The uranium spot price is thinly traded and probably manipulated and does not reflect the true intrinsic value of uranium, said Mike Young CEO of Vimy Resources (ASX: VMY).
The Uranium Spot Price Is Not Real - CEO
David Einhorn's Greenlight Capital returned -2.9% in the second quarter of 2021 compared to 8.5% for the S&P 500. According to a copy of the fund's letter, which ValueWalk has reviewed, longs contributed 5.2% in the quarter while short positions detracted 4.6%. Q2 2021 hedge fund letters, conferences and more Macro positions detracted 3.3% from Read More
If day two of the news that Mining and Exploration Conference here in beautiful New South Stream. Joining me now Mike Young CEO of the new resources. Mike welcome to the show. Good morning thank you for having me. So your company is perhaps sitting on one of Australia's largest uranium deposits correct. So let's talk a little bit about your company before we really dive into uranium prices and where they're headed and what not. Tell us a little bit about the project here because Savimbi is sitting on what's called the molten rock project which is 240 ks west of Kalgoorlie in Western Australia which is a major mining centre. The deposit was discovered by the Japanese in the 1970s. They worked on it through the 80s and 90s and left Australia for various reasons. The company was listed in 2008. I came on board in 2013. We recapitalized it and then really started to look at the deposit. We went through a feasibility study feasibility study. We now have all of our permits. We have all of our Cheniere and we're basically mine ready. So how much you mean you believe is there. So there's 90 million pounds we used pounds for uranium because that's how we sell it 90 million pounds is about 42 million in reserves and we think that's more of the resource we'll convert the reserves and so there's about a 15 year mine life at about three and a half million pounds a year. When do you expect to be in production.
So our plan is to really get contracting done over the next say nine to 12 months and once the contracts are done and we have a debt locked away we would start construction so I'd probably be around early to mid 2021. So you know I know investors get frustrated with the gold price but the uranium prices in a separate category you know stubbornly not moving from around the 2023 dollar a pound mark here. What's going to take for some offtake. So the interesting thing about uranium price is that the spot price that you see published every day is actually an arbitrage market that's thinly traded and probably manipulated and it's not the real reflection of of the sales that are going on around the world. So most uranium is sold between the producer and utility in a private treaty or a private contract and that's never reported. So the actual spot market is not a clearing house market like the LME or the gold spot price. Why do you believe the real price. So we think well that's an interesting question because no contracts are being written right now. So in 2017 five contracts are written in the US and since the beginning of 2008 nobody's written any contracts and so there's this sort of is no man's zone or this hiatus of contracting and what that means at some point when the utilities start coming back into the market to write contracts I think those are going to be in the 50s and 60s. You mentioned manipulation you know which entity do you believe are behind the manipulation that you could say that but they're not be in trouble.
Basically the way the spot price works is there's traders who are arbitrage players who basically tried to buy uranium as low as possible and then what they do is they amass enough uranium so that they literally compete with the miners so then they actually pitch to the utilities for for contracts and so for that to work for them it has to be an arbitrage. Now what you'll find is at the end of every month when prices seemed to be settled the price will come down we're in the middle of the month. Right now the uranium prices up like guarantee I'll bet you a sign that by the end of the month the price will go down and it'll go up again Endres. So there's obviously things going on behind the scenes because it's not a clearing house because the market's not a clearing house market. Basically people don't make the price what they want. What about producers that play with the supply and scale back on supply to try and prop up the price. Yes you're talking about Cameco has at improv around how the big ones the big three right control 60 percent of the world's uranium.