Weekly Reports | 10:00 AM
The U308 spot price surged on robust buying from Sprott and London-listed Yellow Cake with volumes hitting a two-year high.
-Uranium’s price rally underpinned by soaring demand and supply supply challenges
-Nuclear ambitions collide with U308 mining realities
-Sprott stirs the market while utilities continue to hold back
-ASX short interests back off for now
By Danielle Ecuyer
Canaccord Genuity ponders the looming supply shortage
While news and updates from Australia’s uranium companies has been light on, the same cannot be said for the U3O8 spot and term markets, continuing the “turbulent” trend in 2025 in markets, Canaccord Genuity reports.
The first part of 2025 saw a considerable sell-off in uranium equities irrespective of fundamentals. Over the last few months, on average stocks under the broker’s uranium equity coverage have appreciated 70%-80% from April 1 lows.
As a group the uranium sector is averaging around a 35% return on the prior year.
In its latest update on the outlook for uranium, the broker broaches the structural issues facing the market, described as a “tug-of-war” scenario between demand and supply dynamics.
Canaccord’s long-term U3O8 price target remains unchanged at US$90/lb but the near to medium-term dynamics see a shifting landscape of rising demand pitted against the challenges of bringing supply on stream.
As FNArena wrote a few weeks ago, the launch of the 2025 WNA Fuel Report offered upgraded forecasts for global nuclear capacity post the 2023 report. ((https://fnarena.com/index.php/2025/09/09/uranium-week-tripling-nuclear-capacity-by-2050/).
The Executive Plenary Program opened with the WNA Director General, Dr Sama Bilbao y Leon, requesting “bold, visionary leadership” for the nuclear sector.
“Tripling capacity by 2050 is ambitious, but as many noted, it is the bare minimum required”… she went on to point out a previous statement from the International Energy Agency that global data centre electricity consumption could reach around 945 TWh by 2030, which is roughly equivalent to Japan’s current electricity consumption.
Canaccord also emphasises the altered macro backdrop for uranium as the travails of the past thirty years of regulatory headwinds, shutdowns and suspended capacity for the nuclear industry have given way to multiple tailwinds.
The outlook is being driven by a suite of factors including energy security, post Russia’s invasion of Ukraine, to the need for robust zero-emission energy production, as well as burgeoning demand for energy from AI and cloud infrastructure.
The latter is directing policies in the US, China, India and other countries to new builds, deregulation of development bottlenecks, as well as existing plant extensions and restarts.
Although Canaccord expects some delays to the expected connections to the grid in the near term, demand is nevertheless forecast to grow at a compound average rate of 4% to 2030 and 2035.
Under the WNA outlook, projected nuclear capacity of 746GW by 2040 equals annual U3O8 demand of 391mlb, compared to demand in 2025 of 179mlb.
Arguably, Canaccord’s question “Where are we going to find over 300mlbs of incremental supply per year, in just 15 years?” , rings true at face value, assuming the demand and supply assumptions hold.
Bringing supply on stream ain't so easy
As Australian investors have discovered much to their chagrin, uranium mining is far from easy, even for larger, established producers like Canada’s Cameco and Kazakhstan's Kazatomprom.
Over the last year, Paladin Energy ((PDN)) was hit with water issues and inventory problems in the scale up of its restarted Langer Heinrich mine
Boss Energy's ((BOE)) shock announcement on the nameplate capacity and mine life of restarted Honeymoon was a more recent ‘nasty’ event for shareholders.
Canaccord stresses the last year has seen a suite of downgrades across new operators and incumbents relating to supply of U3O8.
Cameco recently downgraded McArthur River production guidance by around -19% for 2025. Kazatomprom’s reduction in subsoil use agreement (SUA) has created concerns over its 2026 volumes. The latter also highlighted the current long-term price at US$80/lb is insufficient to return production to 100% levels.
In other supply setbacks, Uranium Energy has lowered its 2025-2027 production forecasts for its Wyoming hub and spoke operations; Deep Yellow ((DYL)) has deferred first production at Tumas to 2028 from 2027 with final investment decision subject to higher uranium prices.
Bannerman Energy’s ((BMN)) first production has also been put on hold until 2029 from 2028 earlier, with the final investment decision subject to (higher) uranium prices.
Orano has suspended production at its Somair uranium mine in Niger as the company lost control of the mine to the local junta. Global Atomic has pushed back first production to 2028 from 2027 due to problems with project financing.
As stressed by Canaccord, uranium mining isn’t easy and inflation on mining costs has also impacted the financial metrics for new capacity, creating a ‘chicken and egg’ situation, the author posits.
The analyst describes the situation as a “tug-of-war” of utilities versus miners on price. The term price has remained steady at around US$80/lb over the last 15 months and reported contract volumes have remained low at under 42.5mlbs versus 116mlbs in 2024, even when considering under-reporting from utilities.
A structural deficit is estimated between demand and available supply of -10mlbs in 2025, -17mlb in 2026 and -16mlb in 2027 with a return to market equilibrium dependent on new supply and large greenfield projects coming on stream from the likes of NexGen Energy ((NXG)) which could still encounter permitting, financing and construction hurdles.
Canaccord Genuity’s preferred uranium stocks are Silex Systems ((SLX)), Speculative Buy rated with a $6.90 target, and NexGen Energy, Speculative Buy rated with a CA$16 target, up from CA$15.
The target price of Deep Yellow was also raised to $1.98 from $1.61 on changes in modeling and valuation rolled forward by six months. This stock retains a Speculative Buy rating.
Sprott Uranium Trust raises even more funds to purchase U308
With such challenging demand and supply dynamics, the Sprott Physical Uranium Trust (SPUT) has capitalised on the positive macro backdrop and raised another US$242m since September 15, with almost half of the circa US$525m raised in 2025 achieved in the last month.
As noted by Canaccord, SPUT was trading at a 4% premium on September 22, and at its highest level since February 2022, a far cry from hedge fund narrative earlier this year that the Trust was going to be forced to sell U3O8 to cover its annual operating costs of circa US$40m.
Industry consultants TradeTech pointed to a US$5/lb rise in the spot price last week to US$82.75/lb, boosted by demand pressures on both volumes and price from Sprott, as well as from other industry participants.
Since early August, the spot price indicator has risen 1.7% eight of the last nine weeks, pushing the price up by 8.9% year-to-date in 2025 and by 0.9% on a year ago.
The Trust has acquired over 3mlbs since September 15 and still holds US$56.5m in cash with over 72mlbs of U3O8.
London-listed Yellow Cake plc raised around $125m to purchase 1.33mlbs of U3O8 using its purchase option for 2025 under the agreement with uranium producer Kazatomprom at a price of US$78.08/lb.
Transactions in the spot market came in at twenty-four with TradeTech reporting 4.7mlbs trading hands in the spot market over September, which is the highest monthly volume in over two years.
Thursday last week was the most active day with 1.1mlbs of U3O8 changing hands. While Sprott was a major buyer, seven other parties were iequally active n the spot market.
In the term market, utilities moved forward with informal Requests for Proposals with two transactions taking place. Offers are due, the industry consultants note, in coming days to several non-US utilities with one seeking uranium containing UF6 or enriched product over 2026-2029.
Other utilities are considering off-market offers with one utility agreeing to an 800klbs commitment over 2026-2029.
The TradeTech Mid-term price indicator stands at US$80/lb and the Long-term price indicator at US$82/lb.
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