03/06/2014 05:17 EST | Updated 05/06/2014 05:59 EDT

Will the Athabasca Basin Move the Uranium Industry Forward?

Junior companies rushing into Saskatchewan's Athabasca Basin are shining new light on the industry's dour demeanour.

Uranium has languished since Japan's Fukushima nuclear disaster in February 2011. However, there have been some positive developments that highlight the fact that the industry is not only getting back on its feet, but its first baby steps in terms of investor sentiment are tracking toward the high-quality and untapped uranium potential in the Athabasca Basin.

Supply-demand dynamics are breathing some new life in the once moribund industry. This year marks the end of the U.S.-Russian Highly Enriched Uranium Agreement, also known as the "Megatons to Megawatts Program," under which uranium from old Soviet-era nuclear warheads was converted to low-enriched uranium for export to North American and European nuclear reactors. The program's demise leaves an annual supply shortfall of 24-million pounds -- roughly comparable to Canadian U308 mining heavy-weight Cameco's annual production.

In addition, some countries are signing up to expand nuclear power. Pakistan is currently in talks with China to acquire three large nuclear power plants -- in addition to last year's agreement for China to build two nuclear plants in the southern port of Karachi. State-owned China General Nuclear Power Corporation has also announced it will put another five reactors into operation this year, increasing its total electricity capacity by over two-thirds from a year ago to 14 gigawatts.

And although there remains local opposition in Japan to nuclear power, there are real economic drivers for the Asian country to restart its reactors. The higher electricity rates stemming from the cost of importing fuel for the traditional power plants to offset the absence of atomic power is weighing heavily on Japan.

As a result, there are more power plants planned, proposed or under construction today than we had before the Fukushima disaster.

However, it is a cautiously framed recovery. In terms of discovering and advancing new supplies of yellow-cake to meet the demand, the largest wet blanket is the existing low cost for the metal. From the highs of $136 per pound in 2007, uranium has plunged to the lower $30 range. Under the shadow of depressed uranium prices, mining companies are going to only greenlight projects that are easiest to mine first. The winning investment formula is simple: uranium deposits that are high-grade and near surface equal low-cost production best insulated from even further dips in commodity prices.

Enter Athabasca Basin, a new region that has yielded one of the most impressive high-grade uranium discoveries in decades: the Patterson Lake South Discovery on the district's western side. Fission Uranium and Alpha Minerals were the companies that made the discovery a couple of years ago, generating significant returns for their shareholders as a result. Mainstream business media have taken note. Patterson Lake South is considered the most exciting find in Saskatchewan's Athabasca Basin since Hathor Exploration Ltd. discovered the Roughrider deposit in 2008 (Hathor was later sold for $654-million).

This new discovery demonstrates the potential for shallow, high-grade uranium mineralization on the margins of Athabasca Basin where significantly less exploration has been carried out..

The Athabasca Basin is one of the world's largest and richest uranium endowments. Major players such as Cameco and Denison are aggressively exploring and developing the Athabasca Basin, and have recently seen their share prices hit 52-week highs.

Several other junior companies have flocked to the region around the Patterson discovery in hopes of repeating Fission and Alpha's success, creating Saskatchewan's biggest uranium staking rush in years.

If the uranium industry holds its footing, the Athabasca Basin may be the catalyst moving its feet forward.