Uranium Week: Demand And Supply

This story features BANNERMAN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: BMN

Attendees at the World Nuclear Symposium last weak grappled with supply issues in Canada and Niger and new demand from the SPUT.

-World Nuclear Symposium held in London
-Sanctions on Niger now threatening uranium supply
-The SPUT is back

By Greg Peel

The World Nuclear Association and the Emirates Nuclear Energy Corp, with support from the International Atomic Energy Agency, launched the Net Zero Nuclear initiative on September 7, during the opening session of the World Nuclear Symposium held in London last week.

The initiative calls for unprecedented collaboration between leaders and industry leading up to COP28 later this year, industry consultant TradeTech reports. It calls for the recognition of nuclear as a “green energy source” and advocacy for the tripling of nuclear power capacity to accelerate the transition to low-carbon energy systems.

(Note: COP stands for Conference of the Parties to the United Nations Framework Convention on Climate Change, in case you were wondering.)

A presentation by the World Energy Council Secretary General highlighted a recent WEC survey, which reveals a shifting outlook. The survey asked: How is investment being reallocated in your country in response to new energy security, price, and affordability?

Nuclear represented about 15% — nearly as much as offshore renewables, which shows that nations are seriously reviewing their energy supply mix and diversification, TradeTech notes.

The 2023 edition of WNA's Nuclear Fuel Report highlights that nuclear power continues to meet 10% of global electricity demand, accounts for 25% of low carbon electricity production, and it is expected to play a growing role in future energy supply and low-carbon economy. Notably, geopolitical instability has led to increased interest in nuclear power for energy security.

Both Sides of the Ledger

Receiving much attention in London were recent developments in both the supply and demand sides of the uranium market.

On the supply side, Canada’s Cameco provided a market update last week regarding challenges at its Cigar Lake mine and Key Lake mill that are expected to impact the 2023 production forecast.

Having for weeks suggested the coup in Niger has not upset business as usual, French miner Orano last week announced it is halting the processing of uranium at one of its facilities because international sanctions imposed following the coup in July have created logistical difficulties.

Niger had been supplying some 25% of European uranium demand, but the EU has suggested there is enough inventory on hand currently to see it through.

On the demand side, last week’s Uranium Weekly noted Morgan Stanley’s suspicion the Sprott Physical Uranium Trust may be ready to re-enter the market after having been quiet since April. The value of listed SPUT units had fallen below the net tangible asset value of uranium held, which has previously sparked SPUT back into action on two occasions.

Last week SPUT filed a new prospectus with Canadian regulatory authorities announcing an updated at-the-market equity program to issue up to an additional US$125m in trust units. SPUT intends to use proceeds from the program to acquire physical uranium.

Price Impact

With both sides of the demand/supply balance suggesting higher prices, it’s of no surprise sellers backed off their offers last week. But because everyone was in London, activity was scant.

TradeTech reports only one transaction concluded in the spot market, at US$62.00/lb. Hence TradeTech’s weekly spot price indicator has risen US$1.00 to US$62.00/lb.

No transactions were reported in term markets. TradeTech’s term price indicators remain at US$62.00/lb (mid-term) and US$60.00/lb (long).

Bannerman Energy

Australian-listed Bannerman Energy ((BMN)) last week provided an update on various workstreams at its advanced Etango Uranium Project in the Erongo Region of Namibia, where all environmental approvals have been obtained for the construction and operation of a mine.

The company said in a September 4 statement overall Front-End Engineering and Design (FEED) activities for the project are progressing to plan and budget.

Bannerman also noted its strategy remains unchanged – advancing FEED, financing, and other key workstreams for the Etango Project, while maintaining strong balance sheet liquidity and “strategic patience” with respect to satisfaction of key external factors.

This approach is advancing Etango toward a targeted positive Final Investment Decision (FID), uranium market permitting, during the first half of 2024. Construction of the Etango Project is expected to take approximately 34 months following the FID.

Others

Stockbroker Bell Potter is bullish on the outlook for uranium, noting if current industry projections prove correct, the world will see a net addition of 40 large-scale reactors annually for the next 27 years; this is a projected rate of deployment six times that of the previous decade.

Bell Potter offers a few suggestions as to how to play this theme best via the ASX, starting with soon-to-be-producers Boss Energy ((BOE)) and Paladin Energy ((PDN)). Other suggestions are Deep Yellow ((DYL)), Alligator Energy ((AGE)) and Lotus Resources ((LOT)).

Uranium companies listed on the ASX:

ASX CODE	DATE	LAST PRICE	WEEKLY % MOVE	52WK HIGH	52WK LOW	P/E	CONSENSUS TARGET	UPSIDE/DOWNSIDE
1AE		0.0700	0.00%	$0.28	$0.05
AGE		0.0600	0.00%	$0.08	$0.03
BKY	02/01/2008	0.3900	0.00%	$0.80	$0.25
BMN	02/01/2008	2.4300	0.00%	$2.52	$1.19		$3.200	31.7%
BOE		3.9600	0.00%	$4.16	$1.97		$3.540	-10.6%
DYL	02/01/2008	0.9900	0.00%	$1.22	$0.48
EL8		0.5000	0.00%	$0.58	$0.27
ERA	02/01/2008	0.0400	0.00%	$0.30	$0.03
LOT		0.2600	0.00%	$0.27	$0.15		$0.530	103.8%
NXG		8.6000	0.00%	$10.40	$0.00
PDN	02/01/2008	0.9100	0.00%	$0.95	$0.52	105.8	$1.123	23.4%
PEN	02/01/2008	0.0900	0.00%	$0.20	$0.09		$0.270	200.0%
SLX	02/01/2008	3.3500	0.00%	$5.32	$2.56		$5.800	73.1%

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