Ground Breakers: Namibia soothes the fears of uranium investors as Paladin leads yellowcake higher

Namibia walks back talk on uranium mine equity, sending Paladin shares higher
Miner will not be exposed to claims on Langer Heinrich mine, as Namibia Mines Ministry says it will not look to expropriate shares in existing mining or petroleum leases
Broad-based run for commodities sends materials sector up 1.6%

Phew, that was a close one for uranium investors, who woke up to the scary news on Tuesday they could see their assets partly appropriated by the Namibian Government.

The country is the third largest producer of yellowcake in the world behind Canada and Kazakhstan and a host of ASX-listed companies has assets in the southern African nation.

Among those are two heavy hitters in Paladin Energy (ASX:PDN) and John Borshoff’s Deep Yellow (ASX:DYL).

The latter tumbled 20% on Tuesday thanks to a Bloomberg report about comments made at a workshop by Namibia’s mines minister Tom Alweendo.

We now have a clarfication that is pretty good news for miners like Paladin, which owns a 75% stake in the mothballed Langer Heinrich mine and is looking to restart production in the first quarter of next year.

As it turns out, the Namibian Government does feel its people — one of the most unequal in the world with 64% living under the poverty line as of 2021 — have been locked out of ownership of their natural resources.

They say the Government is considering taking ownership stakes in mining and petroleum licences — just not existing ones like those underpinning Paladin’s Langer Heinrich and DYL’s Tumas.

In a statement the Ministry of Mines and Energy in Namibia said “wrong perceptions” were circulating on various media platforms.

A constitutional provision does exist which gives ownership to land, water and natural resources to the Namibian Government unless lawfully owned otherwise.

“Despite this Constitutional provision, the Government has no intention to seize any stake from existing (emphasis from Namibia) mineral or petroleum licence holders and remain committed to uphold the sanctity of contract,” the ministry said in the statement.

“However, the reality remains that Namibians are and remain disadvantaged because they may not have the financial and other means to exercise their rights in relation to natural resources.

“As such the State as supreme owner of these natural resources may demand a certain minimum stake through public enterprises such as EPANGELO Mining or NAMCOR in any mineral or petroleum licences that may be issued in future.”

Uranium stocks share price today:

Uranium stocks run, so does everything else

With that in mind, Paladin surged over 9% this morning, with Deep Yellow (8.98%) also up big.

But that came with with spot uranium prices lifting slightly overnight on a host of positive news, including lower than expected production out of the US and moves to kick Russian uranium out of Yankee-land.

Prices hit their highest level in one year, according to Trading Economics.

Good news for other uranium players outside Namibia, with Athabasca Basin explorers Valor Resources (ASX:VAL), 92Energy (ASX:92E) and Nexgen Energy (ASX:NXG), and American focused Okapi (ASX:OKR), GTI Energy (ASX:GTI) and Peninsula Energy (ASX:PEN) also higher. Botswana focused A-Cap Energy (ASX:ACB) rose 13.95%.

It wasn’t just yellowcake glowing today. The materials sector walloped the broader market, up 1.6%, with iron ore and copper rising overnight on a stronger than expected Caixin PMI in China, showing purchasing managers activity increased among the country’s small businesses in May.

Gold prices also rose 0.7% to US$1977/oz as the US dollar stumbled on lower treasury yields and lithium stocks climbed on starkly higher hydroxide and carbonate prices.

According to Fastmarkets, hydroxide in North Asia rose $1.50 to US$46.50/kg, with carbonate up US$4.50 to US$37.50/kg.

Weekly Chinese prices also lifted 5000RMB and 7500RMB per tonne respectively to 305,000RMB (US$43,080) and 310,000RMB (US$43,787).

Lithium prices have washed off their 2023 funk, rising more than 10% over the past month.

The strong Caixin print saw China’s rebar steel, coking coal and iron ore prices lift, the latter jumping 3.7% to finish above the US$100/t at US$102/t.