Highlights:

• Sector fundamentals remain positive in the mid and long term.

…..download & read the entire 25 page .pdf report HERE which includes the following topics below,  or continue reading the more detailed Overview beginning with Equity Market Performance:

• Reserves, Resources and Historic Mineralisation
• Valuation and Performance Data
• Uranium Price Fundamentals
• Selected Uranium Sector Performance Charts

Exploration, Development and Production Companies

• Aura Energy Limited
• Black Range Minerals Limited
• Energy Resources of Australia Limited
• [Laramide Resources Limited
• Paladin Energy Limited
• Peninsula Energy Limited
• Toro Energy Limited

Equity market performance

The Merrill Lynch Uranium Equity Index (a global basket of uranium equities) is up 2% in the past month and 12% in the past 3 months, broadly in line with global equity market performance. We expect neutral uranium equity market performance over the next 6 months with downside risk to surplus utility uranium disposals and uncertainty around the anticipated release of the Japanese energy policy to 2030.

In the past month, ERA is down 8% and PDN is up 2%. Paladin reported record production for FY2012 (6.9mlbs U3O8, +21% yoy), and is continuing to make good progress on operational cost reductions at LHM and KM and strengthening its balance sheet, though overall performance remains leveraged to the low uranium price.

 Uranium price and market outlook

The spot uranium price is US$48.00/lb (10 Sep), down US$2.75/lb from US$50.75/lb in June, having breached the US$50/lb support level in July. Price weakness is resulting from the protracted delay in Japanese reactor restarts with 48 of the 50 operable reactors offline nearly 18 months after the Fukushima accident. These offline reactors account for estimated foregone uranium demand of around 18mlbspa, equivalent to around 11% of 2011 global demand (164mlbs U3O8).

Japan restarted the first 2 nuclear reactors in July 2012 (one on July 1, the other July 24). Despite the initial restarts, the spot price is expected to remain under pressure into 2013, reflecting the ongoing impact of reactor shutdowns and closures in Japan and Germany with potential utility surplus dispositions. The spot market is also impacted by Japanese renegotiation of ongoing delivery contracts for surplus supply.

 Additional reactor restarts are expected to occur over a 2 year timeframe – from 2012 to 2014. Market expectations are for 10 to 15 reactors to restart by late 2013 comprising the newest reactors in the most secure locations. Restarts are slower than initially expected, in part reflecting an increasingly vocal domestic opposition to nuclear power in Japan.

Partially offsetting the impact of reduced uranium demand from Japan and Germany has been Chinese inventory build where 26 reactors are due to enter operation by 2015.

The long term contract uranium price is US$60.25/lb (August 31) a modest pullback from US$61.25/lb (May-July), and has increased from a recent low of US$60/lb in Feb-Mar ‘12.Market participants suggest the August price pullback reflects slow seasonal summer trading. Nonetheless, it is surprising given the significant project deferrals and delays recently announced accounting for 40m-45mlbspa U3 O8  and which support potential for market tightness midterm, viz: Olympic Dam, Kintyre and Yeelirrie.

Strong growth in nuclear reactors is expected to continue, particularly in Asia, post Fukushima, with Chinese expansion expected to continue to lead the pack. China’s official installed nuclear capacity projections are 70-80 GWe by 2020, 200 GWe by 2030 and 400-500 GWe by 2050. This compares with a 12 GWe capacity today (15 reactors).

Demand for uranium is expected to increase from around 164mlbspa U3 O8  in 2011 to 226mlbspa by 2020 and 280mlbspa by 2030 (WNA).

As at 1 September 2012, there were 483 nuclear power reactors planned or proposed globally; up 1 unit from March 2011 (pre Fukushima). 171 units are planned or proposed in China, 56 in India, 41 in Russia, 26 in the USA, and 13 in Ukraine. Globally, 65 reactors are currently under construction and over 80 new reactors are expected to be commissioned by 2018.

There is potential for a supply gap to open up in the uranium market midterm due to declining supply from existing mines, deferral of new mining projects, the anticipated reduction in secondary supply with the termination of HEU at the end of 2013, and ongoing demand growth.

Kazakhstan production growth:  Kazakhstan affirmed in July that it intends to lift uranium production by around 15mlbspa to 65mlbspa U3 O8  by 2015, up 28% over 2011 production (50.6mlbs). Reported production 2Q12 was 13.1mlbs, up 9% over 1Q12. Kazak production in 2012 is expected to reach 55mlbs (+9% yoy). The 2015 production target is contrary to earlier official Kazak statements that production would remain capped at ~50mlbspa till market conditions improved.

…..download & read the entire 25 page .pdf report HERE which includes:

• Reserves, Resources and Historic Mineralisation
• Valuation and Performance Data
• Uranium Price Fundamentals
• Selected Uranium Sector Performance Charts

Exploration, Development and Production Companies

• Aura Energy Limited
• Black Range Minerals Limited
• Energy Resources of Australia Limited
• [Laramide Resources Limited
• Paladin Energy Limited
• Peninsula Energy Limited
• Toro Energy Limited