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Uranium stocks on the move as US Senate approves reserve bill

The US will establish a national strategic uranium reserve after a bipartisan bill was passed by the US Senate.

Peninsula Energy Ltd - Uranium stocks on the move as US Senate approves reserve bill
Australian companies are among those benefiting from positive market fundamentals

Uranium prices have risen to their highest point in nearly five years after a bill to create a national US uranium reserve was passed by the US Senate.

Uranium, which is widely used in nuclear power plants, was fetching US$29.70/pound as markets closed last Friday.

US intitiatives

On that day, the US Senate Committee on Environment and Public Works approved a bill that advances a federal initiative to establish a national, strategic uranium reserve. It had bipartisan support.

This is good news for uranium suppliers, particularly those who plan to sell uranium to the US Department of Energy.

Under the new American Nuclear Infrastructure Act, the DOE will only be able to buy uranium recovered from facilities licensed by the Nuclear Regulatory Commission or equivalent agreement state agencies.

Importantly, it will exclude companies owned, controlled or subject to jurisdictions in China or Russia from selling uranium to the US.

US uranium reserve

The act will see the US create a uranium reserve, securing the country’s nuclear fuel supply chain, and has boosted optimism in the sector.

Uranium prices had risen 1.7 per cent by the end of last week and have risen nearly 20 per cent in 2020 to date, making it one of the best-performing commodities of the year.

The US Democrat party, which will take power in January under incoming president Joe Biden, finalised a climate change platform in August that included existing and advanced nuclear technologies within the ‘technology-neutral’ approach it will take to decarbonise the power sector.

The US is the world’s highest uranium consumer, and this is good news for Australia, which is among the world’s top uranium producers, home to nearly one-third of the world’s known uranium ore reserves, and the world’s largest single uranium deposit.

Australian companies to benefit

A number of ASX-listed companies also stand to gain from the new US legislation, including Peninsula Energy Ltd (ASX:PEN), (OTCMKTS:PENMF) (FRA:P1M), GTI Resources Ltd (ASX:GTR), TNT Mines Ltd (ASX:TNT) and Lotus Resources Ltd (ASX:LOT).

All four companies have seen their stock rise this month – Peninsula rose 52 per cent to a high of 13 cents on Tuesday, GTI rose 50 per cent to 2.7 cents, TNT 9% to 30.5 cents and Lotus 36 per cent to a high of 11.5 cents.

Peninsula Energy

Peninsula owns the Lance Uranium Projects in Wyoming in the north-western US.  Commercial operations at the project were suspended in 2019 to allow the team on the ground to prepare for changes to the way it processes the uranium it mines.

It has sought authorisation to mine uranium via a low pH in-situ recovery (ISR) process in addition to the alkaline ISR process, in which groundwater fortified with oxygen and other materials like bicarb soda is pumped into a permeable ore body causing the uranium contained in the ore to dissolve.

Approximately 57 per cent of uranium produced globally in 2019 was extracted via the low pH ISR process. A cost-effective process, Lance is the only US-based uranium project authorised to use this industry-leading method.

Peninsula announced in late October that it had commenced field demonstration to “verify optimised process chemistry, ion exchange resins and solids handling method”, with results expected this quarter.

GTI extends position

GTI Resources’ Henry Mountains Project in Utah, in the western US, was extended in late October with the acquisition of two mineral leases that had produced uranium in the past.

Fieldwork is underway to determine prioritised targets for drilling within the expanded project area.

While the company has initiated the permitting process at the leases, it plans to leverage extensive underground workings across the project area to study the controls and distribution of ore-grade mineralisation through refined mapping and sampling.

TNT sample results

TNT recently received high-grade assay results from underground exploration channel sampling at the 100%-owned East Canyon Uranium-Vanadium Project in southeast Utah, USA.

Results from the None Such and Bonanza Workings include 1-metre at 1.27% uranium and 4.53% vanadium and 0.6 metres at 0.69% uranium and 2.82% vanadium.

Planning and permitting for an initial drill program is underway and this is expected to start this quarter following the receipt of all regulatory approvals.

East Canyon is only 50 kilometres away via a major highway from the White Mesa Mill, the only fully licensed, permitted and operational uranium and vanadium mill in the US.

Lotus plans restart

Lotus Resources has started discussions with major global utilities to reintroduce the Kayelekera project in Malawi, which has been on care and maintenance since 2014.

It is targeting utilities with open near-term requirements and previous customers of Kayelekera, which is positioned as a proven quality uranium product supplier.

The company recently received binding commitments to raise $5 million before costs to fund a restart study for the project and for near-mine exploration potentially increase the existing 37.5 million pounds uranium resource.

A positive scoping study has confirmed that Kayelekera can be among the first uranium projects to recommence production as a low capital cost (US$50 million), long-life operation (14 years).

- Assisted by Daniel Paproth

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