Weekly Reports | Nov 19 2024
This story features PALADIN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: PDN
Uranium spot prices received an extra fillip from Russia’s temporary export ban on enriched product in retaliation to US government sanctions.
-U308 spot price rises US$6/lb over the week
-Nuclear energy part of zero emission energy solutions
-Paladin & Peninsula Energy ramp-ups downgraded
By Danielle Ecuyer
Russia retaliates against US uranium bans
While scant on details, last Friday’s announcement from the Russian government to impose temporary limits on enriched uranium exports to the US proved enough to ignite an upward surge in the U308 price to US$83/lb from US$77/lb a week earlier, as reported by industry consultants TradeTech.
The last time uranium spot rose US$6/lb in a week was on 2 February 2024, when the US Congress announced a restriction on Russian imports. On that occasion, the spot price advanced US$7 to US$107/lb.
Friday’s announcement was a retaliatory move by Russia against the US ban on Russian uranium products. Since then, TradeTech observes “range-bound” price behaviour for U308 following a period of volatility. Whether this trend continues remains to be seen.
Over the course of last week, the spot U308 price increased to US$77.50/lb on Tuesday from US$77/lb on Monday, with another US$1/lb rise on Wednesday, US$2/lb on Thursday to US$80.50/lb, and to US$83/lb by Friday. TradeTech’s mid-term U308 Price Indicator is US$84/lb, and its long-term Price Indicator is US$82/lb.
Russia’s announcement has the capacity to impact the conversion market more significantly, even though the U308 spot price market reacted. The consultants point out the Russian conversion component is required to “bridge the gap” between existing capacity and demand for US and non-US utilities. TradeTech envisions the Russian announcement could complicate decision-making for the nuclear fuel markets.
Bloomberg reports Russia represented 27% of US enriched uranium demand in 2023 and controls almost half of the world’s capacity to separate uranium isotopes needed in reactors. A Cameco spokesperson was reported by Bloomberg as saying, “To break the dependence on Russia and other state-owned enterprises, coordinated Western responses are required.”
The US has one commercial enrichment facility in New Mexico, owned by a consortium of the British, Dutch, and Germans called Urenco Ltd. The facility supplies one-third of enriched uranium used in US reactors and aims to expand capacity by 15% by 2027.
COP29 making nuclear energy great
In a boost to the longer-term outlook for nuclear energy, the US announced at COP 29 in Baku, Azerbaijan, new nuclear energy targets and a framework for 200GW of new nuclear energy capacity by 2050.
The target, if met, would triple the US’ domestic nuclear energy capacity from existing levels, derived from new plants, upgrading existing reactors, and restarting reactors. Other countries also committed to tripling global nuclear capacity by 2050, including El Salvador, Kazakhstan, Kenya, Kosovo, Nigeria, and Turkey.
RBC Capital noted the US election result is “neutral” for the nuclear industry as the build-out of capacity remains a bipartisan issue. RBC analyst foresee the potential for reduced regulation for permits for new nuclear reactor construction and domestic production. Changes to IRA funding for nuclear could be an offsetting factor if the act is repealed.
Production Hiccups Galore
Paladin Energy ((PDN)) shocked the market with another downgrade to FY25 production guidance to 3-3.6mlbs from 4-4.5mlbs and a withdrawal of other guidance due to ongoing higher unit costs on stockpile processing, greater ore grade variability, and water supply disruptions from Namibia Water Corporation.
Traders took no prisoners, sending the share price down by over -25% on the day. Shaw and Partners believes the market overreacted, highlighting the issues had already been flagged at the 1Q25 update two weeks earlier.
Morgan Stanley considers the update short-term in nature, with the share price reaction overstated as management highlighted the nameplate capacity at Langer Heinrich remains at 6Mlbpa, expected to be achieved by the end of 2025.
RBC Capital stressed Langer Heinrich is a “key source” of new uranium supply coming online, emphasising the challenges of delivering production from a brownfield site. This broker also highlighted the time required to start new production.
FNArena daily monitored brokers remain undeterred in their Buy-equivalent ratings for Paladin, with a consensus target price of $12.325.
Short interest in the stock advanced to 15.75% on 11 November from 14.88% a week earlier and 13.58% a month earlier. Paladin has the second-highest short interest on the ASX, after Pilbara Minerals at 17.74%.
Peninsula Energy ((PEN)) announced a slower ramp-up at the Lance Uranium Project with reduced 2025 production guidance to 600klbs of uranium from 700-900klbs, with no changes flagged to medium- or long-term outlooks.
First production is expected in December 2024, with a ramp-up to steady-state at 1.8Mlb by 2029. Peninsula agreed with the contractor on a final cost US$9.5m higher than the previous estimation.
The company also announced management changes, with Managing Director Wayne Heili expected to resign in 2025 and Chairman John Harrison to step down in 2025 after a new Managing Director is appointed.
Shaw and Partners retains a Buy rating with a reduced target price of 24c from 26c. Canaccord Genuity has a Speculative Buy rating, with its target price declining to 16c from 20c.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 15/11/2024 | 0.0400 |  -20.00% |
$0.19 | $0.03 | |||
| AEE | 15/11/2024 | 0.1500 | 0.00% | $0.33 | $0.11 | |||
| AGE | 15/11/2024 | 0.0400 | – 2.50% |
$0.08 | $0.03 | $0.100 |  150.0% |
|
| AKN | 15/11/2024 | 0.0100 | 0.00% | $0.07 | $0.01 | |||
| ASN | 15/11/2024 | 0.0700 | – 5.71% |
$0.17 | $0.06 | |||
| BKY | 15/11/2024 | 0.3300 | – 8.33% |
$0.45 | $0.26 | |||
| BMN | 15/11/2024 | 2.8200 | – 6.67% |
$4.87 | $1.90 | $7.400 | 162.4% |
|
| BOE | 15/11/2024 | 3.0700 | – 8.33% |
$6.12 | $2.38 | 20.3 | $4.200 | 36.8% |
| BSN | 15/11/2024 | 0.0300 | -10.00% |
$0.21 | $0.02 | |||
| C29 | 15/11/2024 | 0.0900 | 0.00% | $0.12 | $0.06 | |||
| CXO | 15/11/2024 | 0.1000 | – 2.00% |
$0.38 | $0.08 | $0.090 | – 10.0% |
|
| CXU | 15/11/2024 | 0.0200 | 100.00% |
$0.06 | $0.01 | |||
| DEV | 15/11/2024 | 0.1200 | – 4.17% |
$0.45 | $0.10 | |||
| DYL | 15/11/2024 | 1.2300 | -12.31% |
$1.83 | $0.91 | -68.9 | $1.900 | 54.5% |
| EL8 | 15/11/2024 | 0.3100 | -10.00% |
$0.68 | $0.26 | |||
| ERA | 15/11/2024 | 0.0030 | 0.00% | $0.08 | $0.00 | |||
| GLA | 15/11/2024 | 0.0100 | 0.00% | $0.04 | $0.01 | |||
| GTR | 15/11/2024 | 0.0030 | 0.00% | $0.02 | $0.00 | |||
| GUE | 15/11/2024 | 0.0600 | -14.29% |
$0.18 | $0.05 | |||
| HAR | 15/11/2024 | 0.0600 | 0.00% | $0.28 | $0.03 | |||
| I88 | 15/11/2024 | 0.4600 | -10.00% |
$1.03 | $0.14 | |||
| KOB | 15/11/2024 | 0.0800 | 0.00% | $0.18 | $0.07 | |||
| LAM | 15/11/2024 | 0.8500 | 0.00% | $1.04 | $0.48 | |||
| LOT | 15/11/2024 | 0.2300 | -10.42% |
$0.49 | $0.20 | $0.547 | 137.7% |
|
| MEU | 15/11/2024 | 0.0400 | 0.00% | $0.06 | $0.04 | |||
| NXG | 15/11/2024 | 11.9000 | 4.23% |
$13.66 | $7.89 | $16.200 | 36.1% |
|
| ORP | 15/11/2024 | 0.0300 | -25.00% |
$0.12 | $0.03 | |||
| PDN | 15/11/2024 | 7.7900 | -24.69% |
$17.98 | $6.83 | 39.8 | $12.325 | 58.2% |
| PEN | 15/11/2024 | 0.0600 | -31.11% |
$0.15 | $0.06 | $0.240 | 300.0% |
|
| SLX | 15/11/2024 | 5.7700 | – 9.95% |
$6.74 | $3.01 | $7.200 | 24.8% |
|
| TOE | 15/11/2024 | 0.3000 | – 5.36% |
$0.70 | $0.01 | |||
| WCN | 15/11/2024 | 0.0200 | 0.00% | $0.03 | $0.01 |
Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.
FNArena is proud about its track record and past achievements: Ten Years On
Click to view our Glossary of Financial Terms
CHARTS
For more info SHARE ANALYSIS: PDN - PALADIN ENERGY LIMITED
For more info SHARE ANALYSIS: PEN - PENINSULA ENERGY LIMITED