Published On: December 11th, 2023
Figure 1: Uranium Prices Hit Highest Levels Since 2011
The continuous dramatic upward trend in uranium prices has been the by-product of tight supply in the market over the past two to three years. Tight supply is driven by mine closures due to the lower prices post-Fukushima, low inventories during Covid and the United States prohibition of purchasing uranium from Russia due to sanctions.
Russia dominates the global uranium enrichment services market, accounting for 14% of uranium concentrates, 27% of conversion and 39% of enrichment worldwide.
Market sentiment is very positive, and uranium prices are increasing due to the expanded imbalanced spread estimation of future demand supply. Recently, weekly uranium prices touched ~ USD 81 per pound, the highest since January 2008, according to UxC.
South Australian explorer Marmota Limited (ASX: MEU) (“Marmota” or “the Company”) discovered the Junction Dam Uranium Project and then paused exploration following Fukushima.
The Company then shifted their focus to making new gold discoveries at Aurora Tank, where they yielded multiple bonanza grades of over 100 g/t Au, including Marmota’s new best-ever gold result with 217 g/t gold over 1 m among a string of new high-grade gold extensions.
Marmota owns 100% of the uranium rights in its flagship uranium project, Junction Dam, where the Company had already spent AUD 8 million developing the existing uranium JORC resource by the end of 2014.
The spike in uranium prices is a golden opportunity for the Company. Marmota Limited decided to restart the exploration activities with a prime focus on the Junction Dam tenement to substantially grow the Company’s uranium resource.
The Saffron deposit of the Junction Dam tenement already has JORC resources of 5.4 million pounds with an average grade of 557 ppm U3O8 and an exploration target of 22 – 33 million pounds of U3O8 at 400 to 700 ppm U3O8. The Boss (ASX: BOE) Honeymoon Uranium Mine (36 million pounds @ 660 ppm U3O8) lies on the same palaeochannel and on the immediately adjacent tenement. Boss has a market capitalisation of approximately AUD$1.5 billion, which is evidence of the uranium value in the Yaramba Palaeochannel.
Engagement of Uranium Expert Mr Mark Couzens
The Company has engaged the uranium expert Mr Mark Couzens (In-depth Geological Services) to conduct the technical analysis of stratigraphy and mineralisation of the Junction Dam Uranium Deposit and to design the re-start drilling program.
“The Junction Dam project is one of the most exciting uranium projects I have worked on in Australia. There are nearly 200 holes drilled by Marmota to date, which enables a very detailed stratigraphic review to be carried out on the project. Work will commence on identifying high-grade uranium bearing palaeochannels through the existing deposits and identifying high potential targets for high-grade extensions where minimal drilling has been completed.” said Mr Mark Couzens.
Identification of New High-Priority Uranium Targets and Expansion of Review
During recent exploration activities, Marmota identified new high-priority drill targets for additional uranium mineralisation at Junction Dam Uranium Deposit. These targets are the first outcome of a new stratigraphic and mineralisation review with the help of recently engaged uranium specialist Mr Mark Couzens and the geological team.
Marmota has completed the first review stage at the Saffron deposit of the Junction Dam Uranium Project. Four new high-priority drill targets have been identified in the north, east and south of Saffron. Stratigraphic modelling, electromagnetic images, and gravity images support the geology’s favourable environment for uranium mineralisation.
Figure 2: Four New Exploration Targets Identified Near the Saffron Resource Area
Dr Colin Rose, Marmota’s chairman, said: “I am delighted with the remarkable speed of progress of the stratigraphic review. The review has already shown the enormous potential for Junction Dam to develop and grow as one of South Australia’s premium uranium deposits in the premier uranium jurisdiction of Australia.”
The review will next expand to the Bridget (to the north) and Yolanda (to the south) prospects.
The Junction Dam tenement is strategically located in the tier 1 jurisdiction of the same Yaramba Palaeochannel as Boss Energy’s Honeymoon Uranium Mine. The Junction Dam tenement is located immediately adjacent to the Honeymoon mine, a brownfield uranium mine that is about to restart production of yellow cake (U3O8).
The feasibility study of Boss Energy’s Honeymoon Project explained that the company needs a large volume of resources for economies of scale for low-cost production and to extend the mine life developing of satellite resources. Boss has recently started drilling at Jasons, adjacent to the MEU tenement boundary.
Factors Behind Sustaining Uranium Prices and Marmota Being Part of Momentum
The World Nuclear Association (WNA) reports show that global nuclear power capacities are growing faster in the forward-looking period to 2040.
The world is seeking clean and reliable electricity with a growing focus on electrification and decarbonisation. According to the IEA World Energy Outlook, electricity demand is predicted to increase by 52% from 2020 to 2040 and 75% from 2020 to 2050. Industry leaders believe it is a transformative tailwind for the nuclear power industry from a demand and supply perspective.
Figure 4: Growth in Electricity Generation
According to the International Atomic Energy Agency, there are 437 working nuclear reactors and 58 are under construction. Heavy construction in the nuclear segment will boost the unprecedented future demand amid disrupted supply times.
Figure 5: Nuclear Reactor Currently Under Construction
The unrest in Kazakhstan raised concerns about the 40% global supply from Kazakh mines. The Russian invasion of Ukraine in late February 2022 is another turning point for the industry. That squeezes the uranium supply chain and eventually pumps commodity prices.
Marmota is progressing swiftly at its Junction Dam Uranium Project. Their geological team already started the drilling target identification reviews. They have the advantage of being located adjacent to the already well-established operational Honeymoon Uranium Mine with a processing plant, especially when the latter wants to attain economies of scale from satellite resources to reduce costs.
Set targets from the Company’s technical and geological experts team show that the various deposit prospects (Saffron, Bridget and Yolanda) at Junction Dam Uranium Project have significant potential to increase the size of JORC resources significantly.
The Company is well aligned to benefit from the momentum in uranium prices. Marmota has zero debt. It has an existing uranium resources, right next door to one of only 4 permitted plants in Australia. More than a dozen companies have made unsolicited approaches to Marmota to acquire the rights to Junction Dam uranium from Marmota.
As of December 7th, 2023, Marmota Limited’s share price stood at AUD 0.044 per share, with a 52-week range of AUD 0.027 to AUD 0.054. The Company has a current market capitalisation of around AUD 44 million.
The Content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations, and video (Content), is a service of COLITCO LLP and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is not a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Colitco LLP is neither licensed nor qualified to provide investment advice through this platform. Users should inquire about any investments, and Colitco LLP strongly suggests the users seek advice from a financial adviser, stockbroker, or other professional (including taxation and legal advice), as necessary. Colitco, at this moment, disclaims any liabilities to any user for any direct, indirect, implied, punitive, special, incidental, or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Colitco LLP. Some images/music used on this website are copyrighted to their respective owner(s). Colitco LLP does not claim ownership of any pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions, or are believed to be in the public domain. We have used reasonable efforts to accredit the head wherever it was indicated as or found to be necessary.
