1. June 2009
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For years, as memories of Chernobyl and Three Mile Island resonated in the public’s mind, uranium lost much of its luster.
With the fall of the Soviet Union, the Western markets suddenly became ooded with Russian yellowcake and the
bottom fell out of the price of the metal, reaching lows of $7 per pound. This absurdly low price caused many mines to
be completely unfeasible and exploration essentially stopped for over 10 years. Slowly but surely, a massive shortfall in
annual production had been created.
Uranium has enjoyed something of a renaissance in the last seven years though. Now with massive emerging markets,
such as China and India, looking to greatly increase their electrical capabilities, they have made nuclear a priority. The
enormous environmental toll taken by using coal for electrical generation has become all too clear. As the world strives
for more carbon-free sources of power generation, other conventional methods need to pick up the slack. Forms of
‘renewable’ energy are not yet scally competitive nor capable of meeting the current electrical needs of the world.
Nuclear is once again in the public’s mind, but this time in a much more positive light.
The price in the uranium spot market has risen from $7 in 2002 to as much as $137 in June 2007 (though now settled at
$49 as of May 25, 2009). This enormous increase has brought exploration of uranium back into the market’s
consciousness. Over $1.5 billion have been raised from Canadian markets in the last three years for exploration
programs across the world, looking for sites that will help ll the production gap that is still widening. While the
disarmament of nuclear weapons has lled much of this shortfall so far, it’s not a practice that can continue inde nitely.
Europe and North America have a long established history of nuclear use, but national development programs have
been stalled until recently. Along with the massive planned expansions in China, Japan and India, several new reactors
are in the development stage in America, Canada, the United Kingdom, Germany and France as well. These
developments create an enormous supply pressure that will be felt strongly.
North American utilities have become extremely cautious in the midst of the ongoing recession, feeling it unwise to
make long-term agreements to purchase uranium. Asian buyers, on the other hand, have been aggressively trying to
secure as many long-term agreements as necessary with hedged pricing going forward. Asian nuclear consortiums have
been actively buying into strategic development joint ventures to further secure supply. We might well be facing
another price spike given the potential supply crunch. Many analysts predict a near-term spot price of $60-$75 per
pound and ve-to-ten year price of $100-$250.
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2. June 2009
% of Money Raised % of Capital Raised Used for Development and Exploration
for Exp. & Dev. ‘06-’09 Amount Raised TSX-V TSX
100% 15,000
Development Total
14,000
Exploration Total
13,000
Other
Average Close (TSX & TSX-V)
80% 12,000
11,000
2006
10,000
38.98% 60% 9000
8000
7000
40% 6000
% Raised
43.36% 17.66% 5000
4000
20% 3000
2007 2000
1000
38.23% 23.47%
May-06
Jun-06
Jul-06
Aug-06
Sep-06
Oct-06
Nov-06
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
38.30%
Total Capital Raised (in $000,000)
Amount Raised $ TSX-V TSX
15,000 100
2008
14,000
90
19.21% 13,000
Average Close (TSX & TSX-V)
12,000 80
11,000
70
10,000
59.45% 21.34% 9000 60
8000
50
7000
6000 40
$ Raised 000,000
2009
5000
30
4000
3000 20
2000
10
4.22% 1000
84.91% 10.87%
May-06
Jun-06
Jul-06
Aug-06
Sep-06
Oct-06
Nov-06
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
Please visit www.canadianfinancing.com to subscribe to our upcoming “Focus on Uranium”
For more information about the Canadian Financing Bulletin contact us at 1-800-504-3588 or cfb@blendermedia.com