The scramble for uranium to supply a future breed of nuclear reactors has led to a $5bn (£2.6bn) merger of two of the sector's biggest mining companies, Uranium One and UrAsia Energy, which is listed in London.
Neal Froneman, chief executive of Uranium One and prospective boss of the Canadian-based combined group, said he expected to see the price of uranium rise from $75 a pound to over $100 by the middle of this year.
"For the next five years there will be a significant constraint on supply," he added.
A new report from accountant Ernst & Young showed uranium represents 10% of its mining index compared with 1% only 12 months earlier, underlining the way mining companies in this part of the minerals world have been rushing to raise money on London's junior stock market, Aim.
Shares in Uranium One and UrAsia raced forward by more than 10% as analysts saw the two firms giving themselves a stronger position in a fast-consolidating sector.
BHP spent more than $7bn in 2005 taking control of WMC Resources, which controls Olympic Dam in South Australia, the biggest uranium mine in the world.
Uranium One expects to complete its acquisition of UrAsia by May by offering its shareholders 0.45 shares in Uranium One for each share in UrAsia. The two firms together will have more than 7m lbs of annual production from five operations.
Mr Froneman said they would benefit from being the only big uranium miner to have production in each of the five biggest resource areas: Kazakhstan, South Africa, Australia, Canada and the US.
"We will have one of the lowest production costs, which amounts to between $10 and $12 per pound," he added.
Some of the uranium is supplied to European customers but the company declined to name them.
British Energy, one of the nuclear power utilities that needs to buy uranium, said recently that its land could be used for building a new generation of plants in Britain following a green light to the industry in the government's energy review.
There has also been speculation the state could be about to offload its 65% stake in the company through a share sale.
British Energy, which has been dogged by failures in its ageing stations, will be asked to clarify the situation when it reports third-quarter financial results tomorrow.
Neal Froneman, chief executive of Uranium One and prospective boss of the Canadian-based combined group, said he expected to see the price of uranium rise from $75 a pound to over $100 by the middle of this year.
"For the next five years there will be a significant constraint on supply," he added.
A new report from accountant Ernst & Young showed uranium represents 10% of its mining index compared with 1% only 12 months earlier, underlining the way mining companies in this part of the minerals world have been rushing to raise money on London's junior stock market, Aim.
Shares in Uranium One and UrAsia raced forward by more than 10% as analysts saw the two firms giving themselves a stronger position in a fast-consolidating sector.
BHP spent more than $7bn in 2005 taking control of WMC Resources, which controls Olympic Dam in South Australia, the biggest uranium mine in the world.
Uranium One expects to complete its acquisition of UrAsia by May by offering its shareholders 0.45 shares in Uranium One for each share in UrAsia. The two firms together will have more than 7m lbs of annual production from five operations.
Mr Froneman said they would benefit from being the only big uranium miner to have production in each of the five biggest resource areas: Kazakhstan, South Africa, Australia, Canada and the US.
"We will have one of the lowest production costs, which amounts to between $10 and $12 per pound," he added.
Some of the uranium is supplied to European customers but the company declined to name them.
British Energy, one of the nuclear power utilities that needs to buy uranium, said recently that its land could be used for building a new generation of plants in Britain following a green light to the industry in the government's energy review.
There has also been speculation the state could be about to offload its 65% stake in the company through a share sale.
British Energy, which has been dogged by failures in its ageing stations, will be asked to clarify the situation when it reports third-quarter financial results tomorrow.
Source: The Guardian
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