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Australian uranium developer Deep Yellow has pumped the brakes on its flagship Tumas project in Namibia, announcing a deferral of the final investment decision (FID) until the clouded global uranium market shows clearer skies. The move, revealed on Tuesday, marks a further delay for the ambitious project, which had already seen its FID pushed back to March of this year due to engineering holdups.
Instead of forging ahead with full-scale development, Deep Yellow will adopt a more cautious, phased approach. This will involve proceeding with early works infrastructure development and detailed engineering, ensuring the project is primed and “shovel ready” when the economic climate improves. However, the construction of the processing plant, which constitutes the lion’s share of the estimated capital expenditure, will be put on ice.
The company reiterated that the critical factor underpinning any FID has always been the prevailing uranium market conditions. Deep Yellow views Tumas as a globally significant, advanced greenfield uranium prospect, but the current market landscape is failing to provide the necessary impetus for such a substantial undertaking.
Despite the delayed decision, investors appeared to take the news in stride, with Deep Yellow’s shares closing Tuesday’s session a notable 4.9% higher, boasting a market capitalization of A$826.7 million. This rebound followed a dip to a 52-week low on Monday, recovering from the recent global market jitters.
John Borshoff, Deep Yellow’s managing director, pulled no punches in his assessment of the market. “We have a situation where the long-term uranium market is essentially broken,” he stated bluntly. He attributed this to over a decade of sluggish activity within the sector, persistently depressed uranium prices, and the reluctance of utility companies to engage in offtake contracting practices that would adequately support the development of new uranium production.
While acknowledging that the Tumas project remains economically viable at current long-term uranium prices, Borshoff argued that these prices fail to reflect or support the immense production capacity required to meet anticipated future demand.
Deep Yellow has been diligently advancing the Tumas project since 2016, successfully delineating a substantial resource of 118 million pounds of uranium oxide (U3O8) at a grade of 255 parts per million. Within this resource lies an estimated ore reserve of 79 million pounds grading 298 ppm U3O8, projected to sustain a lengthy mine life of at least 22 years with an annual uranium production of 3.6 million pounds.
The company’s latest optimization work, conducted over the past three months, has reaffirmed Tumas’s credentials as a robust, long-life project with a post-tax net present value of $577 million and an internal rate of return of 19%. The initial capital expenditure is estimated at $474 million. However, these figures are based on a uranium price of $82.50 per pound, a significant premium over the current uranium futures trading price of around $64 per pound.
Australian uranium developer Deep Yellow has pumped the brakes on its flagship Tumas project in Namibia, announcing a deferral of the final investment decision (FID) until the clouded global uranium market shows clearer skies. The move, revealed on Tuesday, marks a further delay for the ambitious project, which had already seen its FID pushed back to March of this year due to engineering holdups.
Instead of forging ahead with full-scale development, Deep Yellow will adopt a more cautious, phased approach. This will involve proceeding with early works infrastructure development and detailed engineering, ensuring the project is primed and “shovel ready” when the economic climate improves. However, the construction of the processing plant, which constitutes the lion’s share of the estimated capital expenditure, will be put on ice.
The company reiterated that the critical factor underpinning any FID has always been the prevailing uranium market conditions. Deep Yellow views Tumas as a globally significant, advanced greenfield uranium prospect, but the current market landscape is failing to provide the necessary impetus for such a substantial undertaking.
Despite the delayed decision, investors appeared to take the news in stride, with Deep Yellow’s shares closing Tuesday’s session a notable 4.9% higher, boasting a market capitalization of A$826.7 million. This rebound followed a dip to a 52-week low on Monday, recovering from the recent global market jitters.
John Borshoff, Deep Yellow’s managing director, pulled no punches in his assessment of the market. “We have a situation where the long-term uranium market is essentially broken,” he stated bluntly. He attributed this to over a decade of sluggish activity within the sector, persistently depressed uranium prices, and the reluctance of utility companies to engage in offtake contracting practices that would adequately support the development of new uranium production.
While acknowledging that the Tumas project remains economically viable at current long-term uranium prices, Borshoff argued that these prices fail to reflect or support the immense production capacity required to meet anticipated future demand.
Deep Yellow has been diligently advancing the Tumas project since 2016, successfully delineating a substantial resource of 118 million pounds of uranium oxide (U3O8) at a grade of 255 parts per million. Within this resource lies an estimated ore reserve of 79 million pounds grading 298 ppm U3O8, projected to sustain a lengthy mine life of at least 22 years with an annual uranium production of 3.6 million pounds.
The company’s latest optimization work, conducted over the past three months, has reaffirmed Tumas’s credentials as a robust, long-life project with a post-tax net present value of $577 million and an internal rate of return of 19%. The initial capital expenditure is estimated at $474 million. However, these figures are based on a uranium price of $82.50 per pound, a significant premium over the current uranium futures trading price of around $64 per pound.
Deep Yellow’s decision underscores the delicate balancing act facing uranium developers globally. While the long-term outlook for nuclear power and, consequently, uranium demand remains positive, the current market realities are proving to be a significant hurdle for bringing new projects online. The company’s pragmatic approach of preparing Tumas for development while awaiting more favourable market conditions reflects a cautious optimism in a sector still navigating a complex and uncertain future.
‘s decision underscores the delicate balancing act facing uranium developers globally. While the long-term outlook for nuclear power and, consequently, uranium demand remains positive, the current market realities are proving to be a significant hurdle for bringing new projects online. The company’s pragmatic approach of preparing Tumas for development while awaiting more favourable market conditions reflects a cautious optimism in a sector still navigating a complex and uncertain future.
