Around 3% of the primary supply available to the spot market for this year is being shut down. One of the industry's biggest producers, Cameco, is suspending production at its Rabbit Lake uranium mine (Saskatchewan) and placing the facility into 'care and maintenance'. It's also reducing production at McArthur River/Key Lake and at its US uranium operations. This is a direct result of market conditions and while it's bad news for Cameco in the short-term, it's good news both short and long term for the sector as a whole.

Thanks to secondary sources of supply and the cheap, large-scale production coming out of Kazakhstan and the well-below-normal purchasing of utilities world-wide, the overhang of recent years has not yet gone away. It's less than it was but still there nonetheless.

With Cameco's move, it looks like we are entering a phase in the supply and demand cycle that's actually very familiar to me. When I first started in uranium back in the late-90's uranium was on it's knees and had been for some years. With uranium spot prices as low as $7/lb my banking, stock broker and mining friends thought that uranium bulls like myself and Rick Rule were crazy. They saw low prices without end. I saw more reactors being built than production at that time could cope with. Producers finally began cutting back on production and prices started to rise. Then major issues at Cigar Lake and Ranger exacerbated the situation and the spot price ended up over $140/lb.

I'm not saying we are going to end up with that sort of price peak again, though it could absolutely happen given the right circumstances. I am saying that when producers start suspending production at operating mines, at a time when 65 reactors are under construction and hundreds more are either already on order, are planned or have been proposed, then things are looking a lot more interesting in the sector.

Dev Randhawa, CEO of Fission Uranium

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Fission Uranium Corp. issued this content on 28 April 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 29 April 2016 17:46:14 UTC

Original Document: http://www.fissionuranium.com/ceo-corner/index.php?&content_id=263