Uranium Sentiment Remains Bullish

15 February 2024 15:21

Uranium sentiment remains extremely positive and robust, particularly amidst a challenging market for other commodities.

While lithium explorers continue to grapple with pricing woes and junior explorers in the gold sector struggle to see share price growth despite rising gold prices, uranium stands out with its remarkable bullish surge.

Uranium reached 16 year highs in January, breaking the pivotal $100 per pound USD milestone, reflecting a 100% increase from the 2023 low, and a whopping 300% climb on the 2020 low.

As U shows no signs of slowing, analysts contemplate the extent of its potential ascent – could we see a record price for uranium in 2024?

Uranium: A Bull Market

Uranium reached $106 USD per pound today, equaling it’s joint price high witnessed last month.

The January surge was enabled through a buying frenzy in the market, triggered by Kazatomprom (AIX:KAP; LSE:KAP), the world’s largest miner of the nuclear fuel, announcing production risks.

Kazatomprom cut its 2024 uranium production guidance by 13% following challenges with sulphuric acid inputs and wellfield developments, and stated the issues also risked production leading into 2025.

Kazakhstan’s Kazatomprom has an ambitious 2025 production strategy, involving significant increases in production with the use of Subsoil Use Agreements, signaling a pivotal moment with far-reaching implications for the global uranium market alongside the broader energy sector.

The increasing demand for fresh uranium sources, ongoing volatility of fossil fuel prices and global pushes for decarbonisation has prompted substantial investments in nuclear power.

The recent Cop28 climate conference further emphasised the need for nations to transition away from fossil fuels and accelerate development of low-emission technologies, such as nuclear energy.

As countries around the world embark on the transition to sustainable energy, nuclear power is gaining recognition as a crucial player in combating climate change, marking a significant shift in its perceived role.

Liberum analyst Tom Price told Reuters; “After a decade of dormancy, uranium suddenly came to life in mid-2021, rising above its long-standing cap at $30 a lb, which also happens to be the global industry’s marginal cost of mined production,” he said.

Uranium Supply Faulters

Despite supply challenges and Kazatomprom’s output reductions, analysts remain bullish on the price of uranium.


Figure 1: Kazatomprom lowered its 2024 guidance in February by as much as 14%, having previously warned it’s likely to fall short of production targets into 2025.

In 2022, the disparity between uranium production and demand amounted to 650,000 metric tonnes, a gap expected to intensify, reaching a cumulative deficit of 680,000 by the end of the year.

Reactivating dormant mines emerges as a critical strategy to address this supply shortage and bridge the immediate deficit in supply.

Price told Reuters he expects Kazatomprom to restart their dormant mines as early as this year.

“While we recognise upside price risk, we also expect Kazatomprom and Cameco to eventually reactivate their dormant mine capability, as the price rallies – to secure market share and deter entrants,” he said.

However there could be other ways to bridge the gap.

Bannerman Energy, an Australian uranium development company, told talks with prospective buyers have signaled there’s additional interest in new off-take agreements in the market.

Chief Executive Officer Brandon Munro commented; “It’s clear to us from those discussions that utilities want to see greater diversification of supply,” he said.

“We think the long-term picture remains strong.”

Demand Backing a Price Surge

This perspective is further reinforced by the increasing demand for uranium. With 436 operational nuclear reactors worldwide and an additional 173 in development, the demand for uranium is steadily growing.


Figure 2: Uranium Demand. Source: Visual Capitalist

Liberum forecasts demand at the end of 2024 to reach 174.7 million lbs, up from 170.4 million lbs last year.

Valent Asset Management Portfolio manager Jay Tatum told Reuters; “Uranium is having a moment on the demand side,” he said.

“It is cost effective. If it isn’t green, it is certainly green adjacent.”

In the wake of growing demand and widespread market attention, exploration Company’s are jumping on the U train, riding it all the way to the station.

Cobra Resources (LSE:COBR)

Cobra Resources is an exploration Company with a market capitalisation of £6.37 million and 3,261 square kilometre land package in South Australia, a pro-uranium mining jurisdiction hosting 25% of the world’s uranium resources and Australia’s sole operational uranium mines.

While its primary focus remains on its Boland ionic Rare Earth Element discovery and advancing in-situ mining recovery at the Wudinna Project, the Company has also expanded its portfolio by acquiring exploration licenses with significant potential for uranium.

These licenses are strategically located near IsoEnergy‘s (TSXV: ISO) Yarranna Uranium Project, which features four well-defined uranium occurrences characterised by roll-fronts hosting extensive zones of mineralisation and high-grade intersections.

Particularly, the Yarranna South East prospect’s eastern roll-front mineralisation has produced a multitude of noteworthy intersections, including:

  • 1 metre at 708 ppm U3O8 from 66 metres (IR1436)
  • 3 metres at 340 ppm U3O8 from 72 metres, including 1 metre at 420ppm U3O8 from 73 metres (IR1435)
  • 1 metre at 209 ppm U3O8 from 68 metres (IR1448)
  • 0.95 metres at 617 ppm eU3O8 from 69.95 metres (IR1065)

IsoEnergy has seen significant growth alongside the Project, with a market valuation now standing at $900 million CAD.

Cobra’s proximity to IsoEnergy showcases the substantial growth potential for the Company as it progresses with its dual exploration strategies

COBR’s London Stock Exchange-listed share price is currently trading at 0.98 Great British Pence (1.15pm UTC+ 8 hours).

Power Metal Resources PLC (LSE:POW)

With a market capitalisation of £20.92 million, Power Metal Resources stands out as a junior explorer worth watching, particularly due to its commanding land position in Canada’s Athabasca basin.

In December, Power made headlines with its strategic move to advance its uranium division through the conditional disposal of its Canadian uranium assets, marking a notable progression for the company.

Power’s uranium holdings in the Athabasca Basin, Saskatchewan, encompass seventeen wholly-owned properties, featuring projects with high prospects for uranium, intrusion-related uranium, and uraniferous pegmatites.

The Company has conducted extensive exploration across the portfolio yielding encouraging results and confirming historical prospectivity.

Results include high-grade uranium mineralisation, such as 1.09% U308 over 10.7 metres at Thibault Lake, grab samples reaching up to 3.54% U308 at Cook Lake, and soil samples showing concentrations of up to 13,200ppb Uranium at Tait Hill.

The Company’s potential isn’t going unnoticed – Rick Rule, one of the most prominent resources investors in Canada, has increased his ownership in Power Metal to just over 4.5%, further highlighting the significant upside potential for POW.

Power’s strategic business model involves acquiring opportunities, developing projects internally or through strategic joint ventures, and ultimately preparing them for disposal through outright sale or separate listing on a stock exchange, thereby consistently generating value for its shareholders through internal exploration and development efforts.

POW’s London Stock Exchange-listed share price is currently trading at 0.93 Great British Pence (1.15pm UTC+ 8 hours).

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