Uranium Energy Corp., which mines and processes the nuclear fuel in Texas, is cutting production as prices trade at a seven-year low.
Uranium Energy will reduce output at its Palangana mine so the project just breaks even, the Vancouver-based company said in a statement today. The savings will be used to develop the company’s larger Goliad and Burke Hollow projects.
Uranium spot prices have fallen 22 percent this year amid delays in the restart of nuclear plants in Japan following the March 2011 earthquake and tsunami. Last month, Cameco Corp., the world’s third-largest uranium producer, dropped its projected sales volume from its German trading unit Nukem Energy GmbH to 8 million to 10 million from 9 million to 11 million pounds.
“This uranium price is tied to what’s going on in Japan,” said David Talbot, an analyst for Dundee Securities Corp. in Toronto. Once Japanese regulators approve more plant restarts, it will signal to the world to begin buying uranium again and the price will rebound, he said.
The shift at Uranium Energy will put the company in a better position to benefit when higher uranium prices return, Chief Executive Officer Amir Adnani said in the statement. Uranium Energy is also assessing its exploration projects and looking at both possible acquisitions and selling off some assets.
The shares fell 3.7 percent to $2.36 at the close in New York.