Weekly Reports | Feb 13 2024
This story features BOSS ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: BOE
Recent uncertainty surrounding global uranium production has led to spot price volatility around the US$100/lb mark.
-Uranium spot price falls
-Uncertainty in Kazakhstan and Canada impacting
-Broker picks in the Australian-listed space
By Greg Peel
Recent confirmation from Kazatomprom it would likely miss its early targets for production in 2024 and 2025 due to challenges with sulphuric acid deliveries and wellfield development, that 2024 guidance has been downgraded by -13%, and that 2025 remained “uncertain”, had the spot uranium price pushing through the psychological US$100/lb mark and up to US$107/lb.
The spot price had been surging up to that level based on supply uncertainty and speculative players in the market. Now the US$100 mark has been reached, prices have exhibited increased volatility.
Last week news emerged the president of Kazakhstan had ousted his cabinet and had given Kazatomprom a number of tasks aimed at improving the company’s performance. The news caused market participants to step back to assess the potential impact of the developments, industry consultant TradeTech reports.
With a total of 850,000lbs U3O8 changing hands last week, TradeTech’s weekly spot price indicator fell -US$4.00 to US$103.00/lb.
Contagion?
The drop was largely in response to the reaction of investors and speculative buyers who were expecting the difficulties highlighted by Kazatomprom would flow over to Canada’s Cameco, one of Kazatomprom's joint venture partners, TradeTech notes. However, Cameco expects to weather the interruption in Kazatomprom production by utilising a variety of tools, including inventories and its diverse asset portfolio.
Cameco issued December quarter and full year results last week, reporting net earnings and cash from operations in 2023 more than doubled compared with 2022, as the company benefited from higher sales volumes and realised prices in its uranium and fuel services segments.
Cameco also highlighted as of end-2023 it had commitments for delivery of an average of about 27mlbs of uranium per year from 2024 through 2028.
TradeTech’s term price indicators remain at US$103/lb (mid-term) and US$72/lb (long).
Australian Players
Bell Potter estimates Kazatomprom’s downgrade equates to roughly -7% of 2023 production. The broker’s updated 2024 supply/demand balance now shifts to a deficit of -32mlbs, or some -23% of 2023 production.
Bell Potter sees a risk of further downgrades to 2025 guidance, which was originally going to see the business produce at 100% capacity. A full scrapping of 2025 growth would further exacerbate the global supply deficit and place upward pressure on both spot and long-term contract prices for U3O8. If so, the current spot price around US$100/lb is likely to face upside risk.
For Australian-listed uranium producer/developers, Bell Potter remains in favour of Boss Energy ((BOE)), Paladin Energy ((PDN)), Deep Yellow ((DYL)) and Alligator Energy ((AGE)) as these businesses offer an alternative supply source from the global heavyweights in stable jurisdictions.
Boss and Paladin are approaching the restart of their respective assets over the next six months, and have the ability to capture near-term price spikes.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 12/02/2024 | 0.1700 |  6.25% |
$0.19 | $0.05 | |||
| AGE | 12/02/2024 | 0.0690 |  -12.66% |
$0.08 | $0.03 | $0.100 | 44.9% |
|
| BKY | 12/02/2024 | 0.3150 | 10.53% |
$0.80 | $0.26 | |||
| BMN | 12/02/2024 | 3.4900 | – 4.90% |
$3.99 | $1.19 | $7.040 | 101.7% |
|
| BOE | 12/02/2024 | 5.2400 | -13.39% |
$6.12 | $2.02 | 189.3 | $5.720 | 9.2% |
| DYL | 12/02/2024 | 1.4750 | – 8.67% |
$1.76 | $0.48 | $1.640 | 11.2% |
|
| EL8 | 12/02/2024 | 0.5900 | – 9.23% |
$0.68 | $0.27 | |||
| ERA | 12/02/2024 | 0.0550 | – 8.33% |
$0.26 | $0.03 | |||
| LOT | 12/02/2024 | 0.3300 | – 9.59% |
$0.38 | $0.15 | $0.720 | 118.2% |
|
| NXG | 12/02/2024 | 11.6900 | – 7.15% |
$12.99 | $5.11 | |||
| PDN | 12/02/2024 | 1.3250 | – 5.02% |
$1.46 | $0.52 | 527.1 | $1.513 | 14.2% |
| PEN | 12/02/2024 | 0.1300 | – 7.14% |
$0.20 | $0.08 | $0.340 | 161.5% |
|
| SLX | 12/02/2024 | 5.1000 | – 2.86% |
$5.78 | $2.92 | $7.600 | 49.0% |
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CHARTS
For more info SHARE ANALYSIS: AGE - ALLIGATOR ENERGY LIMITED
For more info SHARE ANALYSIS: BOE - BOSS ENERGY LIMITED
For more info SHARE ANALYSIS: DYL - DEEP YELLOW LIMITED
For more info SHARE ANALYSIS: PDN - PALADIN ENERGY LIMITED