Weekly Reports | Jun 25 2024
This story features PALADIN ENERGY LIMITED. For more info SHARE ANALYSIS: PDN
Still rivers run deep when it comes to the current uranium market as short term prices weaken, but US authorities shore up support for new nuclear technologies and Paladin stakes its claim as a global uranium resource company.
-U308 spot market, did someone mention quiet?
-US invests US$900m in developing nuclear reactor technologies
-Paladin Energy in pursuit of creating a uranium resource powerhouse
By Danielle Ecuyer
The week that was for the U308 spot market
For now at least, the proposed Russian uranium ban has taken the wind out for the sales of the U308 spot market, which industry experts TradeTech described as “exceptionally” quiet last week.
The market has taken a step back from supply side concerns as the slated Department of Energy waivers on Russian imports have alleviated market anxiety over supply disruption.
The U308 price declined -US$1.75 to US $83.25 last week with the only transaction reported on Tuesday afternoon, post four quiet days.
Three transactions were finally concluded for July delivery at Canada’s Cameco, with 50,000lbs bought at US$83.90, followed by a second at US$82.50lb, and a third at US$83.50.
TradeTech also points to utilities shifting focus to the mid-term and long-term deliveries market.
By shifting the time factor, demand in the spot market traditionally slows as sellers wait to establish whether buyers have been successful. In the event the seller is not awarded the deal, they move into the spot market to sell, often depressing the price, as transpired in the week past.
The U308 mid-term price sits at US$93.50 and the long-term price at US$80.
In the last month, the U308 price has retreated by -9% and is off -22% from the previous high of US$107 in early February. TradeTech highlights it remains 48% above the spot value in the corresponding period last year.
Industry news in focus
The US continues to move forward with further fiscal support for its domestic nuclear energy industry. The Department of Energy announced a US$900m support package for the initial deployment of Generation 111+Small Modular Reactor technologies. TradeTech highlights this was part of the Bipartisan Infrastructure Law targeted to strengthen the US nuclear industry.
Meanwhile, the Swedish owners of the Forsmark and Ringhals nuclear power plants announced an extension to the reactors’ lives to 80 years from 60 years.
Paladin Energy drives capacity expansion in Canada
What has been described by Morgan Stanley as the potential for Paladin Energy ((PDN)) to become one of the largest players on the global uranium supply stage, the company announced its $1.253bn acquisition of Canadian Fission Uranium Corp.
The Fission Patterson Lake South project is more advanced with higher grades and lower cost than Paladin’s Michelin mine, Morgan Stanley highlights.
Citi finds the combined resource of 544mlb would make the merged Fission/Paladin Energy entity the third largest global resource for a listed company. When measured in market capitalisation, BHP Group and Cameco are the numbers one and two.
The timelines for the two projects synchronise with Fission’s underground mine production slated for 2029 to 2039 and Paladin’s Michelin not anticipated to come on stream until 2035.
Fission is reported as trading at a discount to its peers making it an attractive prospect to Paladin Energy. Fission shareholders will receive 0.1076 Paladin shares for each Fission share, which will enable Fission shareholders to own 24% of the combined group.
Paladin is expected to retain a dual listing on the Toronto Stock Exchange and the ASX.
Citi rates the stock a Buy with a $17 target price: Morgan Stanley has an Overweight rating and a $16.65 target.
The FNArena consensus sits at $16.44.
For more reading:
https://fnarena.com/index.php/2024/06/20/all-aboard-for-the-nuclear-renaissance/
https://fnarena.com/index.php/2024/06/18/uranium-week-spot-price-hits-pause/
https://fnarena.com/index.php/2024/06/12/uranium-week-namibia-in-focus/
https://fnarena.com/index.php/2024/06/04/uranium-week-preparing-for-the-nuclear-age/
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 24/06/2024 | 0.0700 |  16.67% |
$0.19 | $0.05 | |||
| AGE | 24/06/2024 | 0.0500 |  – 3.85% |
$0.08 | $0.03 | $0.100 | 100.0% |
|
| BKY | 24/06/2024 | 0.3450 | – 1.43% |
$0.80 | $0.26 | |||
| BMN | 24/06/2024 | 3.4900 | – 7.94% |
$4.87 | $1.44 | $7.400 | 112.0% |
|
| BOE | 24/06/2024 | 3.9700 | – 3.66% |
$6.12 | $2.83 | 40.6 | $5.438 | 37.0% |
| DYL | 24/06/2024 | 1.3700 | – 4.21% |
$1.83 | $0.65 | -97.1 | $1.770 | 29.2% |
| EL8 | 24/06/2024 | 0.4000 | -10.87% |
$0.68 | $0.29 | |||
| ERA | 24/06/2024 | 0.0300 | -20.00% |
$0.08 | $0.03 | |||
| LOT | 24/06/2024 | 0.3300 | – 9.59% |
$0.49 | $0.17 | $0.660 | 100.0% |
|
| NXG | 24/06/2024 | 10.2100 | – 5.18% |
$13.66 | $6.56 | $17.500 | 71.4% |
|
| PDN | 24/06/2024 | 12.2800 | – 2.29% |
$17.98 | $6.80 | -243.9 | $16.310 | 32.8% |
| PEN | 24/06/2024 | 0.1000 | – 4.76% |
$0.19 | $0.08 | $0.260 | 160.0% |
|
| SLX | 24/06/2024 | 5.0500 | – 2.08% |
$6.74 | $2.92 | $7.600 | 50.5% |
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