David Cates: The Uranium Market is Getting Tight, and There Isn’t Enough Production
David Cates, president and CEO of two companies- Uranium Participation Corporation and Denison Mines, joins us to discuss the Uranium market. He says the Uranium spot price has moved upwards in the last week and that uranium stocks have yet to price this move in. In recent months a lack of liquidity and a thinly traded market has limited price discovery, however this has improved recently as more utilities have been buying.
Over the next few years he expects more utilities to enter the market and good returns in the 2-4 year range as demand increases and supply declines. The current price is not reflective of actual production costs in his opinion. David thinks the spot price should move towards the $40 level and possibly $60 or higher. Very few projects are in the global pipeline to fulfill the looming supply demand gap.
David says it’s difficult to judge the market supply dynamics and in the grand scheme the market is currently oversupplied, although secondary supplies are being unloaded. This is the cause of the general softness in the market. Some are concerned that China has significant inventory, however he anticipates that this stockpile will look reasonable once more of their reactor builds come online.
David also discusses a Canadian-focused company, and why he believes the Athabasca basin is the best jurisdiction in the world to be a uranium developer. He says they are set to be the next major uranium producer in this region.
Talking Points From This Week’s Episode
•The uranium market is artificially low, and price discovery is weak due to soft demand.
•Uranium spot price is below the cost of production due to secondary supplies.
•Very few project mines in the pipeline to fulfill future demand, especially at these prices.
•Recent activity in the market has been dramatic, and the market may be shifting.
•There is potential for expansion in the United States due to the new Trump Administration.
David D. Cates is the President and CEO of Denison Mines Corp. and Uranium Participation Corp. He is a Chartered Professional Accountant and holds a Master of Accounting and a B.A. Degree.
As Chief Financial Officer, Mr. Cates played a key role in the Company’s mergers and acquisitions activities – leading the acquisition of Rockgate Capital Corp. and International Enexco Ltd. Mr. Cates joined Denison in 2008 and held the position of Director, Taxation prior to his appointment as Chief Financial Officer. Prior to joining the Company, Mr. Cates held positions at Kinross Gold Corp. and PwC LLP with a focus on the resource industry.