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BUSINESS OVERVIEW
06
6.4 Operations
URANIUM PRICE INDICATORS 2010-2016
(IN CURRENT US DOLLARS)
0
15
30
45
60
75
USD/lb
Spot
Long term
Jan. 10
Jan. 11
Jan. 12
Jan.13
Jan. 14
Jan. 15
Jan. 16
Dec.16
Sources: UxC, Uranium market outlook Q4 2016.
The spot market, which covers approximately 15% of uranium supply, varied
between $18 and $34 per pound, ending the year at $20 per pound (-40%). These
historically low levels are explained by an imbalance between supply and demand
which was accentuated in 2016 by the drop in Chinese imports. The long-term
indicator, which reflects the signature of multi-year contracts for deliveries starting
a few years from now, fell in 2016, ending the year at $30 per pound versus $44
per pound at the end of 2015.
With market indicators in decline since Fukushima, producers have announced
numerous project postponements, closures and/or the mothballing of producing
mines, and reduced production, particularly Cameco and Paladin in 2016. This
restructuring is expected to continue in the coming years.
Longer term, the market is still expected to grow, with demand 25% higher in 2025
than in 2015 according to the World Nuclear Association (WNA), led in particular
by the restart of the Japanese reactors and growing reactor requirements from the
Chinese nuclear program. Rising demand is expected to raise market prices and
enable new projects to be launched.
Resources, reserves and production sites
Uranium
The mineral reserves of AREVA’s deposits totaled 181,875 metric tons of uranium
at December 31, 2016 (AREVA’s equity share), versus 181,189 metric tons of
uranium at December 31, 2015 (AREVA’s equity share).
The volume of the best-known resources (measured and indicated resources) was
124,756 metric tons of uranium at December 31, 2016 (AREVA’s equity share),
versus 98,641metric tons of uraniumat December 31, 2015 (AREVA’s equity share).
The volume of inferred resources available to AREVA totaled 151,123 metric tons
of uranium at December 31, 2016 (AREVA’s equity share), versus 178,205 metric
tons of uranium at December 31, 2015 (AREVA’s equity share).
ESTIMATING METHODS
AREVA’s resources and reserves are estimated based on data gathered by the
group’s teams or taken from audited reports. An internal group department is in
charge of these estimates.
The mission of the Resources and Reserves Committee, which reports to
Management, is to validate the schedule for updating resources and reserves; to
validate the resources and reserves reported by AREVA each year; and to ensure
that the means, organization, and internal and external estimating methods enable
a comprehensive and objective estimate of resources and reserves, in accordance
with international practices.
In Canada, the group’s reserves are the subject of independent estimates or audit
reports by the shareholders of the companies operating the mines.
In 2010, AREVA decided to conform to international standards for the classification
of its resources and reserves. At December 31, 2016, 100% of its resources and
99% of its reserves were in conformance.
Definition of resources
Mineral Resources:
Concentrations whose form, quantity and grade or quality are
such that they present reasonable prospects for economic recovery. The location,
quantity, grade, geological characteristics and continuity of the mineral resources
are known, estimated, or interpreted based on specific geological evidence and
data. Mineral resources are subdivided into resources that are measured, indicated
and inferred.
Measured Resources:
Share of mineral resources for which the characteristics
(1)
are known such that they can be estimated with a high level of confidence to enable
appropriate application of technical and economic parameters to support production
planning and assessment of the economic viability of the deposit. The estimate is
based on detailed, reliable information and a sufficient volume of information to
confirm both the continuity of the geology and the grades.
Indicated Resources:
Share of mineral resources for which the characteristics
(1)
are known such that they can be estimated with a sufficient level of confidence to
enable appropriate application of technical and economic parameters to support
mining operation planning and assessment of the economic viability of the deposit.
The estimate is based on detailed, reliable information and a sufficient volume of
information to issue a reasonable assumption on the continuity of the geology
and the grades.
Inferred Resources:
Share of mineral resources for which the quantity and grade
can be estimated based on geological evidence and limited sampling, and which
can be reasonably used for assumptions of geological continuity and grades,
without however verifying them.
Definition of reserves
Mineral Reserves:
Economically and technically recoverable share of measured or
indicated mineral resources, as demonstrated by at least one preliminary feasibility
study or mining project. The study includes adequate information about mining and
processing operations, metallurgy, economic aspects and other relevant factors
demonstrating that mining is profitable at the time the report was written. Mineral
reserves include dilution factors and the allowance for mining losses which may
be incurred during mining operations.
Proven Mineral Reserves:
Economically and technically recoverable share of
measured mineral resources.
Probable Mineral Reserves:
Economically and technically recoverable share of
indicated mineral resources and, in some cases, of measured mineral resources.
(1) Tonnage, grade, density, form and physical characteristics.
66
2016 AREVA
REFERENCE DOCUMENT