Uranium Week: Paladin’s First Shipment

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By Rudi Filapek-Vandyck

Australia is the world’s fourth producer of uranium, behind Kazakhstan, Canada and Namibia, thanks to BHP Group’s ((BHP)) Olympic Dam mine in the heart of the country.

ASX-listed Paladin Energy ((PDN)) is resuming mining at its Langer Heinrich mine and reported shipping its first sale to a customer on July 12th. Paladin’s operation is only getting re-started, but even when Langer Heinrich reaches full production, this won’t change the world rankings for producing countries.

Langer Heinrich is in Namibia.

None of this should spoil the enthusiasm for uranium exposure among Australian investors. Management at Paladin has grabbed the opportunity to re-iterate guidance for FY25 (current running financial year, with FY24 to be reported in August). Brokers are equally optimistic with all four monitored daily, ex Macquarie which still is under research restriction, plus Canaccord Genuity rating the stock a Buy.

The price of uranium has come under pressure this year, having first rallied steeply from mid-year last year to above US$100/lb, dragging down most share prices for explorers, developers and soon-to-be producers. For Paladin, price targets vary from $15.70 to $16.65; all significantly above today’s share price of $12.16.

Optimism Dominates at Petra Capital

A sector update by Petra Capital this week highlighted the sector’s greenfield developers have been underperforming brownfield developers and producers, even with Bannerman Energy ((BMN)) and Deep Yellow ((DYL)) posting strong rallies throughout the first half of the calendar year of respectively 22% and 23%.

Most share prices have returned negatively over the period which suggests to the broker we are still early in the new up-cycle. The good news is Petra Capital is expecting investor interest to broaden beyond producers in the second half. The three key ETFs covering the industry returned 4% on average.

Petra Capital’s preferred exposures for Australian investors include Lotus Resources ((LOT)), Bannerman Energy, Nexgen Energy ((NXG)), Aura Energy ((AEE)) and, among explorers, Devex Resources ((DEV)) and Global Uranium and Enrichment Ltd ((GUE)).

Shares that performed positively since January 1 include Silex Systems ((SLX)), Paladin Energy, Lotus Resources, Deep Yellow, Bannerman Energy, Berkeley Energeia, Cauldron Energy, Infini Resources ((I88)), Marmota Ltd ((MEU)), White Cliff Minerals ((WCN)), C29 Metals ((C29)), and Anson Resources ((ASN)).

Quiet Spot Books Another Fall

Meanwhile, industry consultant TradeTech only recorded one spot transaction last week, with spot uranium losing another -US$2/lb to US$84/lb. There were no transactions in term, conversion or enrichment markets.

It was the week of the Nuclear Energy Institute’s Nuclear Fuel Supply Forum and, clearly, the market went quiet while attendees and participants yet again discussed the new framework for American imports which are aimed at banning Russian material as soon as practically possible.

As per TradeTech, a recent 8-K SEC company filing revealed the US Department of Energy (DOE) has issued a waiver to Centrus on July 18 allowing the company to import low enriched uranium (LEU) from Russia for deliveries already committed by the company to its US customers for the years 2024 and 2025.

A similar request from Centrus to supply foreign customers is still under DOE review. Centrus has also put in a waiver request for US customers yet to be specifically committed to.

Putting last week’s price weakness in perspective, TradeTech points out its weekly spot uranium price is now down some -9% calendar year-to-date, but still 50% up on the price a year ago.

TradeTech’s mid-term indicator is currently US$93/lb, while its long-term indicator is US$80/lb. TradeTech’s production cost indicator sits at US$57.80/lb.

Uranium companies listed on the ASX:

ASX CODE	DATE	LAST PRICE	WEEKLY % MOVE	52WK HIGH	52WK LOW	P/E	CONSENSUS TARGET	UPSIDE/DOWNSIDE
1AE	22/07/2024	0.0600	-33.33%	$0.19	$0.06
AGE	22/07/2024	0.0500	-10.00%	$0.08	$0.03
BKY	22/07/2024	0.3450	1.47%	$0.46	$0.26
BMN	22/07/2024	2.8500	– 9.21%	$4.87	$1.44		$7.400	159.6%
BOE	22/07/2024	3.7100	– 6.73%	$6.12	$2.83	37.6	$5.050	36.1%
DYL	22/07/2024	1.2300	-12.63%	$1.83	$0.65	-89.3	$1.770	43.9%
EL8	22/07/2024	0.3500	-11.69%	$0.68	$0.29
ERA	22/07/2024	0.0400	0.00%	$0.08	$0.03
LOT	22/07/2024	0.3000	-14.49%	$0.49	$0.20		$0.660	120.0%
NXG	22/07/2024	9.9000	– 8.68%	$13.66	$6.84		$17.500	76.8%
PDN	22/07/2024	12.1100	– 8.47%	$17.98	$7.25	-96.0	$16.287	34.5%
PEN	22/07/2024	0.1000	0.00%	$0.15	$0.08	33.3	$0.260	160.0%
SLX	22/07/2024	4.9200	– 4.08%	$6.74	$2.92		$7.600	54.5%

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