Why Invest in Forsys
Forsys Metals Corp is an innovative uranium development Company, with a dynamic management team with strong African mining experience, focused on creating shareholder value by developing uranium assets in Namibia, Africa. The Company’s flagship Norasa Uranium Project is 100% owned, permitted and has a large NI 43-101 Resource and Reserve. Norasa is one of the world’s premier undeveloped uranium projects, and is only the third Mining Licence to be granted within the last few decades in Namibia.
The Norasa has NI 43-101 compliant Reserves of 90.7 Mlbs U3O8 supporting a 15 year mine life included in Measured and Indicated Resources of 115.0 Mlbs U3O8 with a further 11.0 Mlbs inferred U3O8. Power, water and transport resources are available and the Namibian government has signalled a strong commitment to ensuring the success of Norasa.
Uranium Suuply and Demand
There are 454 nuclear power plants operating worldwide and at least 335 more plants will be added by 2030, with 55 nuclear reactors currently under construction. The low operating cost of nuclear power generation and the increasing concern for the environment and climate change are driving a nuclear renaissance.
Existing nuclear reactors consume around 70,000 tons of uranium per year, of which, around 60,000 is satisfied by global mine production with the remainder coming from secondary sources, including Russia’s disarmed nuclear stocks, excess commercial inventories, reprocessing of spent fuel and inventories held by governments. The International Atomic Energy Agency (IAEA) estimates that global uranium demand will rise to 140,000 tonnes in 2030 as a result of the construction of new nuclear power plants. The established producers will not be able to completely cover this increase in demand.
On April 23, 2020, the United States Nuclear Fuel Working Group released its report, Restoring America’s Competitive Nuclear Advantage which proposes, among other items, the establishment of a new uranium reserve through US government purchases of 17,000,000 to 19,000,000 pounds of uranium, beginning in 2020, from domestic producers. The US government's 2021 budget request included US$150,000,000 for this initiative.
Also in April 2020, as a result of government imposed measures to prevent the spread of COVID-19, Kazatomprom cut its production forecast by up to 4,000 tonnes, Cameco suspended operations at Cigar Lake and CNNC Rössing Uranium suspended operations at Rössing. To date, COVID-19 has affected 50% of global uranium production.
Most of the countries that use nuclear-generated electricity do not have sufficient domestic uranium supply to fuel their reactors and therefore they secure the majority of their required uranium supply by entering into medium-term and long-term contracts with foreign uranium producers and other suppliers. Remaining supplies are secured through spot purchases of uranium. It is estimated that about 90% of all long-term supply contracts between uranium producers and energy generating companies expire by the end of 2020
The spot price of uranium can be more volatile than the long-term contract price of uranium; noting that the majority of uranium sales occur under long-term contracts. As producers suspended production and purchased uranium in order to meet contractual obligations, there has been a rally in uranium prices. The spot price for uranium on July 31, 2020 was US$32.80/lb compared with US$24.93/lb on December 31, 2019. There is substantial industry commentary that supports a continued improvement in the spot price.
The long-term uranium price on July 31, 2020 was US$35.50/lb, compared to US$32.50/lb on December 31, 2019. Long-term prices are driven more by production costs and future supply-demand forecasts rather than current customer inventory levels.
As a result of the impending supply gap as a result of the increase in the number of nuclear power plants, analysts are predicting a long-term uranium price of US$50-60/lb for contract prices and the consensus long-term price from 2024 is US$52.50/lb.
Note: The Company calculates industry average prices from the month-end prices published by UxC and TradeTech.