Weekly Reports | Sep 03 2024
This story features PALADIN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: PDN
Brokers and industry consultant TradeTech question the growing disconnect between the U308 spot price and uranium market demand/supply dynamics.
-Activity pops in the last week of August
-U308 spot price remains under pressure
-Aussie producers simply too cheap?
By Danielle Ecuyer
Buyers surface as U308 price falls
It has not escaped the attention of Petra Capital that Kazatomprom’s updated 2025 production guidance (Aug 23) of 65-69mlbs of U308, a reduction of -8-13mlbs from guidance at the start of 2024, has not had the expected impact on share prices of ASX-listed uranium companies.
Industry consultant TradeTech makes a similar observation in its August monthly update regarding the world’s largest uranium producer’s revised 2024 and 2025 production and the (absent) resulting reaction in spot uranium prices.
Kazatomprom revised up its 2024 production estimates at the start of August as part of its 2Q market update, causing a slide in U308 prices.
In contrast, the downgrade in 2025 expected production did not move the uranium price upwards.
Over August, the TradeTech uranium spot price indicator declined from US$85.50lb on August 1 to US$79lb at the end of the month. Although market observers will no doubt draw some comfort that activity levels picked up in the final week.
Some 13 transactions equating to 1.2mlbs of U308 were evidenced in the final week of August. TradeTech notes the last time activity had surged over 1mlbs occurred was in May.
The U308 spot price fell below US$80lb for the first time since November 2023, representing a decline of -14% since the start of the current calendar year.
Encouragingly, the fall brought out buyers including traders, financials, producers and utilities, TradeTech surmises.
Over the course of last week, the spot price declined -US$2lb to US$79lb, with negotiations between parties ongoing after the close.
TradeTech’s Mid-Term U308 price indicator ended the week and month at US$90lb, and the Long-Term Price Indicator at US$82lb.
The positive macro picture keeps on keeping on
Against a backdrop of price weakness and pullback in production supply guidance, the market has experienced ongoing positive macro news, in terms of increased potential longer-term demand for uranium with rising nuclear power generation.
On August 24, Switzerland was in focus with its government seeking a U-turn on the 2018 ban for new nuclear reactors. The government pointed to a lift in the ban to meet its climate targets. The country has four reactors in operation.
Serbia is also reported by TradeTech as considering the removal of its ban on nuclear power. While China’s State Council gave approval to add four Westinghouse AP1000 technology-based plants to new projects at Bailong Nuclear Power and Lufeng Nuclear Power Plant.
Another eight reactors are under construction.
What’s in focus for Aussie uranium stocks?
As highlighted, Petra Capital questions the level of short interest in uranium stocks, given the changing macro backdrop from Kazatomprom’s reduction in 2025 production guidance.
The broker believes short positions will need to be unwound at some stage, recommending a tactical exposure to the most shorted stocks.
FNArena’s The Short Report (ASIC data up until August 27th) shows short interest for the four most shorted ASX-listed companies connected to the uranium sector as follows:
Paladin Energy ((PDN)) has a 9.76% short interest; Boss Energy ((BOE)) at 8.88%; Deep Yellow ((DYL)) at 8.31% and Lotus Resources ((LOT)) at 6.5%.
The Short Report: https://fnarena.com/index.php/analysis-data/the-short-report/
Paladin and Boss Energy reported FY24 earnings results last week.
Production at Langer Heinrich continues to scale, meeting management’s guidance. The reversal of a US$92m inventory impairment resulted in Paladin booking a net profit for FY24.
Bell Potter believes the Fission Uranium acquisition will proceed despite Fission delaying the vote for approval until September 9 to reportedly gain more shareholder support.
Boss Energy’s operational performance also came in above expectations with a revaluation of its inventory with daily monitored brokers Bell Potter and Shaw and Partners both questioning the share price level with the Honeymoon project back into production alongside the re-start of 30% owned Alta Mesa in the US.
TradeTech, along with the brokers, points to a seasonally better period for the uranium market with London’s World Nuclear Association symposium in the first week of September which has the potential for more good macro news and the re-start of utility contracting activities.
Shaw expects the uranium sector will perform well in the fourth quarter of 2024.
The FNArena consensus price target for Paladin stands at $16.088, with the latest updates revealing two Buys, one of which is rated High risk.
The consensus target price for Boss stands at $4.863 with two Buys.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 30/08/2024 | 0.0500 |  -16.67% |
$0.19 | $0.05 | |||
| AEE | 30/08/2024 | 0.1200 | -10.71% |
$0.36 | $0.12 | |||
| AGE | 30/08/2024 | 0.0400 | – 9.30% |
$0.08 | $0.03 | $0.100 |  150.0% |
|
| AKN | 30/08/2024 | 0.0100 | 0.00% | $0.07 | $0.01 | |||
| ASN | 30/08/2024 | 0.1000 | -15.65% |
$0.20 | $0.07 | |||
| BKY | 30/08/2024 | 0.3550 | 5.97% |
$0.45 | $0.26 | |||
| BMN | 30/08/2024 | 2.2400 | – 6.88% |
$4.87 | $2.16 | $7.400 | 230.4% |
|
| BOE | 30/08/2024 | 2.7400 | – 9.27% |
$6.12 | $2.77 | 22.7 | $4.863 | 77.5% |
| BSN | 30/08/2024 | 0.0300 | – 2.94% |
$0.21 | $0.02 | |||
| C29 | 30/08/2024 | 0.0800 | 0.00% | $0.12 | $0.06 | |||
| CXO | 30/08/2024 | 0.0900 | – 6.00% |
$0.45 | $0.08 | $0.093 | 3.7% |
|
| CXU | 30/08/2024 | 0.0200 | 0.00% | $0.06 | $0.01 | |||
| DEV | 30/08/2024 | 0.1900 | 2.63% |
$0.45 | $0.16 | |||
| DYL | 30/08/2024 | 1.0900 | – 7.26% |
$1.83 | $0.92 | -77.1 | $1.770 | 62.4% |
| EL8 | 30/08/2024 | 0.3200 | – 7.25% |
$0.68 | $0.26 | |||
| ERA | 30/08/2024 | 0.0050 | -75.00% |
$0.08 | $0.01 | |||
| GLA | 30/08/2024 | 0.0100 | 0.00% | $0.04 | $0.01 | |||
| GTR | 30/08/2024 | 0.0030 | 0.00% | $0.02 | $0.00 | |||
| GUE | 30/08/2024 | 0.0600 | 0.00% | $0.18 | $0.05 | |||
| HAR | 30/08/2024 | 0.0500 | 0.00% | $0.28 | $0.05 | |||
| I88 | 30/08/2024 | 0.5900 | -10.61% |
$1.03 | $0.14 | |||
| KOB | 30/08/2024 | 0.1300 | 0.00% | $0.18 | $0.06 | |||
| LAM | 30/08/2024 | 0.7000 | 15.00% |
$1.04 | $0.56 | |||
| LOT | 30/08/2024 | 0.2300 | – 8.00% |
$0.49 | $0.20 | $0.685 | 197.8% |
|
| MEU | 30/08/2024 | 0.0400 | – 2.63% |
$0.06 | $0.03 | |||
| NXG | 30/08/2024 | 8.7100 | – 6.86% |
$13.66 | $8.18 | $16.200 | 86.0% |
|
| ORP | 30/08/2024 | 0.0500 | -20.00% |
$0.12 | $0.04 | |||
| PDN | 30/08/2024 | 9.6000 | -10.02% |
$17.98 | $8.75 | 15.8 | $16.088 | 67.6% |
| PEN | 30/08/2024 | 0.0800 | -10.11% |
$0.15 | $0.08 | 26.7 | $0.260 | 225.0% |
| PNX | 30/08/2024 | 0.0040 | 0.00% | $0.01 | $0.00 | |||
| SLX | 30/08/2024 | 3.8800 | -11.99% |
$6.74 | $2.93 | $7.200 | 85.6% |
|
| TOE | 30/08/2024 | 0.2000 | -10.42% |
$0.70 | $0.01 | |||
| WCN | 30/08/2024 | 0.0100 | 0.00% | $0.02 | $0.01 |
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CHARTS
For more info SHARE ANALYSIS: BOE - BOSS ENERGY LIMITED
For more info SHARE ANALYSIS: DYL - DEEP YELLOW LIMITED
For more info SHARE ANALYSIS: LOT - LOTUS RESOURCES LIMITED
For more info SHARE ANALYSIS: PDN - PALADIN ENERGY LIMITED