of the Middle Kingdom drying up exports.
Then there’s uranium – one of the only resources commodities where China’s influence is meek, yet prices can only be described as a decades-long rollercoaster ride since the early 1970s with two distinct events that sent its value into the doldrums.
Uranium’s long-term commodity cycle is a thing
Major disasters such as Chernobyl and Fukushima Daiichi heavily influenced public perception of nuclear energy and caused significant falls in price over the last 50 years.
Source: USGS, Numerco, Cameco.
As you can see, when uranium gets its skates on it goes hell-for-leather.
The differences that could really send the world into a yellowcake frenzy the likes of which we’ve never witnessed before come down to two important factors: ever-improving safety protocols and a global push towards clean, reliable energy production using nuclear power.
Nuclear power provides massive, low-cost quantities of stable, baseload energy to grids on a continuous basis and emits less CO2 than wind and solar – almost nothing.
And because nuclear power is so cheap and reactors expensive to shut down, utility companies will still be compelled to purchase on highs – especially when compared to equivalent price surges in natural gas or coal, Katusa Research says.
“Even if uranium’s price shifts from US$45/lb to US$450/lb, the change in cost per kWh is minimal,” Katusa notes.
“If there’s a tenfold price hike in uranium, the cost for electricity generation from a nuclear reactor would only rise by about 24%.”
It’s currently sitting around $US88/lb, almost 2X since January last year.
Traversing Athabasca
The yellowcake is back on the rise again and shuttered projects in proven districts such as Canada’s uranium-rich Athabasca Basin in Saskatchewan are being looked at once more by a bunch of intrepid ASX juniors.
But why? Well, some of the work has already been done for them. There’s a lot of identified deposits that were mothballed the last time the uranium price tanked and explorers have historical datasets already to go off.
Uranium deposits in Canada are mostly found towards the edges of the potato-shaped Athabasca Basin, where two active uranium mines – McArthur River and Cigar Lake – sit on the east side of the geological setting.
Discovered in 1988, Cameco’s MacArthur River (including Key Lake) is the world’s largest uranium mine and mill, with 317.5Mlbs of reserves @ 7.02% U3O8, while its Cigar Lake contains 135Mlbs @ 18.11% U3O8 – the highest grade mine in the world.
Canada’s Standard Uranium is another big player in the region with almost a dozen tenements dotted all around the Basin.
Source: Standard Lithium.
In the junior exploration game, money matters and prospective deposits need a fine-toothed comb run over them before diving in the deep end.
Sprinkle some astute decisions with a little bit of luck and the ability to predict commodity cycle turns and you’re in good stead to walk the pathway to success.
Juniors in the Athabasca
Take Mamba Exploration (ASX:M24) for example. As an exploration junior with a team experienced in the uranium business, its foray into Athabasca is timely and methodical.
M24 inked a deal to snap up 75% of the Canary uranium project back in January – just 11km from IsoEnergy’s (TSX-V:ISO) 2018 discovery of its super high-grade Hurricane deposit which contains 48.61Mlb @ an astonishing 34.5% US3O8.
Its MD Simon Andrew spoke to Stockhead about his company’s approach to choosing the project and the company’s exploration pathway.
“We really didn’t want to look at completely greenfields projects so chose something a bit more advanced and in a well-infrastructured jurisdiction that had a more supportive stance on uranium exploration and development,” Andrew says.
“That led us to the Athabasca Basin where we were shown an advanced project in an area where there’s been significant discoveries over the last decade.”
Andrew says Canary has had considerable grassroots exploration conducted by Standard Lithium in terms of soil sampling and historical drilling and is funded and ready to get to work on the project.
“We’ve found an asset that we’re ready to drill and given ourselves the best chance of proving up a deposit that can get into production,” Andrew says.
M24’s initial focus will be on drilling unconformity-related targets from historical data and recently defined geophysical anomalies that suggest basement-hosted uranium mineralisation.
“There’s three target areas we’re concentrating on that have identified conductors that are not particularly deep which is a bonus when operating in that part of the world because it lowers exploration costs,” Andrew says.
“We’ll be drilling the second week of May which is exciting and have drill contractors, helicopter support and accommodation secured and ready to mobilise on time.”
The company could end up emulating NexGen Energy (ASX:NXG) Rook 1 project – which has one of the largest development-stage uranium projects in Canada with a 209.6Mlb contained in 2.18Mt @ 4.35% U3O8 resource.
Or it could go down the path of 92 Energy (ASX:92E), which merged late last year with ATHA Energy and Latitude Uranium to create a large, well-funded uranium explorer.
Other explorers include Recharge Metals (ASX:REC) which recently completed the acquisition of its Newnham Lake project and Basin Energy (ASX:BSN) – an early mover into the region that is in its second phase of drilling at the Geike project.
Trinex Minerals (ASX:TX3) is laser-focused on its Gibbons Creek uranium project in which it has a 51% interest and is bullish on the yellowcake market as a whole.
TX3 MD Will Dix says long-term the uranium industry will grow.
“There’s a recognition globally that while we want to be part of this energy transition from fossil fuels to renewables or less impactful energy sources, from a pollution or CO2 emissions point of view, I think uranium has a very big role to play in that,” Dix told Stockhead.
The first lot of drill holes at the TX3 prospect have already intersected uranium mineralisation and assays are expected imminently.
The company plans to carry out additional geophysical work before the next round of drill testing.
At Stockhead, we tell it like it is. While Trinex Minerals, Recharge Metals, Basin Energy and Mamba Exploration are Stockhead advertisers, they did not sponsor this article.
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