Spot uranium prices are at levels not seen since January 2006. Amid the credit crisis many utilities are holding back on purchases.
TradeTech’s Uranium Spot Price Indicator dropped $4.00 this week to $47.00 per pound U3O8.
JOHANNESBURG (miningweekly.com) – Uranium-miner Uranium One has temporarily suspended mine operations at its troubled Dominion project, near Klerksdorp, in South Africa, after it was unable to reach an agreement with striking workers.
The miner said in a statement to shareholders on Monday that the move follows labour disruptions last week, which had culminated in a general illegal strike.
Most of the labour force at Dominion had refused to return to work, despite a court order, issued by the Labour Court of South Africa on October 9, which prohibited the continuation of the illegal strike.
Subsequently, Uranium One had, on Friday, started issuing termination notices to the striking workers at Dominion.
"In the meantime, the company is actively exploring all options available to it at Dominion," the company said in a statement to shareholders.
On October 8, the National Union of Mineworkers (NUM) had reported that workers were failing to go to work at the project, as they were being threatened by a group of armed men.
The group of armed men were recently dismissed by the mine and had started calling themselves the "crisis committee", said the NUM.
Shares of uranium producer Cameco (NYSE CCJ) are 50% off their highs and are now trading below net asset value.
Desjardins Securities analyst John Redstone:
"Previous valuations accorded by the market used earnings with a high multiple based on the anticipation of a sharp increase in the price of uranium, he said in a note to clients. "Since then, however, the price has dropped considerably to US$53 from a high of US$146. It is highly debatable whether such high multiples will be applied anymore."
Mr. Redstone said he still believes Cameco stock can rise to its net asset value, adjusting his price target from $34.20 to $29.55. Reflecting the current share price, he also upgraded his recommendation from "hold" to "buy."
