"Supply constraints to boost uranium price, Froneman says" (Source: Mining Weekly)

By: Matthew Hill
Published: 5 Feb 08 - 16:11

TSX- and JSE-listed uranium miner Uranium One CEO Neal Froneman on Tuesday echoed experts' forecasts that the uranium price would continue to increase over the medium term.

While demand for the nuclear fuel was set for strong growth as countries, like China, rolled commissioned more reactors, supply would underpin prices, he said.

"In the next five to ten years, constrained supply will drive the price increases, rather than the increases in demand," Froneman stated.

"I expect the uranium price to continue increasing over the medium term," he said.

While the uranium spot price had plunged in the second-half of 2007 to levels almost half of its June peak of $138/lb, long-term contracts had stabilised at levels around $95/lb.

The spot price was not truly representative of the long-term fundamentals of the radioactive metal, Froneman commented, addressing an audience at the Cape Town Mining Indaba.

On Monday, US consultancy firm Ux Consulting president Jeff Combs also said that the long-term fundamentals for uranium remained strong.

TOP 10 PRODUCER

Meanwhile, Uranium One had moved into the world's top ten uranium producers in 2007, Froneman said.

"Our resource base is only second to Cameco," he added.

However, it was the firm's business to turn these resources to account, and Froneman said the company was doing just that.

Uranium One was doing two studies at its flagship Dominion Reefs Uranium Mine (Drum) near Klerksdorp, hoping to increase the scope of the project.

By the end of the year, it expected to complete a feasibility study on a possible expansion of the current mine, and it was also starting drilling on possible extension areas to the operation.

"The orebody needs to be expanded," Froneman stated, adding that the focus was to expand the operation along strike, not at depth.

The mine's expansion could see the mill increasing in capacity to as much as 400 t/m.

Uranium One also was already producing at its joint venture projects in Kazakhstan, and was building Australia's fourth uranium mine, the Honeymoon project, which it wholly owned.

Although this was a smaller mine, Froneman said he saw it as a "springboard" into the bean-shaped country.