By: Tomas Ronolski - AllPennyStocks.com News

Monday, July 6, 2015

Uranium prices remain below $40 per ton even though the long-term outlook continues to improve. While major uranium miners remain bullish, diversified miner Rio Tinto (RIO) recently decided to shelve a project in Australia. Rio Tinto believes that at the current price level, expanding the mine is not feasible. Rio’s decision though will lead to tighter supply in the uranium market sooner than anticipated. This will have a positive impact on prices, especially if utilities rush back to the market to sign long-term contracts.

Long-term contracting activity has remained subdued since the Fukushima nuclear power plant disaster. And until there is a pick-up in long-term contracting activity, uranium prices will remain under pressure notwithstanding the bullish long-term outlook.

The potential supply deficit though might prompt utilities to finally enter the market. Several utilities will also see their long-term contracts expire in the next year or two.

With the outlook for uranium prices continuing to improve, miners such as Northern Uranium Corp. (TSX-Venture:UNO) are developing new projects. Based in Kelowna, Canada, UNO is a uranium mining company. Late last week, the company provided a report on its 50% owned North West Manitoba project. The company believes that it can earn up to an 80% interest in the project from CanAlaska Uranium Ltd. (TSX-Venture:CVV).

UNO’s management believes that high grade uranium mineralization can be found within the licenses. The North West Manitoba project is located along the extension of the Mudjatik Wollaston tectonic zone. This zone hosts most of the major uranium deposits within the Athabasca Basin.

UNO said that the bedrock mainly consists of semi-pelite gnesiss, calc-sillicate gneiss and calcareous arkose. The bedrock was intersected by hole MGD15DD-0016 at a down hole depth of 26 meters. Drilling intersected hydrothermal alteration zones from 327.9 to 334.5m and 334.5 to 338.4m, according to Northern Uranium.

The summer drill program was started last month. One of the challenges for junior exploration companies is funding. UNO though has sufficient cash to advance exploration activities. In February this year, the company had announced a private placement of its securities to raise up to $2.50 million. The company had noted that the proceeds from the offering will be used to advance the Northwest Manitoba exploration project, as well as for general working capital.

At the end of the first quarter of 2015, UNO still had $1.91 million in cash on its balance sheet.

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