The official decision on 232 was announced on Friday night. In our view this is positive for the overall uranium market, as we believe its resolution should allow utilities and producers to enter into long-term agreements, which should push the uranium price higher. While positive for the overall market, the premium that U.S. producers and developers had acquired over the last ~18 months is likely to come out of the market.
Appia Energy Corp
Impact: Mildly Positive Appia has announced the completion of ground gravity survey results at its higher grade Alces Lake REE property in Saskatchewan, Canada. The company is now doing follow up drilling (3,000m). We believe a successful program would uniquely position the company to emerge as one of the few high-grade rare earth element (REE) explorers in North America. We continue to believe Appia provides significant exposure to REE price momentum at Alces Lake project and underpinning value with a large uranium resource at the Elliot Lake Camp.
Recent events suggest that a Presidential decision on Section 232 investigation into Uranium is coming soon, which in our view should be a catalyst for the entire uranium space. We have summarized our thoughts below.
Impact: Mildly Positive Appia has provided drill results from its Loranger property in the Athabasca Basin of northern Saskatchewan. This technical success provides important data on uranium mineralization in two target areas, which could allow the company to close in on a potential discovery. We believe Appia provides leverage to the uranium market with its Loranger property and large uranium resource at Elliot Lake Camp in addition to providing significant exposure to rare earth price momentum at its high-grade Alces Lake project.
Earlier this week, Red Cloud hosted a pair of conferences in New York and Toronto featuring presentations from seven uranium developers and explorers and other industry experts. Both conferences were kicked off by a presentation from Philip Johnson, Vice President – Fuel Cycle, of the UxC, which is one of the nuclear industry’s leading market research and analysis companies. Philip presented an overview of the uranium market, which included the UxC’s outlook on global nuclear demand and uranium supply. Seven presentations followed from Anfield Energy (TSXV:AEC), Appia Energy (CSE:API), Blue Sky Uranium (TSXV:BSK), CanAlaska Uranium (TSXV:CVV), Fission 3.0 (TSXV:FUU), Fission Uranium (TSX:FCU) and Laramide Resources (TSX:LAM). The New York conference ended with a Q&A with Arthur Hyde, Partner & Co-Portfolio Manager at Segra Capital Management, which consisted of a discussion on recent macroeconomic trends and the outlook on the uranium sector.
A new uranium bull market is coming – sooner than most people think. Our work suggests that the current price environment is unsustainable and that the long-term the price needs to increase 72% to more than US$55/lb U3O8e to stimulate the market enough to bring on new production (Figures 4, 5 and 6). In this report, we evaluate both the supply and demand fundamentals of the market, the real cost to bring on new supply and the price response required to do so. In addition, we evaluate most uranium companies and provide a detailed analysis of stocks that we believe are likely to benefit with the coming bull market.