Weekly Reports | Feb 18 2025
This story features PALADIN ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: PDN
Site visits to Namibian uranium mining facilities reaffirms the underlying growth story for the commodity despite ongoing weakness in U308 spot price
-Uranium mining companies walk the talk
-U308 spot price sinks on uncertainties – tariffs and Ukraine
-Japan and Britain move to more nuclear energy power generation
By Danielle Ecuyer
Contrast and compare: spot market versus miners
The stark contrast between what is happening in the U308 spot market against the likes of Paladin Energy ((PDN)) was highlighted last week.
Industry consultant TradeTech reported a fall in the spot price by -US$2.80/lb to US$66.35/lb, with various uncertainties from trade tariffs to a possible cessation of the war in Ukraine cited as reasons for inaction and increased spot market selling pressure.
In contrast, Shaw and Partners came back from a site visit to Paladin’s Langer Heinrich mine in Namibia filled with optimism around the mine’s restart and the capacity to generate 6mlbs per annum in uranium production by 2026.
The broker stresses that obstacles around poor quality stockpiled ore grade and water shortages in the September quarter are now in the rear view mirror, and the fall in the stock price of over -40% was overdone with the benefit of hindsight.
Management has successfully addressed the water issue, pointing to a desalination plant and two aquifer bore fields. The broker explains disruption in supply from the desalination plant is par for the course as maintenance and pump issues arise. The installation of onsite water storage is designed to offset supply interruptions.
Regarding the issues around stockpile grade, the problem will continue until Paladin transitions to mining fresh ore, expected in June 2025, although management is considering how this timeline can be advanced.
The company is highlighted by the broker as on track to achieve FY25 revised guidance of 3mlbs-3.5mlbs, with the month of December post a shutdown in November reaching 309klb. Even maintaining the December production rate brings the company in line with the lower end of guidance.
For Shaw and Partners, Paladin remains the preferred uranium exposure on the ASX, with a Buy rating and an unchanged target of $15.80.
While Shaw has the standout target price, FNArena’s consensus target price for daily monitored brokers stands at an average of $11.575, with four Buy-equivalent ratings and two Hold-equivalent ratings.
The broker also visited Bannerman Energy‘s ((BMN)) Etango project in Namibia and came away positively surprised by the work in progress since the May 2024 site visit.
Management highlighted the construction of water storage facilities, the nearly finished power transmission lines, as well as the site access road from the main highway.
Etango is located closer to the coast than Langer Heinrich, so pumping costs are expected to be lower.
The project has a 207mlb resource, and at this stage, the Etango-8 project will consume 53mlb once operational, the analyst explains, leaving substantial opportunities for expansion in the future.
Bannerman’s Etango is one of the few fully permitted and shovel-ready uranium projects, and the broker believes the stock offers a cheap entry point for investors with substantial upside potential in the contract uranium price.
Bannerman is Buy rated with a $7.40 target price.
Contract price outlook versus the short term shorts
Looking through the weakness in the U308 spot price, Shaw again stresses this market is not indicative of “industry fundamentals” and points to upside in contracting prices above US$100/lb, with the view the upcoming cycle could realise a price of US$150/lb or more.
TradeTech noted at the end of last week uncertainty led sellers to lower offers, with the last transaction on Friday 14 at US$65.25/lb for 50,000lbs of U308 delivered to Cameco’s Canadian facility.
Other transactions were conducted at US$67.75/lb for ConverDyn’s US facility and US$65.50/lb for Orano’s facility in France. TradeTech’s Mid-Term price indicator stands at US$76/lb, and the Long-Term price indicator at US$82/lb.
Short interest in Australian uranium stocks has Boss Energy ((BOE)) ranked the highest on the ASX at 19.5% and Paladin at 16.05%, compared to 18.27% and 16% a month earlier, respectively.
Deep Yellow ((DYL)) is ranked the 10th most shorted, at 10.12%, slightly lower than a month earlier at 10.9%.
Zero emission targets and energy demand fuel nuclear power
While short-term factors might be creating opportunities for U308 buyers in the spot market, trends in nuclear energy production saw Japan’s draft strategic energy plan move to strengthen the country’s reliance on nuclear power, fourteen years after the triple meltdown at Fukushima Daiichi power plant.
Japan is facing growing energy demand from semiconductor factories and AI-related data centres, as well as the need to achieve net-zero emissions by 2050.
The new plan aims for nuclear energy to generate 20% of the country’s electricity supply by 2040, with 40%-50% from renewable sources. The plan has encountered criticism over concerns about refitting aging reactors in earthquake-prone areas.
In Britain, the UK’s first new location for a commercial nuclear power plant since 1978 is being assessed for a license by the regulator. The project is a micro reactor to be built on the site of a former coal plant in South Wales. All recent plants have been built on or near sites with existing plants.
US company Last Energy plans to construct the first 20MW micro reactor at the plant in 2027, with four reactors eventually coming online at a cost of -US$378m.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 14/02/2025 | 0.0500 | 0.00% | $0.16 | $0.03 | |||
| AEE | 14/02/2025 | 0.1200 |  – 3.85% |
$0.26 | $0.11 | |||
| AGE | 14/02/2025 | 0.0300 | – 3.03% |
$0.07 | $0.03 | $0.100 |  233.3% |
|
| AKN | 14/02/2025 | 0.0100 | 0.00% | $0.04 | $0.01 | |||
| ASN | 14/02/2025 | 0.0700 | 0.00% | $0.17 | $0.05 | |||
| BKY | 14/02/2025 | 0.4000 | 15.94% |
$0.45 | $0.27 | |||
| BMN | 14/02/2025 | 2.8800 | – 1.99% |
$4.87 | $1.90 | $7.400 | 156.9% |
|
| BOE | 14/02/2025 | 3.1900 | – 2.74% |
$5.99 | $2.21 | 22.9 | $4.025 | 26.2% |
| BSN | 14/02/2025 | 0.0200 | 0.00% | $0.17 | $0.02 | |||
| C29 | 14/02/2025 | 0.0600 | 20.00% |
$0.13 | $0.03 | |||
| CXO | 14/02/2025 | 0.0900 | 0.00% | $0.26 | $0.08 | $0.090 | ||
| CXU | 14/02/2025 | 0.0100 | 0.00% | $0.05 | $0.01 | |||
| DEV | 14/02/2025 | 0.0800 | – 2.53% |
$0.45 | $0.07 | |||
| DYL | 14/02/2025 | 1.2500 | – 0.79% |
$1.83 | $0.91 | -457.5 | $1.810 | 44.8% |
| EL8 | 14/02/2025 | 0.2600 | 0.00% | $0.62 | $0.23 | |||
| ERA | 14/02/2025 | 0.0030 | 0.00% | $0.06 | $0.00 | |||
| GLA | 14/02/2025 | 0.0100 | 0.00% | $0.03 | $0.01 | |||
| GTR | 14/02/2025 | 0.0030 | 0.00% | $0.01 | $0.00 | |||
| GUE | 14/02/2025 | 0.0800 | 0.00% | $0.14 | $0.05 | |||
| HAR | 14/02/2025 | 0.0500 | 25.00% |
$0.19 | $0.03 | |||
| I88 | 14/02/2025 | 0.4800 | -15.00% |
$1.03 | $0.14 | |||
| KOB | 14/02/2025 | 0.0700 | 0.00% | $0.18 | $0.07 | |||
| LAM | 14/02/2025 | 0.7500 | 0.00% | $1.04 | $0.48 | |||
| LOT | 14/02/2025 | 0.2000 | -17.02% |
$0.49 | $0.17 | $0.533 | 166.7% |
|
| MEU | 14/02/2025 | 0.0600 | 1.85% |
$0.06 | $0.04 | |||
| NXG | 14/02/2025 | 9.6600 | – 3.89% |
$13.66 | $7.89 | $16.600 | 71.8% |
|
| ORP | 14/02/2025 | 0.0400 | 0.00% | $0.12 | $0.03 | |||
| PDN | 14/02/2025 | 8.2100 | – 4.97% |
$17.98 | $6.83 | 59.3 | $11.575 | 41.0% |
| PEN | 14/02/2025 | 1.0200 | -14.53% |
$2.70 | $0.99 | $4.810 | 371.6% |
|
| SLX | 14/02/2025 | 5.2000 | -13.74% |
$6.74 | $3.35 | $7.200 | 38.5% |
|
| TOE | 14/02/2025 | 0.2000 | 2.50% |
$0.52 | $0.19 | |||
| WCN | 14/02/2025 | 0.0200 | – 5.00% |
$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: DYL - DEEP YELLOW LIMITED
For more info SHARE ANALYSIS: PDN - PALADIN ENERGY LIMITED