Alligator Energy Ltd (ASX:AGE) has made significant progress in its strategic partnership with Traxys North America LLC, the US branch of the global commodities trading group Traxys.
Open doors
This collaboration, formed in May 2021, has opened doors for Alligator in uranium marketing, long-term offtake contracting, project development financing and uranium and energy minerals project acquisitions.
Traxys, a renowned merchant in metals, minerals and alloys, boasts an annual turnover exceeding US$9 billion and its uranium marketing and trading group operates across the Americas, Europe, Australia and Asia, handling up to 15 million pounds of U3O8 annually. It also manages contract supply books in conversion, UF6, futures and options.
Alligator has reaped significant benefits from this partnership. The company has coordinated more than 25 meetings with nuclear utilities in the US and Europe, identifying key anchor nuclear utilities interested in establishing conditional offtake contracts.
Uranium and nuclear fuel pricing trends
Joint participation in global nuclear conferences, including the recent World Nuclear Fuel Market meeting, has allowed Alligator to engage in discussions on uranium and nuclear fuel pricing trends.
The Traxys agreement has facilitated the evaluation of external uranium resource opportunities, enabling the development of a future supply pipeline. Alligator has received regular uranium and nuclear market updates from Traxys, supporting informed decision-making at both the board and management levels.
The ability to access pre-production finance of up to US$15 million through a secured commercial prepayment for U308 (ASX:UTO) under the Traxys agreement is expected to significantly contribute to the completion of a bankable feasibility study, mining lease approval and a final investment decision for the Samphire Project.
Alligator Energy and Traxys recently attended the World Nuclear Fuel Market meeting, where the shortage of enriched uranium product (EUP) in short and long-term markets was a key topic.
Transport difficulties and restrictions on Russian material, along with self-imposed delivery restrictions from Russia, have exacerbated the shortage. As a result, uranium spot prices have risen to US$57 per pound this month and the long-term price reached US$55 per pound in May.
Developing relationships with nuclear utilities takes time and the planned Field Recovery Trial at Samphire presents an opportunity for Alligator and Traxys to showcase the project's technical operations to prospective customers. This trial-stage engagement can help foster trust and facilitate future business partnerships.
Market access
Alligator Energy views its relationship with Traxys as a significant advantage, providing market access and potential uranium supply to support mine start-up and increase market share. The ongoing interactions with potential offtake customers and industry players over the past two years have already proven valuable.
“We view the relationship with Traxys as a key differentiator for Alligator Energy, providing market penetration into the opaque long-term uranium and nuclear fuels contracting business, while providing potential access to available uranium supply to either support mine start-up, or add to produced uranium volumes and increase market share,” said Alligator CEO and MD Greg Hall.
“The broader benefit of direct engagement with potential offtake customers and the wider industry is already apparent from the interactions that have occurred over the last two years.”
Alligator Energy's collaboration with Traxys has positioned the company as a key player in the uranium and nuclear fuels contracting business, enabling market penetration and potential growth in uranium supply and market share.