(MENAFN- Baystreet.ca)
There was a time when the U.S. was a uranium-producing force, leading the world for nearly three decades up to 1980. In the last half-century, low prices for uranium have caused the industry to shrivel up even though, at 55 million pounds annually, the country consumes one-quarter of global supply.
Trade tensions, increasing uranium consumption in Asia, leading mines being put on maintenance to bolster prices and a U.S. presidential mandate to produce critical metals domestically have investment and interest in American uranium starting to gain momentum as prices climb higher.
Uranium demand from China is surging as the country spends aggressively on constructing new nuclear reactors as a clean energy source to reduce its massive levels of air pollution. The country has just over 40 reactors running currently, with plans to build about 180 more in the coming years.
That will likely make China the top uranium consumer worldwide, considering the U.S. currently holds the top spot with 99 reactors in operation. That said, demand in the U.S. is also staring at an upswing, with applications for 20 new nuclear reactors awaiting approval from the U.S. Commerce Department.
Production cuts and a potential future supply imbalance has helped stabilize and raise prices for uranium, which had plunged from $73 U.S. per pound in February 2011 to just $18 per pound last December. At the end of November, prices had recovered to $29 U.S. per pound, perhaps signaling the downtrend has found its bottom.
This has created a favorable environment for new producers to emerge as leading uranium players in the U.S., including Anfield Energy (TSX-Venture:AEC) (OTCQB:ANLDF), a company that arguably could become one of the U.S.'s top uranium producers in the coming years.
Anfield has built a massive position of uranium properties in the Western U.S., with 25 in-situ resource (ISR) uranium projects in Wyoming, of which three already have National Instrument-compliant resource reports completed. The flagship property is the Charlie Project, acquired from Cotter Corp. earlier this year.
Historic data and current resource estimates show Anfield properties containing more than 30 million pounds of uranium. Even at $25 U.S. per pound, that's over three quarters of a billion dollars in resources from a company with a market capitalization under $10 million U.S.
The Charlie project alone was 4.5 million pounds of eU3O8 Indicated and Inferred resource. U3O8 stands for triuranium octoxide, a compound of uranium and popular form of "yellowcake" refined and used in nuclear reactors, amongst other things.
Anfield also has what only two others in the country have: a licensed, permitted and constructed conventional mill for uranium. Uranium One, a key strategic partner of Anfield, paid over $100 million U.S. for the Shootaring mill in Utah and a handful of U.S. uranium projects in 2007, ultimately selling the assets to Anfield in 2015 in a cash-and-stock transaction.
Anfield management says that, following refurbishment, the mill can become only the second conventional mill producing uranium in the U.S., putting it on par with the White Mesa Mill in Utah of Energy Fuels Inc. (NYSE American:UUUU) (TSX:EFR). Energy Fuels has a market cap near $400 million.
Estimates are that the U.S. will produce just 2% of its uranium demand this year, marking the lowest level since before the Cold War. The bulk of the uranium imports (~42%) come from Russia and countries it subsidizes, something U.S. President Donald Trump and the U.S. Congress may not allow to continue as a matter of national security. It has long been argued that Russia and China strategically flood the market with cheap commodities in order to monopolize it and keep the U.S. from competing.
With state-owned China National Uranium Corp. buying the Rossing mine in Namibia, one of the biggest uranium mines in the world, from Rio Tinto, this tactic will likely be employed again, putting the U.S. in the position that it must curtail imports and support domestic production to scuttle Beijing's game.
Companies like Anfield and Energy Fuels are integral parts of the energy solution and with the support of investors and regulators should have plenty of room to grow long legs in the future as domestic uranium comes back en vogue.
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