Uranium: 3 experts, 9 stock picks as global sentiment embraces a nuclear resurgence
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The fundamentals for uranium and nuclear energy are stronger than ever.
A continuous flow of endorsements from global governments, as well as persistent concerns about tight supplies due to Russia’s war on Ukraine bolstered uranium sentiment in 2022, sending the stock price surging from as low as US$43/a pound to 11-year highs of US$64/lb.
Japan announced its plan to restart 17 nuclear power plants in a bid to reach net-zero carbon emissions by 2050, the EU voted in favour to allow nuclear power plants to be marketed as sustainable investments, and for the first time there was a focus on nuclear energy at COP27 as a potential ‘low emission’ energy source instead of renewables.
Industry analysts say nuclear remains the most reliable carbon free power generation system with a running cost comparable with renewables.
As oil and gas prices continue to rise, particularly in Europe, governments are seeking cheaper sources of energy and for those that have already paid the hefty up-front cost, maintaining their plants presents an attractive option.
Like Japan, other countries are also considering a nuclear turnaround after deciding to shut down their plants following the Fukushima disaster in 2011.
Germany revealed it would keep two of its remaining three nuclear power plants on standby until at least April 2023 in case of a severe energy crunch, while a growing number of announcements for new builds were seen out of France, the UK, and China.
NOW READ: Uranium stocks guide
Experts believe this will create even further demand for uranium, putting the deficit under increasing pressure.
The oncoming uranium shortage could send ore prices up by about 25% by 2030, S&P Global says, although sceptical miners may not aggressively expand production until prices climb even higher.
Peter Strachan, capital markets veteran and resource analyst, says a line is usually drawn at about US$60/lb to support new uranium oxide production but the price has stalled over the past few months.
“I think we’ll see it jump towards the mid $60s and even as high as US$70/lb, which will be sufficient to get new projects up and running,” he says.
As sentiment takes off, Stockhead sat down with a few experts in the field to get a gauge for their favourite companies, and why.
This is what they said.
Stock picks: T92 Uranium, Bannerman Energy, ENRG Elements
“The uranium spot price is trading around US$51/lb and is up around 5% in 2023,” he says.
“The main driving force has been limited supply coming out of Eastern Europe, with SPUT adding to its physical on-market buying this year.
“With over 50 new reactors being built around the globe, Japan ramping up its requirement for clean-energy and global governments around the world sourcing new energy sources – could we see another uranium boom?
“Yes! Is the short answer.”
“This company has identified one of the largest anomalies (since Cameco’s McArthur River uranium mine) in Canada’s Athabasca Basin,” Dagan explains.
“A 100-hole RC drilling program has commenced as part of T92’s maiden exploration program focused on the discovery of major uranium deposits under cover at the 100% owned Pasfield and Parker Projects.
“T92 have said that its Project level ZTEM and VTEM airborne geophysics has now been completed across its entire project portfolio.
“Diamond drilling will soon follow to test the conductors, together with interpretation of the RC drilling campaigns.
“With the ex-head of operations for Cameco worldwide, Mike McClelland driving the program – we feel that the company is in good hands.”
Bannerman has recently announced to the market an updated Pre-Feasibility Study (PFS) with $209m NPV based on US$65/lb Uranium.
“The good news is that Etango-8 is moving towards financing and construction with the Mining Licence application submitted in August 2022,” Dagan adds.
“The key for Bannerman is the Final Investment Decision in the second half of 2023.
“With over $47m in cash as at end of last quarter, the company is in a strong position to take advantage of the higher uranium market.”
Enrg has a diversified portfolio of assets but its flagship project is the Agadez Uranium Project within Niger’s Tim Mersoi Basi.
Interestingly, Niger was the seventh largest uranium producer in 2021.
The project has inferred mineral resource of 16.5Mt at 295ppm across three exploration permits.
“ENRG recently advised that the review of historical exploration information further supports tenement prospectivity and confirms mineralisation,” Dagan explains.
“This was further reinforced by rock chips of over 34.3% uranium with results to be used in conjunction with existing airborne radiometric to define priority drilling target.”
Stock picks: DexEx Resources, Elevate Uranium, Boss Energy
DevEx has an extensive tenement package within the Alligator Rivers Uranium Province (ARUP) of the Northern Territory that is centred on, and includes, the former Nabarlek Uranium Min – once considered Australia’s highest-grade uranium mine.
“The ARUP is generally considered to be amongst the world’s most prospective regions for uranium mineralisation, with more than 500 million pounds of uranium (U3O8) identified within mined and unmined deposits,” Wendt says.
“Recent exploration activity has seen it actively drilling multiple uranium targets surrounding the old mine site, with several prospects reporting positive high-grade intercepts such as Nabarlek South, North Buffalo and the U42 Prospects.
“Evidence from the historic Nabarlek uranium mine has shown that these high-grade deposits can exist within a lens of between 30m and 75m in length, and are known for their small, but high-grade, uranium footprint.
“At the former Nabarlek Uranium Mine, the majority of the 24Mlbs at 1.84% eU3O8 produced came from two high-grade lenses that were between 30m and 75m in length.
“The mineralisation identified so far has significant potential to grow as drilling intensifies.”
Wendt believes EL8 is a uranium story with a difference.
“In addition to maintaining prospective uranium acreage and Mineral Resources within both Australia and Namibia, Elevate also retains a potentially ground-breaking technology that could radically improve the commerciality of calcrete-hosted uranium deposits.
“This is what makes the company unique in the uranium space in my view.
“Whilst strengthening uranium prices are providing some relief for current producers, and hope for aspiring producers, many projects are still marginal at best.”
He says the company’s process has the capacity to lower the operating cost-base for calcrete-hosted uranium deposits, thereby improving operating margins, profitability and commerciality.
“Elevate is exploring its large tenement position that hosts a JORC resource base within the globally recognised Erongo uranium region in Namibia, a country with an established and longstanding uranium mining industry, and a supportive government.”
Boss Energy is an emerging producer, focused on the re-start of its Honeymoon Uranium Project in South Australia.
“Honeymoon represents one of the few uranium projects globally that is ready to come on-stream in the early stages of the emerging uranium bull market, with first production targeted for the the fourth quarter of 2023,” Wendt says.
“Honeymoon is fully permitted, with $170 million of established infrastructure already in place, including a well-maintained plant that’s currently under care and maintenance.
“Honeymoon has a resource base of 71.6Mlb of contained U3O8 and holds a large inventory of 1.25 million pounds of physical uranium that has been stockpiled to provide off-take flexibility and de-risk contract delivery during the project’s commissioning phase.
“Boss offers first-mover advantage for those wanting direct uranium price exposure via a production company.”
Stock picks: Boss Energy, Deep Yellow, Paladin Energy
“The International Energy Agency says the amount of energy supplied by nuclear power will need to increase by 40% by 2030 and double by 2050, which is why we are seeing a lot more focus on nuclear power,” Wulff explains.
“Decarbonisation will be more difficult and costly without it.”
“Bell Direct has a speculative Buy rating on Boss Energy with a price target of $3.51,” Wulff says.
“The company is primarily focused on its Honeymoon uranium project in South Australia which has been mothballed since 2013 because the price of uranium was just so low, there was no value in bringing it to life.
“But given the energy crisis and now this renewed focus uranium and nuclear power there’s a lot more stamina in the space and the company is now preparing to restart the mine by the end of 2023 and eventually ramp up to produce 2.45 million pounds of uranium oxide a year.”
Wulff says Bell Direct has a speculative Buy rating on Deep Yellow of $1.04 cents per share.
“Bell Potter initiated coverage of this stock following its successful merger with former successful uranium developer Vimy Resources,” Wulff say.
“The companies boast two advanced projects including the Tumas project with production expected by the end of 2025 and the Mulga Rock project where production is expected shortly after,” she says.
“Deep Yellow has released the Tumas project definitive feasibility study which shows they are moving one step closer to the final investment decision and into development and production after that.”
Wulff says Deep Yellow is a strong play to buy into due to its successful merger with Vimy and the fact that is has two advanced uranium projects under its belt.
“When supply tightness is expected to peak from these countries reigniting their nuclear power plants, that’s exactly when Deep Yellow’s projects come online.”
Bell Direct’s speculative Buy rating and price target from $1 to 0.99 cents a share.
“The company’s strategic focus is on its Langer Heinrich mine in Namibia which is in care and maintenance mode until the price of uranium came back up.
“Paladin has progressed through recapitalisation, paid its debt and has strengthened their balance sheet under the leadership of CEO Ian Perdy for when they restart again in 2024.
“Shares are up 270 per cent over the last five years and the thing that all these miners have in common is that although they have been mothballed, people are seeing great investment opportunities in them and are getting in as the outlook is getting better.”
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewee and do not represent the views of Stockhead.
Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.