Weekly Reports | Sep 24 2024
This story features PALADIN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: PDN
Hyperscaler Microsoft follows Amazon into a major nuclear energy supply contract but this fails to lift activity and price enthusiasm in the spot market. Paladin’s Fission acquisition in question; Lotus Resources scoping study reveals higher costs and global banks commit to nuclear funding.
-Spot uranium market remains in the doldrums
-International Atomic Energy Agency forecasts on the up
-Is Lotus the new Paladin?
-Financing drought breaks
-Short sellers lift positions
By Danielle Ecuyer
Lack of activity becalms spot market
In what transpired as another listless week of activity, industry consultants TradeTech report the spot market experienced a lack-of-buying interest, with downward pressure on the U308 price, as sellers sought to attract buying interest.
The spot price declined -US$0.75 to US$79.25 with a further 50,000lb transactioned after the close of market on Friday at US$79lb.
TradeTech explains the disconnect between the spot market and the more bullish longer-term scenario as the time difference between current levels of demand and the longer lead times of bringing new nuclear generating capacity on stream.
The highlight of the week for U308 enthusiasts came with Friday’s announcement between Constellation Energy and Microsoft in a 20-year off-take agreement for nuclear power to feed the technology giant’s growing data centre energy demand.
The project involves the restart of Three Mile Island Unit 1, five years after it was decommissioned, under the name of the Crane Clean Energy Centre.
An estimated 3,400 jobs both direct and indirect will be involved for the investment to restore the plant, including approval from the US Nuclear Regulatory Commission.
Constellation aims to the bring the project on stream by 2028 adding around 835MW of energy to the grid.
While the medium to longer term outlook for demand continues to improve, as TradeTech highlights, it will be multiple years before increased nuclear power capacity equates to buying interest.
The consultants also point to the absence of buying interest from hedge funds and investors which were prevalent between 2021 and 2023. Buying interest in the spot market is characterised by a “small number of players and trading is thin”.
TradeTech’s Mid-Term U308 Price Indicator is US$86lb, and the Long-Term Price Indicator US$82lb. The term markets are where more of the Geo-politics and longer-term supply dynamics come to the fore.
In addition to Kazatomprom’s recent announcement that shipments can no longer be facilitated to Europe via St Petersburg (see last week’s Uranium Weekly, listed below), the US government is investigating the possible exportation of Chinese enriched uranium while the country is importing enriched uranium from Russia.
In other macro news, the International Atomic Energy Agency’s Energy, Electricity and Nuclear Power Estimates for the Period up to 2050 were released last week.
TradeTech observes for the fourth year in a row the Agency has increased expectations for global nuclear capacity, now estimating it will expand two-and-a-half times current capacity by 2050 compared to 2023.
Australian uranium miners in focus
Having received shareholder approval for the acquisition of Fission Uranium Corp, Paladin Energy ((PDN)) announced it received a notification that CGN Mining Co., a subsidiary of China Nuclear Power which holds a 11.86% stake in Fission, that it will not be supporting the acquisition.
The Supreme Court of British Columbia will provide a final ruling on the takeover with the court due to resume on September 26.
Lotus Energy ((LOT)) took the stage this week with an updated scoping study for its greenfield project, Letlhakane Uranium Project. Bell Potter couldn’t hide its disappointment from the latest update which revealed results similar in the A-Cap 2015 technical report, from whom Lotus acquired the asset.
The analyst highlighted higher costs as a point of concern with both capital and operating expenses coming in above peers.
Canaccord Genuity assesses the base case for the project as 3mlbs p.a. versus previous expectations of 3.5mlbs p.a. with a 15-year mine life against 20-years. Estimated capex of -US$488.5m or a capital intensity of US$162.8/mlb versus the previous forecast of US$150/mlb.
Management is aiming to improve the mining techniques with a reduction in acid consumption which Canaccord believes has scope to enhance the project and reduce the estimated cash costs by US$6lb.
Despite a more downbeat view on the scoping study, brokerage Bell Potter remains positive on the restart of Kayelekera, retaining a Speculative Buy rating. The target price is lowered to 50c from 70c because of the lower ascribed valuation on Letlhakane.
Macquarie initiated coverage on Lotus with an upbeat assessment. This analyst emphasises the investment case is not dissimilar to Paladin a few years ago with the start of Langer Heinrich.
The proposition rests on the relatively low capex cost to re-commence Kayelekera. Once this project is generating cashflows, Macquarie suggests the company can transition to developing the larger greenfield project at Letlhakane.
Macquarie is also “bullish” on the outlook for uranium due to growing new nuclear reactor capacity and a lack of supply additions.
FNArena’s daily monitored brokers all have Buy equivalent ratings with an average target price of 54c.
Banks step up triple the world’s nuclear energy capacity
The Financial Times reported at a White House meeting fourteen of the world’s largest banks and financial institutions committed to providing more financial support for the nuclear energy industry, including financing new power plants.
George Borovas, head of nuclear practice at Hunton Andrews Kurth and a board member of the World Nuclear Association, was quoted by the FT, saying “this event is going to be a game changer” with the disposition from the financiers shifting from it’s “very difficult, very controversial” to “part of the solution for climate change” instead of “a necessary evil”.
The list of institutions includes Bank of America, Barclays, BNP Paribas, Citi, Morgan Stanley, Goldman Sachs, Abu Dhabi Commercial Bank, Ares Management, Brookfield, Credit Agricole CIB, Guggenheim Securities, Rothschild & Co, Segra Capital Management and Societe Generale.
Short sellers continue to edge up their positions against Aussie uranium stocks
The latest data reveal short interest in Australia continuing to edge up with Paladin now at 11.24% shorted from 9.35% a month ago; Boss Energy ((BOE)) at 10.25% from 9.06% a month earlier; Deep Yellow ((DYL)) 8.61% from 8.18% and Lotus up to 7.58% from 5.48%.
FNArena’s The Short Report: https://fnarena.com/index.php/analysis-data/the-short-report/
For further reading last week’s Uranium Weekly:
https://fnarena.com/index.php/2024/09/17/uranium-week-u308-supply-in-the-spotlight/
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 20/09/2024 | 0.0500 | 0.00% | $0.19 | $0.03 | |||
| AEE | 20/09/2024 | 0.1400 |  16.67% |
$0.36 | $0.11 | |||
| AGE | 20/09/2024 | 0.0400 | 0.00% | $0.08 | $0.03 | $0.100 | 150.0% |
|
| AKN | 20/09/2024 | 0.0100 | 0.00% | $0.07 | $0.01 | |||
| ASN | 20/09/2024 | 0.0800 |  -11.36% |
$0.20 | $0.07 | |||
| BKY | 20/09/2024 | 0.3200 | – 4.41% |
$0.45 | $0.26 | |||
| BMN | 20/09/2024 | 2.6100 | 5.75% |
$4.87 | $1.90 | $7.400 | 183.5% |
|
| BOE | 20/09/2024 | 2.9000 | – 3.60% |
$6.12 | $2.38 | 20.8 | $4.280 | 47.6% |
| BSN | 20/09/2024 | 0.0300 | 3.23% |
$0.21 | $0.02 | |||
| C29 | 20/09/2024 | 0.0700 | 0.00% | $0.12 | $0.06 | |||
| CXO | 20/09/2024 | 0.1000 | 2.04% |
$0.45 | $0.08 | $0.090 | – 10.0% |
|
| CXU | 20/09/2024 | 0.0200 | 0.00% | $0.06 | $0.01 | |||
| DEV | 20/09/2024 | 0.1300 | – 7.41% |
$0.45 | $0.11 | |||
| DYL | 20/09/2024 | 1.2600 | 3.54% |
$1.83 | $0.91 | -90.0 | $1.770 | 40.5% |
| EL8 | 20/09/2024 | 0.3500 | 6.45% |
$0.68 | $0.26 | |||
| ERA | 20/09/2024 | 0.0070 | 16.67% |
$0.08 | $0.00 | |||
| GLA | 20/09/2024 | 0.0100 | 0.00% | $0.04 | $0.01 | |||
| GTR | 20/09/2024 | 0.0040 | 25.00% |
$0.02 | $0.00 | |||
| GUE | 20/09/2024 | 0.0600 | 0.00% | $0.18 | $0.05 | |||
| HAR | 20/09/2024 | 0.0300 | -25.00% |
$0.28 | $0.03 | |||
| I88 | 20/09/2024 | 0.5000 | 0.00% | $1.03 | $0.14 | |||
| KOB | 20/09/2024 | 0.1000 | 0.00% | $0.18 | $0.07 | |||
| LAM | 20/09/2024 | 0.5600 | -11.93% |
$1.04 | $0.48 | |||
| LOT | 20/09/2024 | 0.2500 | – 4.17% |
$0.49 | $0.20 | $0.540 | 116.0% |
|
| MEU | 20/09/2024 | 0.0400 | – 5.41% |
$0.06 | $0.03 | |||
| NXG | 20/09/2024 | 9.4700 | 5.84% |
$13.66 | $7.89 | $16.200 | 71.1% |
|
| ORP | 20/09/2024 | 0.0600 | 0.00% | $0.12 | $0.04 | |||
| PDN | 20/09/2024 | 10.1100 | 2.39% |
$17.98 | $8.15 | 20.5 | $14.200 | 40.5% |
| PEN | 20/09/2024 | 0.0900 | 6.25% |
$0.15 | $0.07 | 30.0 | $0.260 | 188.9% |
| PNX | 20/09/2024 | 0.0040 | 0.00% | $0.01 | $0.00 | |||
| SLX | 20/09/2024 | 3.9900 | 7.32% |
$6.74 | $2.93 | $7.200 | 80.5% |
|
| TOE | 20/09/2024 | 0.2000 | -28.30% |
$0.70 | $0.01 | |||
| WCN | 20/09/2024 | 0.0200 | 11.76% |
$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