Weekly Reports | Oct 22 2024
This story features PALADIN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: PDN
An unchanged U308 spot price continues to bely macro drivers, geopolitics and major buyer strategic purchasing.
-Sprott Physical Uranium trust continues to buy
-US administration serves up fiscal support for nuclear
-Bulls and bears grapple over Aussie uranium stocks
-What the brokers had to say
By Danielle Ecuyer
U308 spot price drifts sideways
Interest in uranium stocks continued to gather momentum in the week that was. Canada’s Cameco share price reached a 52-week high, rallying 57% off the recent low on September 9.
According to industry consultants TradeTech, the Sprott Physical Uranium Trust has successfully raised more funds allowing the trust to move back into the spot U308 market, buying another 200,000lbs last week. The purchase comes on the back of 400,000lbs acquired in the last month.
Despite renewed investor interest, the TradeTech spot price traded in a narrow range between US$83lb and US$83.25lb, ultimately finishing the week unchanged on the previous week at US$83lb.
TradeTech’s Mid-Term U308 price indicator stands at US$86lb with its Long-Term price indicator at US$82lb.
Nuclear energy backdrop positive AGAIN
While not much happened in the spot market, the news in the nuclear energy market is anything but ho-hum.
Multiple levers are driving potential systemic shifts in the outlook for the industry, including geopolitics, climate challenged zero emission energy production and substantial demand for power through mega data centre developments and electrification.
On the supply side, the Biden Administration continues to provide incentives to develop domestic enrichment services and more advanced nuclear energy production in small nuclear reactors.
The US Department of Energy announced four companies had been selected as part of the process for a possible US$2.7bn contract over 10-years to help establish a domestic supply of HALEU (high-assay, low-enriched uranium) which is required for more advanced nuclear reactors.
The Department of Energy also announced up to US$900m as fiscal support for small modular reactor technologies.
Hyperscalers are also leaning into the nuclear energy sector with Amazon the latest Big Tech company to sign three agreements for the development of nuclear energy projects, including four small modular reactors with X-Energy to be constructed, owned and operated by Energy Northwest.
Google also signed an agreement with Kairos Power to develop a fleet of nuclear power projects by 2025.
TradeTech also highlights Italy is in talks with Westinghouse and EDF from France for developing advanced nuclear reactors.
Kazatomprom announced supply contracts to China National Overseas and China National Uranium Corp. The value of these contracts exceeds more than 50% of the company’s total book value of assets, meaning they must be submitted for approval at the AGM on November 15.
TradeTech astutely points out the contracts signal a shift to the East away from the West by Kazatomprom, on the back of previous comments from CEO Mukanov regarding shipments to western markets becoming too costly and challenging.
Sprott fires up Aussie uranium stocks
Not to be left behind, Australian uranium stocks have been rallying over the last month.
A back of the envelope calculation has shares in Paladin Energy ((PDN)) up over 50%. Last week famed investor Eric Sprott provided an extra impetus for the uranium bulls as Boss Energy ((BOE)), Deep Yellow ((DYL)) and Lotus Resources revealed to the ASX his positions had been increased by around one percentage point in September.
Short interests, however, are refusing to budge. Most recent short interest data have Boss, Paladin, Deep Yellow and Lotus, in that order, sitting in the top ten of highest short positions in the Australian market as at October 14.
Boss is the highest at 14.21%, tailing down to Lotus at 8.55%.
To quote one of my favourite movies “Something’s Gotta Give”.
Latest broker updates
While observers might be yawning at the lack of movement in the U308 spot price, the same can’t be applied to corporate news flow.
Lotus Resources ((LOT)) caught the attention of three brokers with the pull forward on the restart of the Kayelekera project to 8-10 months from 15 months to 3Q2025.
In a positive surprise to Canaccord Genuity, the upfront capital investment announced at around -US$50m was well below the previous -US$88m estimate.
Bell Potter expects the capital cost to be -US$49.7m versus -US$89.2m before, with changes to the ore sorting, a delay in the electricity grid connection and changes to the plant’s terrace as the major factors accounting for the difference.
All have Buy equivalent ratings with target prices ranging from a low of 42c at Macquarie to 54c from Canaccord Genuity.
Bannerman Energy ((BMN)) also made news, with the first phase of early works completed in July. Management has decided to extend the final investment decision window for the Etango Uranium Project into 2025, on the basis that current contract conditions have not yet fully “aligned” with positive market developments.
Shaw and Partners stresses management wants to retain maximum flexibility in the off-take and financing options for Etango.
All brokers have equivalent Buy ratings. Daily monitored broker Shaw and Partners’ target of $7.40 stands out, compared to Canaccord and Petra at $4.33 and $4.68, respectively.
For those who love a new uranium name, Canaccord initiated coverage of Laramide Resources ((LAM)) with a speculative Buy rating and $1.30 target. The broker highlighted the investment appeal for Laramide’s 100%-owned flagship projects, Crownpoint-Churchrock in New Mexico and Westmoreland in Queensland with a 117mlb resource base.
One more permit is required for Churchrock, a project with an estimated mine life of 32-years, production of 1mt per annum up to possibly 3mt, annually. Westmoreland has estimated production of over 4mlbs a year.
Another company with uranium exposure Brazilian Rare Earths ((BRE)) popped up as a feature last week for In Brief. Check it out here:
https://fnarena.com/index.php/2024/10/18/in-brief-lithium-brazilian-rare-earths-fineos/
For more reading, last week’s Uranium Weekly, see link below:
https://fnarena.com/index.php/2024/10/15/uranium-week-nuclear-support-broadening/
The author owns Paladin Energy shares.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 18/10/2024 | 0.0500 | 0.00% | $0.19 | $0.03 | |||
| AEE | 18/10/2024 | 0.1800 |  2.94% |
$0.33 | $0.11 | |||
| AGE | 18/10/2024 | 0.0500 | 6.52% |
$0.08 | $0.03 | $0.100 | 100.0% |
|
| AKN | 18/10/2024 | 0.0100 | 0.00% | $0.07 | $0.01 | |||
| ASN | 18/10/2024 | 0.0800 | 2.63% |
$0.20 | $0.07 | |||
| BKY | 18/10/2024 | 0.3900 | 2.99% |
$0.45 | $0.26 | |||
| BMN | 18/10/2024 | 3.3700 | 0.30% |
$4.87 | $1.90 | $7.400 | 119.6% |
|
| BOE | 18/10/2024 | 3.7600 | 3.21% |
$6.12 | $2.38 | 25.9 | $4.280 | 13.8% |
| BSN | 18/10/2024 | 0.0300 | 3.23% |
$0.21 | $0.02 | |||
| C29 | 18/10/2024 | 0.0800 | 14.29% |
$0.12 | $0.06 | |||
| CXO | 18/10/2024 | 0.1200 |  – 8.70% |
$0.40 | $0.08 | $0.090 | -25.0% |
|
| CXU | 18/10/2024 | 0.0200 | 0.00% | $0.06 | $0.01 | |||
| DEV | 18/10/2024 | 0.1400 | 11.11% |
$0.45 | $0.11 | |||
| DYL | 18/10/2024 | 1.5300 | 4.95% |
$1.83 | $0.91 | -83.9 | $1.900 | 24.2% |
| EL8 | 18/10/2024 | 0.3800 | 0.00% | $0.68 | $0.26 | |||
| ERA | 18/10/2024 | 0.0100 | -50.00% |
$0.08 | $0.00 | |||
| GLA | 18/10/2024 | 0.0100 | 0.00% | $0.04 | $0.01 | |||
| GTR | 18/10/2024 | 0.0040 | -20.00% |
$0.02 | $0.00 | |||
| GUE | 18/10/2024 | 0.0900 | 12.50% |
$0.18 | $0.05 | |||
| HAR | 18/10/2024 | 0.0500 | 50.00% |
$0.28 | $0.03 | |||
| I88 | 18/10/2024 | 0.5100 | 0.00% | $1.03 | $0.14 | |||
| KOB | 18/10/2024 | 0.1100 | -16.67% |
$0.18 | $0.07 | |||
| LAM | 18/10/2024 | 0.7900 | 2.60% |
$1.04 | $0.48 | |||
| LOT | 18/10/2024 | 0.3100 | 7.41% |
$0.49 | $0.20 | $0.547 | 76.3% |
|
| MEU | 18/10/2024 | 0.0400 | 0.00% | $0.06 | $0.03 | |||
| NXG | 18/10/2024 | 12.2400 | 5.38% |
$13.66 | $7.89 | $16.200 | 32.4% |
|
| ORP | 18/10/2024 | 0.0400 | 0.00% | $0.12 | $0.04 | |||
| PDN | 18/10/2024 | 12.9700 | 5.67% |
$17.98 | $8.15 | 25.3 | $14.160 | 9.2% |
| PEN | 18/10/2024 | 0.1100 | 1.01% |
$0.15 | $0.07 | $0.260 | 136.4% |
|
| SLX | 18/10/2024 | 5.2500 | 10.72% |
$6.74 | $3.01 | $7.200 | 37.1% |
|
| TOE | 18/10/2024 | 0.2900 | 7.69% |
$0.70 | $0.01 | |||
| WCN | 18/10/2024 | 0.0200 | -16.67% |
$0.03 | $0.01 |
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CHARTS
For more info SHARE ANALYSIS: BMN - BANNERMAN ENERGY LIMITED
For more info SHARE ANALYSIS: BOE - BOSS ENERGY LIMITED
For more info SHARE ANALYSIS: BRE - BRAZILIAN RARE EARTHS LIMITED
For more info SHARE ANALYSIS: DYL - DEEP YELLOW LIMITED
For more info SHARE ANALYSIS: LAM - LARAMIDE RESOURCES LIMITED
For more info SHARE ANALYSIS: LOT - LOTUS RESOURCES LIMITED
For more info SHARE ANALYSIS: PDN - PALADIN ENERGY LIMITED