Alex Molyneux: Uranium Will Continue to Climb Higher
Alex Molyneux’s career began with a degree in economics and then he entered into investment banking and then the mining business. He discusses his experience working with Robert Friedland, Ivanhoe and the restructuring of Paladin Energy. He prefers commodities with a unique supply-demand model or those that will benefit significantly from technology changes.
Uranium is an attractive commodity that utilizes long-term contracts; however, that can result in pricing that doesn’t reflect the underlying product. Lately, uranium has been rising from mine closures, and due to the way, KazAtomProm and Cameco operate.
The uranium market still has a while before it normalizes as plenty of supply and sellers remain at the $29 level. Cameco has started buying from the thinly traded open market, but they have yet to push the bid up. At some point, they will need to increase their rate of purchases.
The uranium market is transitioning to shorter contracts and utilities will only be able to stay out off the market for a little while longer. $50 is needed to maintain existing supply levels while much higher prices will be necessary for any increases in market demand.
Lead is interesting because it is the most traditional battery metal and it has been overlooked. Also, new zinc mines tend to have less lead production as a by-product, and thus it remains in a severe supply deficit.
Time Stamp References:
0:45 – Alex’s career in finance and mining.
1:50 – His opportunity from Robert Friedland.
4:30 – Restructuring Paladin Energy.
6:50 – His uranium fund.
8:50 – Outlook for uranium.
11:00 – Cameco’s inventory levels and uranium supply.
14:00 – KazAtomProm’ s cutbacks.
15:45 – Uranium supply and potential deficits.
17:30 – Supply contract structures.
22:00 – Shorter contracts.
23:30 – Utilities have to renew soon.
25:00 – $50 Uranium need to maintain supply.
28:00 – His focus on particular commodities.
29:00 – Why lead may be a good opportunity.
30:10 – Galena Mining Limited
Talking Points From This Week’s Episode
• Long-term supply contracts for uranium can distort the price.
• The uranium spot market is still thinly traded.
• Regulatory uncertainty by governments has made utilities cautious.
• Production is going to have to increase in the coming years, and it will lag demand.
• Supply of lead is dwindling at new zinc mines produce less of it as a by-product.
Alexander Molyneux is CEO of Galena Mining Limited. He is a metals and mining industry executive and financier with 20-years industry experience. Mr. Molyneux was CEO of Paladin Energy Limited (ASX: PDN) (2015 – 2018) one of the world’s largest uranium companies, where he optimized its operating business and completed a US$700M successful recapitalization of the company and a re-listing on the ASX. Well known for his breadth of experience in the mining industry and serves on a number of public company boards, including: Ivanhoe Mines Group and Ivanhoe Energy, Argosy Minerals Ltd. (ASX: AGY), Metalla Royalty & Streaming Ltd. (TSX-V: MTA), Tempus Resources Ltd. (ASX: TMR) and Azarga Metals Corp. (TSX-V: AZR).