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Sprott’s US$200m raising to buy physical uranium oxide triggers substantial buying in Australian uranium stocks, taking short interest by surprise.
-Short interest struggles to cover Australian uranium stocks
-U308 spot market declines as Israel-Iran conflict fires up
-World Bank returns after seven decades to fund nuclear energy
By Danielle Ecuyer
Large outstanding short interests provide a rocket for share prices
Seems only apposite to commence this week’s Uranium update with the prefix: Australian uranium stocks are rallying sharply higher, with yet no new apparent news for the buying. Although some commentators are suggesting the rally is due to Israel striking Iranian uranium enrichment facilities while others are pointing to Amazon’s $20bn investment spend on Australian data centres.
Suffice to say, with such large outstanding short interests in the stocks, it doesn’t take much to shift the dial to upside price swings and the real news eventually hitting the market.
So when early Canadian time, the Sprott Physical Uranium Trust (SPUT) announced it has entered into an underwritten agreement with Canaccord Genuity to raise US$100m at US$17.25 per unit to acquire physical uranium oxide, the catalyst for a rally in uranium-related share prices instantaneously explained itself.
Citi highlights SPUT has now secured US$200m (double the original intention) in deal financing overnight, which equals 11.6m units at a premium to net asset value of US$17.25 against the market price of US$16.98.
The U3O8 spot price is now trading at US$76/lb, the broker reports, as traders move into a thinly traded market.
At current spot pricing levels, this equals around 2.6mlbs of U3O8 will be bought by SPUT, and price momentum is likely to bring more utilities into the market the analyst suggests, which should further accelerate price rises for U3O8.
Citi remains Buy rated on Boss Energy with a $4.60 target price and Buy rated on Paladin Energy ((PDN)) with a $10.10 target price.
As of June 6, ASIC’s latest report continued to have Boss with the highest short interest on the Australian bourse at 18.52% after the GlobalX Gold Bullion (Currency Hedged) ETF ((GHLD)); followed by Paladin at 15.32% in third place, Deep Yellow ((DYL)) in ninth place at 10.52%, and Lotus Resources ((LOT)) at 8.57% in seventeenth position.
Foresight from broker on vulnerability of shorts to a change in news flow
Petra Capital was one broker to emphasise a tactical bullish stance on the ASX-listed uranium sector last week due to the high level of short interests.
The analyst details how the uranium market is changing from inventories setting the U3O8 price to a period when global production capacity relative to demand will be the key factor determining the price.
The world’s largest producer, Kazatomprom, is challenged to achieve the midpoint of 2025 guidance production of 14Mlbs, which sits some -17% below guidance offered in late 2023.
While utilities have always been able to source U3O8, Petra espouses there is insufficient production capacity for all utilities, of which the top 25 globally dominate consumption (50% are government entities) to achieve 100% coverage.
The top two suppliers, Cameco and Kazatomprom, are maintaining restrictive production policies at a US$80/lb term price.
While it is challenging to calculate inventories due to limited disclosure, the analyst proposes even “simple math” underwrites a new contracting cycle with restocking inevitable.
Interestingly, contracting has not equaled annual consumption since 2012, with shortfalls filled by above-ground inventories. Further inventories are held by the Sprott Physical Uranium Trust at 66.2Mlbs and Yellow Cake Plc, which holds 21.7Mlbs.
Petra points to estimated production in 2024 of 156Mlbs, which is circa 89% of estimated consumption of 176Mlbs.
In terms of short interest and days to cover, Bannerman Energy ((BMN)) has the longest ratio, followed by Deep Yellow, Boss, Lotus, and Paladin.
Petra likes the fundamentals for Bannerman (Buy rated with a $5.33 target price) and the stock remains one of key U3O8 exposures for the broker, along with Aura Energy ((AEE)), Buy rated, target price 39c; Alligator Energy ((AGE)), Buy rated, 10c target price; Lotus Resources, Buy rated 30c target; and NexGen Energy ((NXG)), Buy rated and $10.80 target.
RBC Capital’s recent uranium outlook also points to NexGen, which is developing one of the world’s “best” uranium projects.
Uranium demand is expected to be underwritten by the growing commitment to nuclear energy, with generating capacity set to grow through to 2040.
Current forecasts suggest additional supply will be enough to meet demand into the early 2030s, with growing supply-side risks for Western-aligned regions from geopolitics and an over reliance on non-aligned countries.
RBC expects a major uranium deficit by the mid-2030s, which will require higher incentive prices. The longer-term price forecast was raised to US$100/lb post-2035.
Spot price slips as market participants step back
While concerns for traders are rising over Israel’s potential strikes on Iranian uranium enrichment sites, the spot market saw industry consultant TradeTech’s price indicator slip by -US$2.50 to US$69/lb last week.
Five transactions were recorded; four in the spot market and one in the mid-term.
The TradeTech Mid-Term price indicator stands at US$75/lb and the Long-Term price indicator at US$80/lb.
Latest nuclear-related news
The World Bank announced last week it is removing its long-standing ban on financing nuclear energy (in place since 1959), with the President stating it would “begin to re-enter the nuclear energy space” alongside the International Atomic Energy Agency.
In an announcement the World Bank declared: “We will support efforts to extend the life of existing reactors in countries that already have them and help support grid upgrades and related infrastructure”.
The Bank is also looking to support and accelerate small modular reactors to make the technology more viable.
Further support for small modular reactors was given to Great British Energy via the Budget’s GBP 2.5bn funding to the government’s signature state-owned energy company, which will in turn support the Rolls-Royce consortium in developing the technology.
The British government also committed GBP14.24bn to construct the Sizewell C nuclear plant in Suffolk, the first new plant since Sizewell B in 1995.
Prime Minister Starmer was quoted as saying “Having our own energy in this country that we control, gives us security, gives us independence, so (Russian President Vladimir) Putin can’t put his boot on our throat,”
(…..)
“And it means that we can control the prices in a way that we haven’t been able to in recent years, which has meant very high prices for businesses, for households and for families.”
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| 1AE | 13/06/2025 | 0.0600 |  -14.29% |
$0.10 | $0.03 | |||
| AEE | 13/06/2025 | 0.1400 | – 3.70% |
$0.19 | $0.10 | |||
| AGE | 13/06/2025 | 0.0300 | – 3.33% |
$0.06 | $0.02 | $0.100 |  233.3% |
|
| AKN | 13/06/2025 | 0.0100 | 0.00% | $0.02 | $0.01 | |||
| ASN | 13/06/2025 | 0.0500 | -11.11% |
$0.17 | $0.05 | |||
| BKY | 13/06/2025 | 0.5500 | 4.59% |
$0.67 | $0.30 | |||
| BMN | 13/06/2025 | 2.8000 | – 9.12% |
$3.97 | $1.76 | $4.700 | 67.9% |
|
| BOE | 13/06/2025 | 4.1000 | – 4.17% |
$4.44 | $1.99 | 231.8 | $4.159 | 1.4% |
| BSN | 13/06/2025 | 0.0200 | – 5.26% |
$0.07 | $0.01 | |||
| C29 | 13/06/2025 | 0.0300 | – 3.33% |
$0.13 | $0.03 | |||
| CXO | 13/06/2025 | 0.0900 | 3.37% |
$0.14 | $0.06 | $0.100 | 11.1% |
|
| CXU | 13/06/2025 | 0.0100 | 0.00% | $0.03 | $0.01 | |||
| DEV | 13/06/2025 | 0.0800 | 1.33% |
$0.34 | $0.07 | |||
| DYL | 13/06/2025 | 1.5700 | – 2.63% |
$1.65 | $0.75 | -1550.0 | $1.570 | |
| EL8 | 13/06/2025 | 0.2900 | – 3.57% |
$0.47 | $0.19 | |||
| ERA | 13/06/2025 | 0.0020 | 0.00% | $0.04 | $0.00 | |||
| GLA | 13/06/2025 | 0.0100 | 0.00% | $0.02 | $0.01 | |||
| GTR | 13/06/2025 | 0.0040 | 0.00% | $0.01 | $0.00 | |||
| GUE | 13/06/2025 | 0.0600 | -14.29% |
$0.10 | $0.05 | |||
| HAR | 13/06/2025 | 0.0700 | 1.54% |
$0.12 | $0.03 | |||
| I88 | 13/06/2025 | 0.1000 | 0.00% | $1.03 | $0.08 | |||
| KOB | 13/06/2025 | 0.0400 | 0.00% | $0.18 | $0.03 | |||
| LAM | 13/06/2025 | 0.8800 | 2.92% |
$0.90 | $0.48 | |||
| LOT | 13/06/2025 | 0.1700 | – 8.82% |
$0.38 | $0.13 | $0.325 | 91.2% |
|
| MEU | 13/06/2025 | 0.0400 | – 2.44% |
$0.06 | $0.03 | |||
| NXG | 13/06/2025 | 10.6000 | 3.23% |
$13.53 | $6.44 | $14.650 | 38.2% |
|
| ORP | 13/06/2025 | 0.0300 | 0.00% | $0.08 | $0.03 | |||
| PDN | 13/06/2025 | 7.2200 | – 1.25% |
$14.28 | $3.93 | -279.4 | $8.493 | 17.6% |
| SLX | 13/06/2025 | 3.9300 | – 6.94% |
$6.62 | $2.28 | $6.500 | 65.4% |
|
| TOE | 13/06/2025 | 0.1700 | 0.00% | $0.38 | $0.15 | |||
| WCN | 13/06/2025 | 0.0200 | 0.00% | $0.04 | $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: DYL - DEEP YELLOW LIMITED
For more info SHARE ANALYSIS: GHLD - GLOBAL X GOLD BULLION (CURRENCY HEDGED) ETF EXCHANGE TRADED FUND
For more info SHARE ANALYSIS: LOT - LOTUS RESOURCES LIMITED
For more info SHARE ANALYSIS: NXG - NEXGEN ENERGY LIMITED
For more info SHARE ANALYSIS: PDN - PALADIN ENERGY LIMITED