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Interview Paul Atherley, Managing Direktor of Berkeley Energia (911733, ASX: BKY, London: BKY)

By: Hannes Huster

-- Posted Friday, November 10 2017 | Digg This ArticleDigg It! |

Hannes Huster, Goldreport:

Dear Paul, thank you very much for the opportunity to interview you today as I can imagine lots of questions are coming with the breaking news we saw from Uranium-Producer CAMECO.

What are your thoughts about the production stop and what it means for the uranium market?

Paul Atherley:

We think this could be a really big turning point in the uranium market. Cameco’s suspension of production, the latest in a long line of production cuts at high cost operations, brings the total volume of uranium removed from the market in 2018 to 17 million pounds, about 12% of primary mine supply. This in turn will mean the oversupply of uranium is being brought sharply back into balance.

Cameco’s decision also sends a signal to the buyers of uranium that they need to start re-contracting at higher prices in order to secure supply otherwise key suppliers like Cameco could face closures.

Many uranium mines have only been surviving because of historical long term contracts that were signed with utilities during periods of higher prices. These contracts are now clearly rolling off and the mines are losing cash. Realised prices for Cameco fell from around $45/lb to $35/lb in just one year. As BMO put it this morning: “we would expect the decision to suspend the world’s largest and one of the world’s lowest cost uranium mines to raise security of supply concerns among utilities.”

Hannes Huster:

The last production cut from Kazatomprom led to an increase in the uranium price of around 30-40% at the beginning of the year. Do you think there is potential for a similar reaction here?

Paul Atherley:

Absolutely. It will take time to work through, but Kazatomprom cut around 5-7mlbs of production during 2017 whereas the Cameco suspension means 17mlbs in total is being cut out of the market in 2018 (12mlbs attributable to Cameco).

The nuclear utilities will be watching this very closely and will be considering whether now is the time to re-enter the market in a big way to sign contracts from 2019 onwards where there is significant uncovered requirements in the market.

Hannes Huster:

BERKELEY is very well advanced and your company fulfilled every milestone you predicted. How do you see the production stop of Cameco impacting your business? Is the Uranium-World hungry for low-cost mines like Salamanca?

Paul Atherley:

Whilst supply continues to fall in to the hands of fewer and fewer players and the increase in global demand shows no sign of slowing down we are continuing with construction at the only uranium mine being built in the world today. Our position at the bottom of the cost curve gives us the luxury of continuing towards production in the current depressed market as, even with spot prices around the US$20 mark, we are able to make money

Cameco’s decision, which Rob Chang at Cantor Fitzgerald believes will “spur strength in the spot U3O8 price”, confirms our belief that we should be building a mine at the bottom of the uranium price cycle. Starting sales in 2019 means we will be delivering U3O8 in to a supply/demand deficit that industry experts have called both fundamental and unavoidable.

Hannes Huster:

Thank you very much and all the best for you and your company!

More info about DER GOLDREPORT: www.dergoldreport.de

More info about Berkeley Energia: www.berkeleyenergia.com


-- Posted Friday, November 10 2017 | Digg This ArticleDigg It! |

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