Bulls N’ Bears takes a look at the listed companies that have enjoyed share price explosions on the back of 16-year high uranium prices. With lithium taking a breather, the uranium renaissance has filled a gap as demand for uranium to power a clean-energy future pushed the commodity’s fortunes and propelled it to US$106 per pound earlier this year.
2023 will be seen as a renaissance year for uranium, with the controversial commodity closing out the year at around US$91 a pound, having kicked off the year at closer to US$48.
2024 was also notable for uranium when it touched a 16 year high of US$106 in February before settling back in at around US$90 where it started the year. In any case, the uranium price is now a far cry from the mid-twenties where it was wallowing just 5 years ago.
Perhaps more importantly however, there is a general acceptance in the market that uranium projects will hang together economically at around US$100 a pound which means it is game on now for those uranium companies that have been warehousing their projects over the last few years.
Demand for uranium to power a clean-energy future and reduce pollution from carbon emissions has boosted the commodity’s fortunes and many countries now see uranium as the key when it comes to meeting clean energy targets. Of equal importance is the dark shadow cast by the nuclear disaster in Ukraine’s Chernobyl appears to have finally lifted on the industry. It is perhaps ironic that Russia’s invasion of Ukraine and the sanctions on Russia that followed are probably partially responsible for the hike in the uranium price.
On the demand side, the United States and 20 other countries have indicated that their nuclear power will be tripled by 2050.
At the United Nation’s COP28 climate change conference, 22 countries signed up to the goal of tripling global nuclear energy capacity by 2050, believing it to be the only likely way forward to achieve stated emissions targets.
China is leading the nuclear energy pack, with 22 reactors under construction from the proposed 58 new global reactors to be built, while Japan has restarted several projects to increase nuclear power output. France is also looking to construct 14 new reactors, Bulgaria is planning to build four, with Italy planning to introduce nuclear to its energy mix from as early as 2032.
Whilst uranium has been on an impressive upward trajectory for the last five years, it has nonetheless taken a breather of late.
Uranium prices fell below US$100 per pound for the first time in seven weeks in late February, after the United States Government refrained from banning imports of Russian nuclear fuel in its latest sanctions package, easing concerns of supply risks emerging in the global marketplace.
The United States House of Representatives passed a bill in December last year to ban imports of Russian uranium, although the bill has stalled in the Senate.
If passed, the bill would ban the imports 90 days after its enactment, subject to various waivers, including if the U.S energy secretary determines no alternative sources of supply were available, or if it is decided that imported shipments of the nuclear fuel are in the national interest.
The world’s largest uranium producer, Kazakhstan’s US$11 billion (AU$16.6 billion) National Atomic Co. Kazatomprom, has signalled flat production forecasts for this year, while Canada’s Cameco Corporation downgraded production estimates last September.
The inability to quickly ramp up output in a rising price environment could be a further positive for the price going forward, with some uranium analysts remaining bullish.
Terra Capital’s uranium pundit Jeremy Bond recently said: “In Australia, we don’t see it because we’re just anti-nuclear. But China I think needs to do nine reactors a year for the next 10 years or something. There’s 450 reactors globally now. And they’re looking to build 90 over the next 10 years. We think the long-term story is real, the short-term story is real — as in there’s a physical squeeze in the market at the moment. So, you’ve got a short-term story in a spot market squeeze and then a long-term story and I just think the adoption of nuclear is going to become more mainstream.”
Bond also said he saw uranium going beyond its 2007 highs of US$149 per pound in the newly anticipated bull market.
Those types of comments have stirred up plenty of excitement in the uranium market and helped kick-start the share prices of many ASX-listed companies that focus on exploring for, developing, or mining “yellowcake”.
Aspiring uranium and copper explorer White Cliff Minerals is one company that has been riding the new uranium wave after announcing the purchase of the Canadian Radium Point iron oxide-copper-gold-uranium-silver project. Its stock shot from 1c a share to almost double at 1.9c a share in early January on the back of the news.
The Radium Point project has pre-1982 historical production of 13.7 million pounds of uranium.
Intriguingly, the Northwest Territories geoscience office identified the project as having the highest potential for IOCG-uranium style mineralisation in Canada.
WA developer Cauldron Energy has also enjoyed a stellar run, climbing from 0.8c on October 23 last year, to 5.8c on January 16th.
Cauldron recently released a scoping study confirming the potential for a low cost, globally competitive in-situ recovery uranium operation at its Bennet Well deposit.
The deposit is part of its Yanrey uranium project, about 1050 km north of Perth and 100km south of the town of Onslow. Whilst the WA Labor Government is not quite there yet, both the Liberal and National parties in WA have policies that embrace uranium mining which means that any change of Government in WA will provide an instant kick-start for companies like Cauldron.
Bennet Well contains a mineral resource of 38.9 million tonnes grading 360 parts per million (ppm) for 30.9 million pounds of uranium oxide. The study revealed plans for an 11-year mine life, pumping out 16.5 million pounds of uranium oxide at a production rate of 1.5 million pounds per year.
The projects economics were compelling too, with upfront capital costs of US$82.4 million (AU$117.7 million) and ongoing capital costs over the mine life of US$125.3 million (AU$179 million).
What really screamed out from the study was the combined capital and operating costs of about US$36 (AU$55) per pound produced, providing for a potentially profitable operation based on today’s spot price of more than US$88 (AU$135) per pound.
ENRG Elements enjoyed a huge surge in its price on two trading days, January 12 and 15, when the uranium price burst through the psychological US$100 per pound barrier. It opened at 0.7c on Jan 12 and touched a high of 1.7c on Jan 15, closing the day at 1.4c.
The company says it recently kicked-off exploration at its Agadez uranium project in the west African country of Niger, with a trenching program targeting four highly prospective areas.
ENRG’s fully owned Agadez project has a JORC resource of 21.5 million pounds at 315ppm, stretching from surface to a depth of 37m. In 2021, Niger was the seventh-highest producing uranium nation.
Similarly, Basin Energy soared on January 12, opening at 13c before touching 19.5c. Its eventual peak of 20.5c was reached on January 18 and again on February 2.
Basin revealed at the time that it was beginning exploration at its promising North Millenium and Marshall uranium projects, in Canada’s world-class Athabasca Basin.
Cameco Corporation’s high-grade deposit consisting of 104.8 million pounds grading 3.8 per cent uranium oxide is located 7km to the south.
Basin also said it will commence a second-phase drill program at its Geikie project, on the eastern margin of the renowned uranium producing basin.
Maiden drilling at Geikie returned assays up to 0.27 per cent uranium oxide.
Marmota Ltd is another company to have rekindled its uranium interests resulting in a corresponding share price hike.
After announcing plans to recommence exploration at its Junction Dam uranium project in October last year, its share price rose from 3.2c to a high of 5.7c in early February.
Junction Dam has a mineral resource of 5.4 million pounds at a solid 557ppm uranium and an exploration target between 22 to 33 million pounds, ranging in grade expectations from 400ppm to 700ppm.
The resource falls within the same Yarramba paleochannel as the $1.9 billion ASX-listed Boss Energy’s Honeymoon uranium mine.
Boss’ Honeymoon has a resource of 36 million pounds at 660ppm uranium.
Marmota recently engaged uranium expert Mark Couzens from Indepth Geological Services, to design a drill program for the re-start at Junction Dam, in addition to a full technical analysis of the mineralisation at the project.
Several new high-priority targets have been identified with the potential to dramatically increase the project’s resource.
They include the Saffron, Bridget, Yolanda and Jason prospects.
The Jason prospect sits in the north-west corner of Junction Dam with the area extending into Boss’ own Jason deposit, part of the Honeymoon project.
A new high-priority target has been identified on the Marmota side of the Jason prospect based on a gravity survey.
Interestingly, Boss’s highest resource grades come from their Jason deposit with a uranium resource of 10.7 million pounds at 790ppm.
Boss is one of the larger uranium companies to benefit from the commodity’s price rise. Unlike the previously mentioned junior miners, Boss is on the verge of production at Honeymoon, expecting its first drum of yellowcake this quarter.
It recently started the commissioning of its ion-exchange circuit within the processing plant and refurbished its re-agent systems, in addition to commissioning its water treatment and reverse-osmosis (RO) plants.
The company’s share price started the new 23-24 financial year at $3.10 and with the ramp-up in activities to production status since then, it hit a high of $6.12 on February 2nd, with the price settling back down to $4.89 presently.
Deep Yellow is another of the larger uranium developers to benefit from the commodity’s price surge.
Closing at 96c on December 14th last year its price rallied, hitting $1.68 on February 2nd and has since settled at $1.40.
The company recently set out to raise $250 million to assist with development of its flagship Tumas uranium project in Namibia. Tumas’ resource contains 120 million pounds with a grade of 260ppm uranium.
The company is looking to make a final investment decision on the project later this year.
It also has the promising Mulga Rock project in Western Australia with a resource of 105 million pounds of uranium, grading 410ppm and it is pursuing the significant exploration potential at both its Alligator River project in the Northern Territory and the Namibian Omohola project that has a 125 million pounds uranium resource going 190ppm.
Away from the small cap sector, NexGen Energy is also on the cusp of making it big in the uranium space. Its Rook I project in the Canadian Province of Saskatchewan stands apart from almost every other uranium project out there with some biblical scale stats. Firstly, its measured and indicated resource grade is off-the-scale at 3.1 per cent uranium oxide or put another way, 31,000 parts per million (ppm) uranium oxide. There are plenty of listed companies out there showing resource grades of between 400ppm and 600ppm uranium oxide and there is an increasing thought that they are starting to enter profitable territory with the advance in the uranium price. At 3.1 per cent, NexGen leaves them all in the shade.
And the reason that grade is King is because big grades usually produce big numbers when it comes to profitability and again NexGen’s numbers are mind boggling. In a 2021 feasibility study (that granted is probably a little out of date now) NexGen says it can pay down its substantial CAD$1.3b in capex for Rook 1 in….wait for it……just 7 months. In fact the average annual EBITDA predicted in that study at US$100 per pound uranium for the first 5 years comes in at a herculean US$3.39 billion…..and that’s per year. The following 5 years show about US$1.86b a year in EBITDA.
And as a final curtsey to the crowd, NexGen says it can churn out a pound of uranium at an all-in sustaining cost of just US$10.69 a pound – which compares pretty handily against today’s spot price of just under US$90 a pound.
Just as lithium set the market alight a few years ago, so too is uranium, and with lithium taking a breather right now, the onset of a big uranium price and all the opportunities presented by it will no doubt be warmly embraced by small cap punters who likely saw some of their capital trapped in lithium stocks that retreated in the last 12 months.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
