Trump ushers hope on Kayelekera

…Uranium market improving with US pro-nuclear policy

…Paladin continues with exploration near mothballed mine

By Marcel Chimwala

The recent election of Republican Donald Trump as the 45th President of the United States of America has given hope to the uranium market that the price of the yellow cake may climb up which would necessitate the opening of the   mothballed Kayelekera Uranium Mine, which is so far Malawi’s largest mining investment.

Dual listed Paladin Energy, which holds mineral rights for the Kayelekera area, put the mine on care and maintenance in 2014 following the slump in the price of the yellow cake in the aftermath of the Fukushima Nuclear Disaster in Japan, which resulted in the closure of several nuclear plants in Asia.

But Paladin says in its Quarterly Activities Report ending December 2016 that uranium spot prices improved in December in the aftermath of the US election that saw the pro-nuclear Trump attaining leadership of the world’s super power.

Says CEO for the ASX and TSX listed group, Alexander Molyneux in the report:

Uranium spot prices increased in late December 2016, and following KazAtomProm’s  announcement of a 10% cut in planned 2017 uranium production, improved further in early January 2017. Spot material traded as high as 25.50/lb on the day of the KazAtomProm announcement and despite falling back a little, the spot price currently stands at 22.50/lb.

The election of Donald Trump to the US presidency is anticipated to be positive for nuclear power and the approval of the Future Energy Jobs Bill in Illinois in December 2016 will allow Exelon’s Clinton and Quad Cities Nuclear Power Plants to continue operating.

He says in Europe there is also good market news on the nuclear front as in the UK, January saw the award of further contracts for the construction of the Hinkley Point C Nuclear Power Plant and French contractor Buoyguues SA will work with UK builder Laing o’Rourke on a US$1.8-billion contract to construct the building that will house the two reactors.

In France, EdF anticipates French nuclear availability to return to normal levels in early 2017 as 11 out of 12 reactors offline for safety evaluation are expected to return to service,

says Molyneux.

In Japan, where pessimism was reportedly very high against nuclear energy after the Fukushima Disaster, there is also encouraging news for the industry as Kyshu’s Sendai 1 was returned to service in December 2016 after completing its first periodic inspection since restart in August 2015. Sendai 2 was taken out of service for periodic inspection in December and is expected to be back online in late February 2017.

Japan’s Nuclear Regulation Authority cleared Kyshu’s Genkai 1 and 2 reactors and approved a life extension for Kansai’s Mihama 3 in late 2016.

The Genkai reactors are targeted to return to service during 2017,

he says.

Meanwhile, Paladin is continuing with uranium exploration work in its licence area close to its Kayelekera Uranium mine in Karonga, while keeping the mine on care and   maintenance in expectation of the rise in the price of the energy mineral which would propel the firm to restart production.

The ASX and TSX listed miner says that it is continuing with in-house processing of regional geophysical data (radiometrics, magnetic and gravity) which it obtained from the Government of Malawi in order to identify additional exploration targets within the current tenement package.

Malawi’s Geological Survey Department obtained the updated data from the airborne geophysical data which it executed with funding from the World Bank and European Union through the Mining Governance and Growth Support Project (MGGSP).

Paladin says while awaiting confirmation of the likely expenditure commitment on the two most recently granted tenements, the company is continuing to undertake localized ground surveys and confirmation checks on targets analysed during prospectivity analysis.

To date, no significant mineralization has been identified,

says Molyneux.

Following the Fukushima Disaster, the spot price of the yellow cake dropped from US$72 to US$35 per pound.

Market analysts say Kayelekera needs a break-even price of US$58 per pound to reopen.

Kayelekera begun production in 2009 and in 2013, revenues from the mine contributed 2.6% to gross domestic product.

 

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The article above was initially published in Malawi’s Mining & Trade Review Issue Number 46 that is circulating this February 2017.

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.