ASX stocks are beginning to react as uranium spot price approaches 5-year highs

Last week, the Sprott Physical Uranium Trust (SPUT) started buying up physical uranium, taking it out of market circulation.

This yellowcake will be sequestered for the long term.

Last week it was 900,000lb. On Tuesday another 400,000lb was bought and removed from the market, and there will be more to come.

Today @Sprott issued 983K Physical #Uranium Trust units which raised $8.6M used to stack another 400,000 lbs #U3O8 pushing Up NAV by $17.7M to over US$687M. SPUT still holds $4.9M cash for stacking with units closing at 3.19% Premium to NAV. https://t.co/VJuEVxXgYA pic.twitter.com/hrDtL1VUX4

— John Quakes (@quakes99) August 23, 2021

A gigawatt-class reactor uses around 450,000lb per year, so this is no small amount, according to 808s Online, a blog run by a US nuclear professional.

US financial services firm Cantor Fitzgerald – which gives SPUT a ‘buy’ rating – says the Trust is now potentially the single largest participant in the spot market.

“We expect this will prove to be a catalyst that will move spot uranium prices higher, along with the related uranium equities,” it says.

So far, Cantor Fitzgerald are ‘spot’ on. SPUT buying has now sparked a ~11% gain in the uranium spot price to fresh 12-month highs.

Spot #uranium 3325/3375 USc/Lb #U3O8 (Delivery at CMO , Chg +12c, +0.36%) CMO = CVD 0c/Lb, CMO = CMX 20c/Lb See https://t.co/oK6SEbGF1L

— numerco (@numerco) August 24, 2021

Next stop — 5-year highs of ~$US34/lb.

Sprott’s buying spree is sparking renewed investor focus on uranium stocks, which have already enjoyed solid gains over the past nine months on a consensus bullish outlook for the nuclear fuel.

15 of the 19 companies on our list made gains on Tuesday. Eight of the 19 stocks – Alligator, Bannerman, Elevate, Vimy, Deep Yellow, Paladin, Okapi and Gladiator – are up ~100% or more over the past year.

Tuesday’s Standout Stocks

TORO ENERGY (ASX:TOE)

TOE’s ‘Wiluna’ uranium project is one of WA’s only advanced uranium projects with environmental approval from the state and federal governments.

Last quarter, SRK Consulting was appointed to carry out a scoping level engineering study for the mining and processing of the ‘Lake Maitland’ uranium deposit at Wiluna.

The re-engineering work follows on from the successful subsequent redesign of the processing flowsheet which envisages a cheaper, more efficient stand-alone Lake Maitland mining and processing operation.

92ENERGY (ASX:92E)

The freshly listed uranium explorer wants to unlock the potential of its tenements in Canada’s Athabasca Basin, just 11km from Cigar Lake — one of the world’s largest and highest-grade uranium deposits.

A recent survey over its ‘Tower’ and ‘Gemini’ projects has identified multiple prospective conductors that are prospective for high-grade, unconformity-type uranium.

Unconformity-type uranium deposits such as Cigar Lake and McArthur River are some of the largest and richest deposits globally, it says.

Drill targeting over Tower and the northern portion of Gemini will kick off upon receipt of the final processed geophysical data sets, the company says.

The $10.5m market cap stock is up 25% on its IPO price of 20c per share.

BANNERMAN ENERGY (ASX:BMN)

A recently released PFS on the Etango-8 project in Namibia envisages a 3.5 million pounds per annum operation with an initial life of 15 years.

This is an advanced project aiming to take advantage of the coming uranium boom.

Etango-8’s $US274m development cost would take 3.8 years to pay back at a projected uranium price of $US65/lb.

“The underlying robustness of this streamlined development approach to the world-class Etango resource has now been confirmed to a PFS level of accuracy,” Bannerman boss Brandon Munro says.

“We now look forward to the completion of a DFS for Etango-8 in the September 2022 quarter.”

Lotus’ ‘Kayelekera’ project in Malawi – purchased from fellow Africa-focused Paladin Energy (ASX:PDN) in March 2020 – will cost just $US50m to get up and running, the company says.

Kayelekera is a proven uranium operation having successfully produced 11Mlbs over five years, ceasing operations in 2014 due to sustained low uranium prices.

The Project Feasibility Study will commence during August 2021 and is anticipated to be completed by mid-2022.

GLADIATOR RESOURCES (ASX:GLA)

Earlier this month the $9m market cap explorer secured exploration projects in Tanzania, East Africa, with a focus on uranium, rare earths, phosphate, and gold.

Tanzania, while mineral rich, can be an unstable jurisdiction for Aussie companies to operate in.

Gladiator has assessed African exploration opportunities in the past and approached this acquisition knowing the risks, Gladiator Resources chairman Ian Hastings says.

“This transaction represents an opportunity to acquire well known and well documented uranium tenements which are also prospective for gold,” he says.

“All three prospects have the potential of being transformative and Gladiator believes it has secured some of the best uranium ground in East Africa which may deliver shareholders great value over time.”