Weekly Reports | Sep 17 2024
This story features PALADIN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: PDN
The brave new world continues to reveal the heightened risk of geopolitics when it comes to global commodity supplies. This week uranium was in focus as Russia suggests a retaliation against Western sanctions and Kazatomprom hits a transportation cost hurdle.
-U308 spot market takes the backseat to the mid-term market
-World’s largest uranium producer hints at major supply cuts
-Citi is tactically bullish on U308 prices
-UBS the new kid on the uranium stock stage
By Danielle Ecuyer
Higher activity in near-to mid-term markets
The disconnect between the spot and mid-term U308 market pricing continued last week, despite President Putin and the world’s largest uranium producer, Kazatomprom, making announcements which laid bare again the increasing role of geo-political tensions in commodity markets.
Volatility in the spot price market persisted last week, according to industry consultants TradeTech, with 800,000lbs traded in a price range from US$80lb down to US$79.75lb before finishing the week at US$80lb, a fall of -US$0.50.
TradeTech highlighted ongoing activity with buyers focusing on purchasing U308 on a near-to mid-term time horizon. Traders, financial groups and utilities were reported as active in the almost 2 million pounds of U308 trade across a delivery window from the beginning of 2025 through to 2027.
TradeTech’s Mid-Term price is US$86lb and the Long-Term price US$82lb.
Geopolitics takes centre stage
Uranium stock prices reacted positively over the week to two announcements.
Meirzhan Yussupov, Head of Kazatomprom suggested Kazakhstan may be required to redirect its uranium supplies away from European markets due to prohibitive transport costs.
The suggestion comes on the back of sanctions against Russia which means the traditional transport route through St. Petersburg is no longer viable. The alternative via Azerbaijan is -apparently- not cost efficient for the company.
Kazatomprom produces about 43% of U308 global supply to nuclear power plants.
President Putin also weighed into the space with statements suggesting a limit on the export of uranium in response to Western sanctions.
TradeTech emphasises the potential uncertainty to supplies is boosting U308 purchases in the term markets.
Citi updates its commodities outlook
Despite the softer spot market (U308 spot prices down -13% since the start of 2024, but 22% above 2023) Citi remains “tactically bullish” on uranium. As a base case, the broker forecasts the price could reach US$98lb later in 2024 with ongoing momentum to the upside in 2025, to a projected average of US$110lb.
Observing the Chinese market, Cit believes the country will play an ever-important role in demand for U308. The broker points to rising stockpiles and forecasts 450mlbs, peaking in 2028 and 300mlbs in 2050, or the same as two-years uranium supply for utilities to hold in inventories.
UBS initiates coverage on uranium stocks
From a macro perspective, UBS considers a flat U308 price at US$80lb is on the cards in the near-term because of a “flattish” cost curve for the commodity.
UBS remains positive on the outlook for nuclear energy but believes post COP 28 some government nuclear power targets are on the optimistic side.
Over the longer term, the broker forecasts the U308 price will trend to US$70/lb post 2035.
Regarding Paladin Energy ((PDN)), UBS points to a “conservative” earnings outlook or some -20% below consensus forecasts due to its more restrained estimate for uranium prices.
The stock is initiated with a Buy rating and a $10.90 target price.
Paladin was also in the news with Fission Uranium shareholders giving the thumbs up for the proposed acquisition. Canaccord Genuity was quick to remind investors the company would now become the third-largest listed uranium resource globally with an estimated 11.5mlbs according to Morgan Stanley.
The takeover will build scale and provide medium-term production growth for Paladin as well as bringing the company down the cost curve.
Morgan Stanley has lowered its target price to $12 from $16.65 because of the updated valuation on Langer Heinrich post the new technical study, including Fission contributing $2.40.
The FNArena daily monitored brokers have an average target price of $14.12 and are all have Buy-equivalent ratings.
Canaccord Genuity has a $16.50 target price, with an Overweight rating (Buy).
UBS also initiated with a Buy rating on Boss Energy ((BOE)) as the latter restarts its 100% owned Honeymoon Uranium project in South Australia.
The broker focuses on the expansion potential at Honeymoon via the inclusion of Gould’s Dam and Jason as satellite deposits. UBS proposes the extension of the resource is not being priced by the market and could result in the original mine doubling in scope with permitting and transport facilities to over 20 years from 11 years.
Alternatively, the expansion of capacity is possible. Target price of $3.50.
FNArena’s daily monitored brokers have an average target price of $4.59 with four Buy-equivalent ratings (including UBS) and one Hold.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 13/09/2024 | 0.0400 | 0.00% | $0.19 | $0.03 | |||
| AEE | 13/09/2024 | 0.1200 |  13.04% |
$0.36 | $0.11 | |||
| AGE | 13/09/2024 | 0.0400 | 2.56% |
$0.08 | $0.03 | $0.100 | 150.0% |
|
| AKN | 13/09/2024 | 0.0100 | 0.00% | $0.07 | $0.01 | |||
| ASN | 13/09/2024 | 0.0900 | 9.89% |
$0.20 | $0.07 | |||
| BKY | 13/09/2024 | 0.3400 | 0.00% | $0.45 | $0.26 | |||
| BMN | 13/09/2024 | 2.2900 | 15.82% |
$4.87 | $1.90 | $7.400 | 223.1% |
|
| BOE | 13/09/2024 | 2.8400 | 13.77% |
$6.12 | $2.38 | 20.8 | $4.590 | 61.6% |
| BSN | 13/09/2024 | 0.0300 |  – 3.23% |
$0.21 | $0.02 | |||
| C29 | 13/09/2024 | 0.0700 | 0.00% | $0.12 | $0.06 | |||
| CXO | 13/09/2024 | 0.1000 | 19.05% |
$0.45 | $0.08 | $0.090 | – 10.0% |
|
| CXU | 13/09/2024 | 0.0200 | 100.00% |
$0.06 | $0.01 | |||
| DEV | 13/09/2024 | 0.1400 | 0.00% | $0.45 | $0.11 | |||
| DYL | 13/09/2024 | 1.1300 | 20.42% |
$1.83 | $0.91 | -80.0 | $1.770 | 56.6% |
| EL8 | 13/09/2024 | 0.3300 | 9.68% |
$0.68 | $0.26 | |||
| ERA | 13/09/2024 | 0.0100 | 66.67% |
$0.08 | $0.00 | |||
| GLA | 13/09/2024 | 0.0100 | 0.00% | $0.04 | $0.01 | |||
| GTR | 13/09/2024 | 0.0030 | 0.00% | $0.02 | $0.00 | |||
| GUE | 13/09/2024 | 0.0600 | 20.00% |
$0.18 | $0.05 | |||
| HAR | 13/09/2024 | 0.0400 | -25.00% |
$0.28 | $0.03 | |||
| I88 | 13/09/2024 | 0.4900 | 13.33% |
$1.03 | $0.14 | |||
| KOB | 13/09/2024 | 0.1000 | -16.67% |
$0.18 | $0.07 | |||
| LAM | 13/09/2024 | 0.5500 | -25.17% |
$1.04 | $0.55 | |||
| LOT | 13/09/2024 | 0.2500 | 20.93% |
$0.49 | $0.20 | $0.710 | 184.0% |
|
| MEU | 13/09/2024 | 0.0400 | 8.11% |
$0.06 | $0.03 | |||
| NXG | 13/09/2024 | 8.6100 | 9.71% |
$13.66 | $7.89 | $16.200 | 88.2% |
|
| ORP | 13/09/2024 | 0.0600 | -14.29% |
$0.12 | $0.04 | |||
| PDN | 13/09/2024 | 9.1200 | 11.95% |
$17.98 | $8.15 | 18.2 | $14.120 | 54.8% |
| PEN | 13/09/2024 | 0.0800 | 5.26% |
$0.15 | $0.07 | 26.7 | $0.260 | 225.0% |
| PNX | 13/09/2024 | 0.0040 | 0.00% | $0.01 | $0.00 | |||
| SLX | 13/09/2024 | 3.4900 | 3.14% |
$6.74 | $2.93 | $7.200 | 106.3% |
|
| TOE | 13/09/2024 | 0.2600 | 27.27% |
$0.70 | $0.01 | |||
| WCN | 13/09/2024 | 0.0200 | 0.00% | $0.02 | $0.01 |
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