Issue link: http://resourceworld.uberflip.com/i/807573
A P R I L / M A Y 2 0 1 7 www.resourceworld.com 13 he points out that there are still plenty of reactors starting up. He notes, for example, that the Kudankulam 2 reactor in India reached full capacity on January 23, 2017. "Based on data from the World Nuclear Association, we expect a new increase of 21 new reactors in 2017 and followed by an additional 10 in 2018, and 12 more in 2019. This would lead to demand rising from a forecast 189 million pounds of ura- nium this year to 204 million pounds by 2019," he said. However, in a report that was released on the same day that Kazatomprom announced its planned production cuts, Scotia Capital said investors may have to be patient. While it continues to anticipate the gradual restart of the Japanese (reactor) fleet, Scotia said the excruciatingly slow pace of restarts has resulted in a significant uranium oxide inventory build amongst Japanese utilities. "In our view, this has created a significant overhang in the mar- ket as Japanese utilities are likely to now take a meaningful pause in renewing long- term off-take contracts over the next few years,'' Scotia said. Indeed, in January 2017, Tokyo Electric Power Co. Holdings Inc. (TEPCO) issued a termination notice for a $1.3 billion sup- ply contract with Cameco by claiming force majeure. The Japanese company said the decision was prompted by forces beyond its control and arises from the 2011 Fukushima acci- dent that prevented the operation of its plants. Cameco has said it sees no basis for ter- minating the agreement and will pursue all its legal rights and remedies against TEPCO. It is worth noting that radiation levels at the affected Fukushima reactors remain so high that TEPCO officials have to use remote-controlled robots in an attempt to assess the damage. Chang of Cantor Fitzgerald said the ter- mination of the Cameco contract has cast some concern over what will happen to 9.3 million pounds of uranium that was scheduled to be delivered between 2017 and 2018, an amount that equals 775,000 pounds annually. However, he believes the termination could actually prove to be a positive devel- opment if Cameco elects not to produce the pounds at all (and further cut costs by doing so). Alternatively it could elect to store that material in inventory and await higher prices. "Either of those two actions would effectively be removing some of the excess supply from the market,'' he said. Cantor Fitzgerald is one of four invest- ment firms that are currently flashing buy signals in the direction of Uranium Energy. On March 10, 2017, the stock was trading at US $1.31 in a 52-week range of $1.92 and 69 cents. Cantor says it likes the fact that Uranium Energy is currently deploying a "hub & spoke" strategy by developing projects near the periphery of its Hobson processing facility in Texas. In keeping with that strategy, the company recently secured a final mine permit from the Texas Commission on Environmental Quality for its Burke Hollow Project, one of three projects that the company is developing. It is estimated to host an inferred resource of over 5 million pounds of uranium oxides. n