34 www.resourceworld.com
O C T O B E R / N O V E M B E R 2 0 1 8
Mining, as everyone knows, is prone
to boom and bust cycles. But in the ura-
nium sector, the bear market has been so
painfully long that the event that caused
it – the 2011 Fukushima disaster – has
almost become a distant memory.
Before a powerful earthquake and
tsunami disabled three reactors at the
Fukushima nuclear plant in Japan, spot
uranium was priced at US $72.63/lb. The
radioactive metal has since lost 70% of
its value, prompting major producers like
Cameco Corp. [CCO-TSX; CCJ-NYSE]
and Kazakh state-owned KazAtomProm,
to shut down production and announce
indefinite layoffs as long term contracts
that pay huge premiums to the current
spot price expire. In spite of the recent
rebound to US $27/lb from a low of US
$18.50 in late 2016, spot prices remain at
levels that are too low to incentivize the
development of new mines.
It is a dream scenario for contrarian
investors who continue to insist that a
return to pre-Fukushima levels is inevi-
table due to uranium's fundamental role in
the production of clean energy.
It is why a select group that includes
NexGen Energy Ltd. [NXE-TSX, NYSE]
has been able to advance uranium proj-
ects in northern Saskatchewan's Athabasca
Basin with help from some well-heeled
financial backers.
A rebound in the price of uranium is inevitable – Rick Rule, Sprott
Uranium sector
looking brighter
by Peter Kennedy
URANIUM
Denison Mines' 90%-owned Wheeler River
uranium project in the Athabasca Basin
northern Saskatchewan. Photo courtesy
Denison Mines Corp.
