Weekly Reports | Dec 10 2024
This story features NEXGEN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: NXG
The uranium market was becalmed by a complete lack of buying interest, despite sellers trying to attract interest via lower prices.
-Fall of Syrian dictator puts Iran’s nuclear ambitions back in focus
-Quiet U308 markets belie simmering geo-poitical tensions
-Analysts’ enthusiasm for U308 miners remains
-Short interests put uranium stocks at the top of table
By Danielle Ecuyer
The sudden collapse of the Bashar Al-Assad regime in Syria, following a ten-day blitzkrieg by Hay’at Tahrir al-Sham (HTS)-led rebel factions, has put nuclear on the world’s radar yet again with eyes turning towards Iran.
As reported by analysts at RBC Capital:
With the walls closing in, the key question will be if Iran tries to secure a grand bargain with its adversaries or makes a rapid run for nuclear weapons.
Several senior officials from the region had warned about the latter scenario on the sidelines of the UN General Assembly meetings in New York in September.
Indeed, there are indications Iran is keeping bomb optionality options open.
On Friday, the IAEA warned Iran is “dramatically” increasing its high-level 60% uranium enrichment at both the Natanz and Fordow facilities.
Updates to facilities at Fordow, according to the IAEA, allow it to produce 34kg of 60% enriched uranium per month compared to the previous rate of 4.7kg per month.
The UN nuclear watchdog agency stated that the country already has enough 60% fissile material, which is a short step away from 90% weapons grade, to make four nuclear bombs, and warned that use of the of higher speed centrifuges at sites like Fordow could cause Iran’s production capability to rise “seven, eight times more.”
The great unknown is what clandestine activities Iran may be conducting to develop an actual weapon and delivery system.
Given Iran’s dramatic reversal of regional fortunes since summer, the appeal of the Pakistan-style nuclear deterrent option may be growing.
A quiet week with no transactions
As reported by industry consultants TradeTech, prior to the above the spot uranium market showed signs of buyers moving to the sidelines in the wind-up to 2024.
The U3O8 spot price slipped -US$0.50/lb to US$76.75/lb on Friday from a week earlier and down -US$1/lb from the day prior. TradeTech highlights several sellers are eager to shift stock before the end of the year.
In contrast, the spot buyers are hesitant to partake, particularly if payment is due by year-end. Sellers responded with lower offer prices at US$76.75/lb at the end of the week, but no sales were transacted on market.
TradeTech’s Mid-Term U3O8 Price Indicator is US$83/lb, and the Long-Term Price Indicator is US$82/lb.
Despite a lack of transactions in the spot market, TradeTech details the potential flow-on effects from a non-US utility seeking enriched uranium product for delivery in December or January. Offers were due December 6.
While not directly impacting the spot market, the utility seeking enriched product has a flow-on effect, as the enriched product will need to be replaced using spot U3O8 as feedstock.
Geo-politics is not going away
Geopolitical concerns have characterised 2024, with recent Russian sanctions on enriched uranium driving a new level of concern. On November 15, Moscow implemented retaliatory actions against US import restrictions from Russia earlier in the year. Concerns over Ukraine between the West and Russia remain an overhang for market participants.
TradeTech points to the ongoing failure of a ship expected to contain Russian enriched uranium bound for the US to depart St Petersburg’s port. Petra Capital highlights energy intelligence suggesting the ship has since left the port without the cargo.
Discussions between interested parties and Russian officials are continuing, the consultants suggest, to secure the necessary permits so the material can be reloaded onto another ship and depart before year-end.
Australian uranium miners in focus
Focusing on geopolitics, Petra Capital expects government interventions in the uranium markets, as seen in Russia and the US, to result in higher price volatility. Nevertheless, the broker remains bullish on the sector, and prices through the fuel cycle point to higher spot U3O8 prices in the future.
Russia produces around 14% of global U3O8 supply, around 22% of the conversion market, and 44% of enriched uranium.
Petra views an upcoming announcement on the restart of the Springfield conversion plant in the UK by Cameco, which owns 49%, as a potential “trigger” for the market. Westinghouse is anticipated to make its final investment decision on the restart in late 2025.
NexGen Energy ((NXG)) has been a beneficiary of investment inflows, Petra highlights. The company also secured its first uranium sales agreement for 5mlbs with several US nuclear utility companies.
“These inaugural awards all incorporate market-related pricing mechanisms at the time of delivery. They reflect NexGen’s long-stated focus on maximising leverage to future uranium prices and the company’s positioning as a new, reliable Western world source of nuclear fuel . . . from the Tier 1 jurisdiction of Saskatchewan, Canada”, as quoted in the NextGen Energy statement.
Petra prefers smaller miners Bannerman Energy ((BMN)), Alligator Energy ((AGE)), and Aura Energy ((AEE)) for the most share price upside potential.
The broker details how Bannerman’s Etango project is a large, low-grade, heap leach project, which has received both a mining licence and all permits, with early works and designs in progress. As of the end of September, the company had cash on hand of $96m and no debt. The stock is Buy rated with a target of $4.51, and the share price is seen discounting a uranium price of US$78.50/lb.
Shaw and Partners observes Bannerman Energy continues to progress the Etango uranium project toward a final investment decision, with a cash position of $95.7m.
Etango has an expected 15-year life, with annual production of 3.5mlbs and pre-production capex of -US$353m.
This broker remains highly optimistic about the prospects for uranium, citing Bannerman Energy’s recent quarterly update, which noted “current term contract conditions have not yet fully aligned” with the company’s long-term market outlook.
Shaw and Partners expects uranium prices to rise, as both US and European utilities remain uncovered for fuel needs from 2026-28. The broker anticipates a “multi-year” price spike to US$150/lb before stabilising around the long-term price assumption of US$74/lb. Buy, High-risk rating and $7.40 target price are retained.
Petra details how NexGen Energy offers exposure to the Rook 1 project, considered a Tier 1 asset. The analyst highlights “exceptional” exploration results in 2024, with anticipated corporate interest once Federal approval is received. Target price is $14.10 with a Buy rating.
NexGen is described as one of few listed uranium companies offering sufficient liquidity to accommodate “generalist capital inflows.” The share price is seen discounting a US$108.5/lb uranium price.
Aura Energy’s final investment decision for the Tiris project is expected in March 2025 and is currently fully permitted with no limit on production. Petra notes the resource at 91mlbs, recently upgraded from 55mlbs. The company has also submitted exploration permits for its Swedish Haggen project, and the share price is seen discounting a uranium price of US$67/lb. Buy rated with a 33c target price.
Petra views Alligator Energy’s Samphire project as following a similar path to Boss Energy‘s ((BOE)) Honeymoon project, whereby further drilling is expected to result in an expansion in the resource. Boss’s resource advanced 323% over four years, the broker notes. Alligator is Buy rated with a 10c target price, and the share price is seen discounting a US$67/lb uranium price.
Citi has initiated coverage of Boss Energy with a Buy rating, describing the company as a play on rising uranium demand due to the projected global supply deficit and nuclear energy’s role in the global energy transition and artificial intelligence.
Boss’s cornerstone asset is the Honeymoon Uranium Project in South Australia, targeting 2.45mlb U3O8 in FY27. This project, the broker highlights, is one of only a few uranium projects globally ready to come on-stream in the early stages of the emerging uranium bull market.
Citi suggests following share price weakness, the stock looks oversold. Boss Energy owns 100% of Honeymoon. Target $3.40.
Lotus Resources ((LOT)) announced a binding offtake agreement for 700klbs and agreed terms for an additional 800klbs based on a long-term contract price with a 3% escalation for delivery.
Petra highlights the offtake agreement with Curzon Uranium and the term sheet with North American utility PSEG Nuclear. The former includes an unsecured loan debt of US$15m.
The analyst estimates current offtake agreements represent around 20% of assumed 2026-2029 production.The target price decreased to 37c from 41c, with the Buy rating unchanged.
Canaccord Genuity observes Lotus Resources has increased Letlhakane’s mineral resource by 65%, with the total resource at 142.2mt at 363ppm U3O8 for 113.7mlbs.
The broker notes total uranium resources are at 164mlbs, which includes 23mlbs of reserves at Kayelekera. Speculative Buy rating and 42c target price are retained.
Short interest ticks higher
The latest short interest data reveal Paladin Energy ((PDN)) is rated the number one stock on the ASX with the largest short interest at 15.36%, up from 14.64% on November 1. Boss Energy is next at 14.21%, down from 15.42% on November 1.
See also: https://fnarena.com/index.php/analysis-data/the-short-report/
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 09/12/2024 | 0.0500 |  -16.67% |
$0.19 | $0.03 | |||
| AEE | 09/12/2024 | 0.1500 | – 6.25% |
$0.31 | $0.11 | |||
| AGE | 09/12/2024 | 0.0380 | 0.00% | $0.08 | $0.03 | $0.100 |  163.2% |
|
| AKN | 09/12/2024 | 0.0100 | 0.00% | $0.05 | $0.01 | |||
| ASN | 09/12/2024 | 0.0610 | – 3.17% |
$0.17 | $0.06 | |||
| BKY | 09/12/2024 | 0.3400 | – 9.33% |
$0.45 | $0.26 | |||
| BMN | 09/12/2024 | 2.7500 | 0.73% |
$4.87 | $1.90 | $7.400 | 169.1% |
|
| BOE | 09/12/2024 | 2.5500 | – 5.20% |
$6.12 | $2.38 | 16.6 | $4.067 | 59.5% |
| BSN | 09/12/2024 | 0.0170 | – 5.56% |
$0.21 | $0.02 | |||
| C29 | 09/12/2024 | 0.0900 | 0.00% | $0.13 | $0.06 | |||
| CXO | 09/12/2024 | 0.0880 | – 5.38% |
$0.36 | $0.08 | $0.090 | 2.3% |
|
| CXU | 09/12/2024 | 0.0100 | -50.00% |
$0.06 | $0.01 | |||
| DEV | 09/12/2024 | 0.0980 | – 6.67% |
$0.45 | $0.10 | |||
| DYL | 09/12/2024 | 1.2350 | 1.65% |
$1.83 | $0.91 | -67.8 | $1.900 | 53.8% |
| EL8 | 09/12/2024 | 0.2800 | – 3.45% |
$0.68 | $0.26 | |||
| ERA | 09/12/2024 | 0.0020 | -33.33% |
$0.08 | $0.00 | |||
| GLA | 09/12/2024 | 0.0100 | 0.00% | $0.04 | $0.01 | |||
| GTR | 09/12/2024 | 0.0030 | -25.00% |
$0.02 | $0.00 | |||
| GUE | 09/12/2024 | 0.0600 | 0.00% | $0.18 | $0.05 | |||
| HAR | 09/12/2024 | 0.0500 | 0.00% | $0.28 | $0.03 | |||
| I88 | 09/12/2024 | 0.5000 | 6.38% |
$1.03 | $0.14 | |||
| KOB | 09/12/2024 | 0.0700 | -12.50% |
$0.18 | $0.07 | |||
| LAM | 09/12/2024 | 0.7500 | -11.24% |
$1.04 | $0.48 | |||
| LOT | 09/12/2024 | 0.2300 | 0.00% | $0.49 | $0.20 | $0.547 | 137.7% |
|
| MEU | 09/12/2024 | 0.0380 | 2.70% |
$0.06 | $0.04 | |||
| NXG | 09/12/2024 | 13.0300 | 2.20% |
$13.66 | $7.89 | $16.600 | 27.4% |
|
| ORP | 09/12/2024 | 0.0400 | 0.00% | $0.12 | $0.03 | |||
| PDN | 09/12/2024 | 7.4700 | – 3.98% |
$17.98 | $6.83 | 38.2 | $12.325 | 65.0% |
| PEN | 09/12/2024 | 1.1200 | 1766.67% |
$1.23 | $0.05 | $0.240 | -78.6% |
|
| SLX | 09/12/2024 | 5.6700 | – 7.20% |
$6.74 | $3.35 | $7.200 | 27.0% |
|
| TOE | 09/12/2024 | 0.2250 | -19.64% |
$0.70 | $0.01 | |||
| WCN | 09/12/2024 | 0.0200 | 0.00% | $0.03 | $0.01 |
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For more info SHARE ANALYSIS: AEE - AURA ENERGY LIMITED
For more info SHARE ANALYSIS: AGE - ALLIGATOR ENERGY LIMITED
For more info SHARE ANALYSIS: BMN - BANNERMAN ENERGY LIMITED
For more info SHARE ANALYSIS: BOE - BOSS ENERGY LIMITED
For more info SHARE ANALYSIS: LOT - LOTUS RESOURCES LIMITED
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