Uranium Week: Sprott Physical Uranium Trust Speculations

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U308 spot price improved slightly on the return of some buying interest pre and post Trump’s tariff announcement.

-Spot market weathers Trump’s reciprocal tariffs
-Supply concerns are overstated
-Analysts remain upbeat on U308 stocks

By Danielle Ecuyer

Taking stock at month’s end

US tariffs have had a resounding impact on U308 markets across the board. Petra Capital highlighted volumes in both the term and contracts markets continue to be “anaemic”.

Industry consultants TradeTech explain March only saw 1.4mlbs in U308 equivalent trading volumes recorded in the spot market, with prices vacillating between US$63.25 and US$64.50.

Petra observes the spot U308 price continues to lag the long-term price, with utilities adopting a wait-and-see approach before committing to buy stock in a period of such high uncertainty around tariffs.

The consultants observed utilities have preferenced one-time deliveries in the mid-term period, and six transactions were concluded in March plus one in the longer-term delivery market. Utilities were the buyers across all seven transactions.

TradeTech’s Mid-Term price indicator fell to US$70/lb from US$71/lb in late February. he Long-Term price indicator remnained unchanged over the month at US$80/lb.

Although both spot and term uranium markets remain subdued due to uncertainty around tariffs, major producers like Kazatomprom have been selling down inventories, with a decline of -11% in 2024.

Macro musings on uranium fundamentals

Diving into the Sprott Physical Uranium Trust, which is currently trading at a discount to NAV of circa -9.7%, Petra suggests this discount means the trust cannot issue new units, which is part of the underlying mandate.

Sprott Trust currently has cash of US$8.9m, which is sufficient to cover costs until June/July at a burn rate of around -US$3.4m per month and has not issued new units since January 2025 and not bought pounds since November 2024.

Speculation the trust would need to sell uranium holdings to cover management costs is possible, but Petra stresses speculation the trust would sell its 88.2mlb inventory is not viewed as realistic.

Alternatively, swapping the location of where the inventory is held could free up US$32m. The broker proposes swapping some or all the US-stored inventory, or 16mlbs, which is held at ConverDyn in Illinois and is attracting a premium to spot of US$2/lb with pounds held by Canadian utilities.

The potential to realise the funds could cover management expenses for ten months.

Observing other ideas floated by President Trump regarding the uranium market, Petra dismisses the idea the US, alongside China and Russia, reduces nuclear weapon holdings, based on the first nuclear disarmament and energy conversion deal.

Russia agreed in the first deal to convert 500 metric tons of highly enriched uranium from dismantled Soviet nuclear warheads into low-enriched uranium, which was in turn sold to the US to use in nuclear power plants.

With President Trump’s intention to broker a ceasefire between Ukraine and Russia, this has brought forth speculation the US ban on the importation of Russian U308 will be revisited, as well as the Russian ban on exports to the US.

The latter ban was approved by both Congress and Senate with bipartisan support, and a Presidential Executive Order will not be enough to have the legislation overturned.

Petra does not believe the US will cede control of US energy supplies to Russia again for fuel imports and argues it runs counter to the US Energy Secretary’s aim to achieve energy dominance.

Yet, despite the increase in supply, utilities have sat on their hands, awaiting more clarity around Trump’s tariffs.

Maximum uncertainty continues to underpin weak sentiment, with the broker emphasising the replacement rate contracting is yet to start and the uranium sector continues to offer “broad” value.

The preference remains for stocks with independent catalysts of positive news, rather than waiting for the replacement contracting cycle to pick up.

Within that context, preferred stocks in Australia are Lotus Resources ((LOT)), Buy rated alongside target price of 28c, and Aura Energy ((AEE)), Buy rated with a 36c target.

Petra also has a Buy rating on Alligator Energy ((AGE)), Bannerman Energy ((BMN)), and NexGen Energy ((NXG)) with target prices set at 10c, $4.23, and $14.10, respectively.

What happened last week

Ahead of President Trump’s tariff announcement last week, participants entered the U308 spot market on Monday and Tuesday, buying stock for Orano’s facility in France and Cameco’s plant in Canada with a total of 500,000lbs transacted at prices from US$64/lb to US$65.50/lb by the end of business on Tuesday.

Buyers returned to the market on Thursday post the tariff announcements, with two transactions for delivery at Cameco and one deal for ConverDyn’s facility at US$65.25/lb.

TradeTech’s U308 spot price indicator rose US$1.25 to US$65.25/lb. The Mid-Term U308 price indicator finished the week at US$70/lb and TradeTech’s Long-Term price indicator at US$80/lb.

Regarding tariffs, imports from Kazakhstan are subject to a 27% tariff, but the country’s Energy Ministry noted a significant proportion of exports to the US are not subject to additional tariffs because of the exclusion list.

The Ministry stated, “The basis of Kazakhstan’s exports to the United States are oil, uranium, silver, ferroalloys, and others. These categories, which account for 92 percent of deliveries, are included in the list of exceptions provided for by the decree of the US President.”

America achieved more uranium concentrate in 2024, around 676,939lbs U308, than any year since 2018, as a period of higher prices underpinned increased production, according to the US Energy Information Administration.

The rise comes from enCore Energy and Boss Energy (30%) and Peninsula Energy subsidiary Strata Energy’s plant in Wyoming.

Fourth quarter production came in at 375,401lbs of U308, which was higher than the annual production of the years 2019-2023.

Latest broker updates

Citi has maintained a Buy rating on Paladin Energy following the recent sell-off, expecting uranium prices to rise as contracting activity picks up.

Once geopolitical and tariff concerns abate, the broker expects contracting activity to pick up again, which is expected to underwrite higher U308 prices.

The analyst does not envisage the 21% US tariff on Namibia will impact the Langer Heinrich mine and expects it will most likely fall under exemption 6, “energy and other certain minerals that are not available to the United States”.

Citi lowers the FY25 EPS estimate for Paladin on the back of the flooding and is now forecasting a loss of -3c per share, due to a reduced production assumption, down -18%, and higher production costs.

Between Boss Energy and Paladin, the broker prefers the former on better operational performance.

Both stocks are Buy rated, with the Paladin target cut to $10.20 from $11.00. Boss’s target price sits at $3.30.

Short Interest

Prior to the Trump announcements and from the week as at April 1, Boss, Paladin, and Deep Yellow sit in the top three positions for short interest on the ASX at 24.77%, 15.5%, and 13.22%, respectively.

Lotus Resources comes in fourteenth at 9.12%, up from 7.28% a week earlier.

For more reading on uranium:

https://fnarena.com/index.php/2025/04/01/uranium-week-u3o8-renaissance-meets-tariffs/

https://fnarena.com/index.php/2025/03/25/uranium-week-small-positives/

https://fnarena.com/index.php/2025/03/18/uranium-week-tariff-paralysis/

Uranium companies listed on the ASX:

ASX CODE	DATE	LAST PRICE	WEEKLY % MOVE	52WK HIGH	52WK LOW	P/E	CONSENSUS TARGET	UPSIDE/DOWNSIDE
1AE	04/04/2025	0.0400	0.00%	$0.11	$0.03
AEE	04/04/2025	0.1100	-18.75%	$0.20	$0.10
AGE	04/04/2025	0.0200	-17.65%	$0.07	$0.02		$0.100	400.0%
AKN	04/04/2025	0.0100	0.00%	$0.02	$0.01
ASN	04/04/2025	0.0600	5.08%	$0.17	$0.05
BKY	04/04/2025	0.5000	8.33%	$0.66	$0.29
BMN	04/04/2025	1.9800	-12.99%	$4.87	$1.90		$7.400	273.7%
BOE	04/04/2025	2.0600	– 7.26%	$5.99	$1.99	65.2	$3.857	87.2%
BSN	04/04/2025	0.0100	– 7.14%	$0.14	$0.01
C29	04/04/2025	0.0400	0.00%	$0.13	$0.03
CXO	04/04/2025	0.0600	-14.47%	$0.17	$0.06		$0.090	50.0%
CXU	04/04/2025	0.0100	0.00%	$0.05	$0.01
DEV	04/04/2025	0.0700	-12.77%	$0.45	$0.07
DYL	04/04/2025	0.7900	-13.68%	$1.83	$0.80	-2430.0	$1.777	124.9%
EL8	04/04/2025	0.2100	– 8.33%	$0.62	$0.19
ERA	04/04/2025	0.0020	0.00%	$0.06	$0.00
GLA	04/04/2025	0.0100	0.00%	$0.03	$0.01
GTR	04/04/2025	0.0030	0.00%	$0.01	$0.00
GUE	04/04/2025	0.0500	0.00%	$0.13	$0.05
HAR	04/04/2025	0.0500	-16.13%	$0.14	$0.03
I88	04/04/2025	0.1200	-17.65%	$1.03	$0.12
KOB	04/04/2025	0.0500	0.00%	$0.18	$0.05
LAM	04/04/2025	0.7300	1.39%	$1.04	$0.48
LOT	04/04/2025	0.1400	-14.29%	$0.49	$0.13		$0.450	221.4%
MEU	04/04/2025	0.0300	– 9.52%	$0.06	$0.03
NXG	04/04/2025	6.6000	– 3.61%	$13.53	$6.49		$15.700	137.9%
ORP	04/04/2025	0.0300	0.00%	$0.12	$0.03
PDN	04/04/2025	4.0100	-10.57%	$17.98	$3.95	-59.8	$9.779	143.9%
PEN	04/04/2025	0.5700	-16.08%	$2.60	$0.55		$4.810	743.9%
SLX	04/04/2025	2.9200	– 7.48%	$6.74	$2.83		$6.900	136.3%
TOE	04/04/2025	0.1500	-15.79%	$0.51	$0.15
WCN	04/04/2025	0.0200	– 5.88%	$0.03	$0.01

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