THE election of the pro-nuclear Liberal Democratic Party in Japan has prompted forecasts of improved market conditions for uranium producers and a boost in stock prices.
The LDP is expected to roll out a faster-than-planned schedule for restarting nuclear reactors shut down following the Fukushima accident in March 2011.
According to analysts, it could take as little as 12 months to restart the majority of the reactors; much faster than indications given by the (then) ruling centre-left Democratic Party of Japan. As a result they say, global demand could rise by up to 11 per cent.
Interest in Western Australian uranium producers has surged this week as a result. Stock in Paladin Energy, which was last month attempting to explain a slump in its share price, increased 12.44 per cent in one day of trading.
Resource Capital Research has valued the company’s share price at $1.23, taking the election result into account.
That valuation is almost 40 per cent above what Paladin shares were worth at the start of December, and close to 60 per cent higher than 77 cents reached in mid-November.
The company has been hit by a fall in the uranium spot price to a two-year low of SUS40.75/lb in November.
RCR’s December quarter review of the sector predicted significant improvement, with prices reaching $US70-80/pound in the mid-term as an incentive to fill the supply gap.
Other WA companies in line to reap the benefits include Aura Energy, Black Range Energy, and Peninsula Energy. Share prices for all rallied when the Japanese election result was announced last Tuesday.
West-Perth based Toro Energy was also in the mix for an improved performance, but had expectations tempered when the federal government announced a delay in its environmental ruling on Toro’s Wiluna project.
The state government gave the project environmental approval at the start of October, but the federal government has delayed its final decision until March so more information can be gathered.
Consequently, while Toro’s peers were celebrating share prices rallies amid market optimism, its stock price fell.
Managing director Greg Hall said the company had been advised on more than one occasion that no further information was required.
“Toro ... will seek meetings with the minister ... to clarify the nature of, and reasons for the additional information sought,” Mr Hall said in a statement.