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Uranium Equity Prices Poised for Upsurge

29 August 2023 10:26
Uranium Equity Prices Poised for Upsurge

Driven by the impetus of green energy initiatives and the expanding investment in nuclear power, uranium prices are predicted to reach unprecedented highs in the near future.

Sustained Progress in Nuclear Advancements

In July, the U3O8 uranium spot price rose by 0.35%, reaching $56.21 per pound by July 31, 2023. This year, uranium has yielded a strong 16.35% return, showcasing its resilience compared to a 4.85% decline in other commodities measured by the BCOM Index. Over five years, U3O8 spot price gained 118.57%, outpacing the BCOM’s 25.70% appreciation.

Sweden Overturning Ban on Uranium Mining

Sweden’s Climate Minister, Romina Pourmokhtari, has unveiled plans to overturn the nation’s ban on uranium mining, paving the way for a significant expansion of nuclear energy capabilities.

The Swedish Parliament has demonstrated majority support for this move, and the government aims to construct a minimum of ten large reactors within the next two decades to meet the rising demand for low-carbon power.

Highlighting a shift in stance, Swedish Prime Minister Ulf Kristersson stated earlier this year that legislative changes would foster increased nuclear investment.

This marks a noteworthy departure from Sweden’s historical anti-nuclear position, reaffirmed in 2010 when the policy against nuclear generation, initially instituted in 1980, was overturned. Pourmokhtari, an ardent advocate of nuclear energy, believes it should play a pivotal role in shaping Sweden’s future energy portfolio.

Resurgence in East Asia

China is propelling its nuclear aspirations forward with the State Council’s approval for six new nuclear power units, representing an investment of approximately $17 billion. Although not leading in operational reactors, China stands out with the largest number under construction and planned.

In Japan, the revival of nuclear power gains momentum as another plant restarts, contributing to a total of 11 reactivated Japanese reactors.

Meanwhile, South Korea is contemplating the addition of fresh nuclear power plants, reinforcing its commitment after raising its targeted share of nuclear power generation to 32.4% by 2030 and 34.6% by 2036, up from 26% in 2021.

British Self-Sufficiency

The UK government is also set to introduce grants amounting to £157 million alongside the establishment of a novel institution designed to bolster the nuclear power sector.

Named Great British Nuclear (GBN), this entity has been entrusted with a crucial role: to aid in the realisation of the government’s ambitious goal of sourcing a quarter of the UK’s electricity from nuclear energy by 2050. This strategic move aims to expedite the growth of nuclear power plants across the country, thus enhancing energy security and diminishing reliance on imported fossil fuels, as underscored by Grant Shapps, the energy security secretary.

Schapps commented, “Today, as we open Great British Nuclear and the competition to develop cutting-edge small modular reactor technology, which could result in billions of pounds of public and private sector investment, we are seeing the first brush strokes of our nuclear power renaissance to power up Britain and grow our economy for decades to come.”

“By rapidly boosting our homegrown supply of nuclear and other clean, reliable, and abundant energy, we will drive down bills for British homes and make sure the UK is never held to energy ransom by tyrants like Putin.”

Americans Embrace Nuclear Power

Last Monday saw the commencement of a fresh nuclear reactor feeding energy into the United States’ electric grid—a pioneering feat after a nearly seven-year hiatus and the foremost instance of a newly constructed nuclear unit in the country in over three decades.

Located at Plant Vogtle near Waynesboro, Georgia, the unit 3 reactor transitioned into commercial operation, a major milestone confirmed by its primary owner, Georgia Power. The reactor, a Westinghouse AP1000 model, is currently generating an impressive output of approximately 1,110 megawatts, a capacity sufficient to provide energy for roughly 500,000 homes and businesses.

Indeed, a majority of Americans (57%) now advocate for the expansion of nuclear power plants for electricity generation, marking an increase from the 43% who held this view in 2020.

While support for nuclear energy is growing, public sentiment remains more strongly inclined towards solar power (82%) and wind power (75%), both of which align with the carbon-free energy imperative.

Moab Minerals (ASX:MOM)

Strategically situated within the renowned Uravan Mineral Belt in Colorado, Australian-listed junior explorer Moab Minerals (ASX:MOM) is dedicated to the exploration and advancement of its REX Uranium-Vanadium Project.

Holding a 60% ownership stake in the Project, Moab Minerals has control over numerous historical uranium mines, such as Blackfoot/Rattlesnake, Wedge, Merry Widow, Sunbeam, and Vanadium King, which have remained untouched by exploration efforts since the 1970s, except for initial sampling conducted by the Company. The focal objective of Moab Minerals’ is to conduct a focused exploration campaign aimed at delving deeper into the potential of the REX Project.

Global Recognition for Australia

Gaining momentum, the advocacy by domestic politicians and business figures for a shift in Australia’s nuclear energy policy has garnered global support through a recent international report emphasising nuclear energy’s significance in the global energy landscape.

According to the World Nuclear Association’s findings, nuclear power supplied approximately 10% of the world’s electricity in 2022 and a substantial quarter of all low-carbon clean electricity, with the report further underscoring nuclear’s pivotal role in advancing clean energy goals.

Amidst the evolving landscape, a handful of junior Australian uranium explorers have risen to the forefront, poised to contribute significantly to the nation’s energy transition.

Cauldron Energy Limited (ASX:CXU)

Notably, Cauldron Energy Limited (ASX:CXU) emerges as a prominent player in this domain, with its Yanrey Uranium Project. Positioned within the highly prospective uranium district of northern Western Australia, the Yanrey Uranium Project encompasses a vast 1,270 square kilometres, with the Project falling under Cauldron’s complete jurisdiction and boasting an impressive set of 12 granted exploration licenses.

The Project’s expanse covers a substantial segment of a prized uranium-rich area, specifically 78 square kilometres of a prominent linear palaeo-foreshore. This geological feature, host to a significant portion of the known uranium mineralisation in the region, takes centre stage with the pivotal Bennet Well Uranium Deposit.

Comprising Bennet Well East, Bennet Well Central, Bennet Well South, and Bennet Well Channel, this deposit has yielded a robust Indicated plus Inferred Mineral Resource Estimate (JORC 2012) of 38.9 million tonnes at 360 ppm eU3O8, with this estimation equating to 30.9 million pounds (13,990 tonnes) of contained uranium oxide, set against a cut-off of 150 ppm eU3O8.

Deep Yellow Limited (ASX:DYL)

Also located in the state of Western Australia, Deep Yellow Limited (ASX:DYL) is spearheaded by Paladin Energy founder and global uranium industry expert John Borschoff. With a vision to establish a Tier-1 uranium company capable of producing over 10 million pounds per annum, the Company’s expansive portfolio, including Australian and Namibian assets, parading the largest uranium resource base among all ASX-listed companies.

Deep Yellow recently announced the completion of a 656-hole, 36,647m drilling campaign at its Mulga Rock Project, one of only four projects in Western Australia to receive State Ministerial approval to progress with the mining of uranium.

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Figure 2: Deep Yellow Limited Mulga Rock Project

Spanning a total length of 30kms across two distinct mining areas, the Project comprises separate deposits ranging from 1 to 8kms in length. As the Company readies itself to update its Mineral Resource Estimate (MRE) and drilling results, it is also gearing up for a Definitive Feasibility Study (DFS) set to kick off in 2024.

Alligator Energy Ltd (ASX:AGE)

Moving across the state and into Northern Territory is ASX-listed, exploration company Alligator Energy Ltd (ASX:AGE), focused on uranium and energy related minerals, principally cobalt-nickel.

In the Alligator Rivers Uranium Province, a distinct high-grade uranium-rich zone includes the Caramal uranium resource, with 6.5 million pounds of uranium at 3,100ppm, neighbouring notable uranium deposits like Jabiluka (349Mlb at 5,300ppm U3O8) and the Ranger deposits, which previously yielded about 300Mlb along with Ranger 3 deeps (96Mlb at 2,850ppm U3O8).

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Figure 3: Alligator Energy portfolio of assets located in Australia and Italy

Alligator Energy focuses on the underexplored Nabarlek North Project in the same province, known for an exposed Proterozoic unconformity and concealing sediment cover that influenced past exploration; positioned near the historic Nabarlek uranium mine (24Mlb of U3O8 at an average grade of 1.84%), the nearby U40 Prospect displayed historical instances of high-grade mineralisation, with up to 6.3m @ 7.23% U3O8, signifying significant occurrences.

New Horizon Metals

Travelling south, New Horizon Metals is poised to make its inaugural appearance on the London Stock Exchange in the near future. The Company’s primary focus lies in the advancement of two copper projects, one situated in the esteemed copper-belt of Mt Isa in Queensland and the other encompassing an Iron-Oxide Copper Gold (IOCG) and uranium asset located within the Gawler Craton in South Australia.

The Wilan Project, although covered by post Devonian sediments like much of the region, holds multiple identified targets. Locally, two IOCGs have been recognised, displaying magnetic anomalies aligned with gravity anomalies, including an untested anomaly in the south-eastern area of the property. Furthermore, a potential Playa/Lacustrine Uranium-Vanadium occurrence is situated in the western part of the property, while diamond/kimberlite tracer minerals have been found in the northern region.

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Figure 4: New Horizon Metals’ Wilan Project positioned within the Gawler Craton

Adjacent to the Wilan Project lies a cluster of active mines and ongoing exploration endeavours. These operations are under the ownership of noteworthy entities such as BHP, renowned for their Olympic Dam IOCG deposit, a globally significant source of copper, gold, rare earth elements, and uranium, located 140 km to the south-west. Additionally, Oz Minerals’ Prominent Hill Copper Project occupies an area experiencing concentrated exploration efforts from multiple parties. In this landscape, Copper Search’s Peak Project is focusing on targeting IOCG mineralisation akin to the “Cloncurry” type.

Canada’s Nuclear Expansion

The transition towards uranium exploration is however not solely unique to Australia, as similar developments are also occurring in North America.

In Canada, significant developments are taking place in the energy sector, with the Ontario government soliciting an assessment from utility company Bruce Power regarding the potential addition of up to 4.8 gigawatts (GW) of capacity to its Bruce station. This envisioned expansion, if realised, would propel the site to become the largest of its kind globally.

Additionally, the Ontario government has extended the operational lifespan of the Pickering Nuclear Power Plant, comprising six reactors, until September 2026.

Power Metal Resources (LON:POW)

Power Metal Resources (LON:POW), through its wholly-owned Canadian subsidiary, controls a combined 100,514-hectares surrounding, and within the prolific Athabasca Basin, located in Northern Saskatchewan, Canada.

The portfolio was assembled through staking, and as a result all properties are 100% owned by Power Metal with no underlying royalties or encumbrances. The portfolio includes seventeen properties, all which are highly prospective for uranium mineralisation, and include the Badger Lake, Clearwater, Cook Lake, Durrant Lake, E-12, East Hawkrock, West Hawkrock, Kernaghan, Old Woman Rapids, Perch River, Porter Lake, Reindeer Lake, Reitenbach, Soaring Bay, Tait Hill, and Thibault Lake Properties.

High-grade uranium mineralisation across the portfolio includes trenching results of 1.09% U308 over 10.7m (Thibault Lake), grab samples up to 3.54% U308 (Cook Lake), as well as soil samples up to 13,200ppb U (Tait Hill).

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Figure 5: Power Metal Resources Canada Uranium Property Map

Terra Uranium (ASX:T92)

Terra Uranium (ASX:T92) holds ownership of three projects situated within the Athabasca Basin, with the company actively engaged in greenfield exploration and brownfield development initiatives, strategically positioned near existing infrastructure to contribute to the burgeoning decarbonised energy sector.

Since its inception in June 2021, Terra has secured and obtained 16 claims, covering a total expanse of 1008 square kilometres, effectively establishing the HawkRock Project, Pasfield Lake Project, and Parker Lane Project. All three projects are strategically located in proximity to the well-known Cigar Lake and McArthur River deposits, which Terra T92 is utilising as models for its exploration efforts.

92 Energy (ASX:92E)

Also positioned to leverage the opportunities within the Athabasca Basin is uranium explorer 92 Energy (ASX:92E), with the Company acquiring full ownership of the Gemini uranium discovery in September 2021, marking a significant milestone in its portfolio.

The Gemini Mineralised Zone (GMZ) has been explored, revealing intersections as shallow as 60 metres below the surface, covering an area of approximately 250 by 240 metres. Notable drill hole results include a high-grade intercept of 43.0 metres at 0.62% U3O8, featuring a section of 6.0 metres at 2.17% U3O8 within an 18.0-metre span at 1.16% U3O8 in GEM22-025.

The Company recently concluded its Winter 2023 Drill program at the Gemini site, expanding the scope of the discovery and identifying uranium grades up to 9.7% U308. Presently, a 4,000-metre drilling program is in progress, aiming to further explore the uranium potential in the region.

Valor Resources (ASX:VAL)

Finally, Valor Resources (ASX:VAL) emerges as another dynamic energy exploration company dedicated to the pursuit of high-grade unconformity-related uranium within the Athabasca Basin.

In 2021, Valor embarked on Basin exploration by acquiring five noteworthy projects. Throughout the same year, they expanded their portfolio by incorporating an additional three projects, resulting in a current suite of eight projects spanning an area of 985 square kilometres. Notably, the Company’s key projects encompass the Hook Lake Project, an expanse of 258 square kilometres encompassing 16 claims, and the Cluff Lake Project, which boasts 19 contiguous claims over an expansive 622 square kilometres area.

Navigating Supply Shortages

In light of the evolving energy landscape, there are growing concerns within the industry regarding a potential supply shortage of uranium in the years ahead, possibly as early as 2024-2026. Experts predict a significant deficit of around half a billion pounds of uranium, highlighting the need for new uranium mines to meet the rising demand.

The industry’s response to market signals could play a crucial role in determining the trajectory of uranium prices, both in the spot and long-term markets, with this impending scarcity underscoring the importance of strategic exploration and production efforts to ensure a stable supply of uranium for the growing energy demands of the future.

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