Uranium projects should be evaluated first and foremost according to its grade and should be the overarching concern for those interested in investing in uranium.

This is according to Venmyn Deloitte MD Andy Clay, who notes that with so many uranium projects having closed or performed poorly, one needs to ensure that the economic fundamentals, and most importantly the required grade, are in place before starting any uranium venture.

In a previous higher-price commodity environment vast uranium deposit resources were attractive but, increasingly, investors are being advised to focus more on grade than deposit size as an investment criterion.

[quote]Many countries, including South Africa and Kazakhstan, have vast low-grade deposits. These may have grades that are technically acceptable for power plant usage following processing, but may not provide the project owner with high returns.

“The hunt is on for quality uranium resources,” says Clay, although he observes that the ease of processing is also another criterion that may be important since projects that are mechanically and chemically suitable for mining and processing are likely to also bring down the cost.

“Resources are oversold and, for specialist minerals such as uranium, it is all about grade,” he reiterates.

Uranium can be used in military or civilian applications, with the main use in civilian applications as a fuel source for nuclear power plants.

Uranium industry predictions

Should general industry prediction be correct, uranium prices should slowly start to increase over the next few years as demand for nuclear energy continues to rise.

According to the Nuclear Power Association, mainland China has 30 nuclear power reactors in operation, 24 under construction, and more about to start construction.

“Additional reactors are also being planned to give more than a three-fold increase to it nuclear capacity to at least 58 GWe by 2020-21, then some 150 GWe by 2030, and much more by 2050.”

This alone will naturally lead to an increase in demand and this will be driven further by the lack in new uranium mines and expansions coming on stream thanks to the depressed market prices and resource conditions. The combination of these two factors, as supply dwindles and demand increases, will drive prices higher.

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