Weekly Reports | 10:00 AM
The U308 spot price took a breather last week as buying from funds subsided and volumes contracted.
-Uranium's longer term outlook back in focus
-US uranium supply rises over 2024 as Russian imports fall
-U308 spot price slips as buyers step back from market
By Danielle Ecuyer
Supply challenges boost longer-term outlook
Longer-term demand/supply dynamics continue to look favourable for supporting the U308 price.
Petra Capital highlighted the growing tailwinds for demand trends while emphasising the supply challenges as recently noted by the World Nuclear Association (WNA) Fuel Report, which estimates U308 supply will be down -7% in 2040.
Both Cameco and Kazatomprom have lowered production guidance in recent market updates. Concurrently, none of the uranium mining juniors’ ramp-ups have progressed as analysts predicted.
The WNA has lifted the anticipated nuclear generating capacity by 60GW in 2040 which, as Petra Capital explains, represents a NexGen Energy ((NXG)) worth of uranium demand added in two years.
For Petra, NexGen and Aura Energy ((AEE)) remain the top uranium stock picks on the ASX. Both have Buy ratings.
Aura is considered as having the best exploration upside potential on the ASX, including a rise in the resource at Tiris which will support an increase in the project’s potential production output. The explorer is anticipated to become the first company on the Australian market to become a greenfield producer.
Sweden is also noted for the removal of its uranium mining ban come January 1, 2026, with the country’s draft budget looking at allocating US$23bn in capital to 5GW of new nuclear plants.
Aura’s Häggån project in Sweden is viewed as a secondary asset, but it has around an 800mlb U308 resource, making it globally “significant”. Target price is set at 38c for Aura.
NexGen is perceived by Petra as one of the most “strategic” companies in the sector. At the end of June, it had a cash balance of CA$372m with recent equity raisings of CA$400m and CA$600m, upsized from CA$400m in Australia to fund the Rook 1 project past approval. Target price is set at $17.14.
Canaccord Genuity remains positively disposed to the sector, pointing to the robust levels of activity in September as one of the most active months in recent years.
The rise in activity can be attributed to the Sprott Physical Uranium Trust, which acquired around 3.4mlbs from the spot U308 market post raising circa US$300m. With a further circa 0.9mlbs acquired into the start of October, the fund has bought year-to-date nearly 7mlbs of U308.
The rise in buying support was countered by the flagged supply disruptions at Cameco and Kazatomprom.
Canaccord Genuity re-iterates its Buy rating on Paladin Energy ((PDN)) while lowering its target price to $12.50 from $13.05. The analyst believes Patterson Lake South will position Paladin as a major player in the industry, sustaining annual production of around 9.1mlbs with all-in-sustaining-costs of US$15.2/lb.
Langer Heinrich is in the final stages of ramping up. Paladin has cash and cash equivalents of around US$302m, which are anticipated to support both Patterson Lake South and Langer Heinrich. The latter reported production of 727lbs for July-August.
As part of the broker’s U308 September quarter review, the analyst notes the U308 spot price rose 5% to US$82/lb from US$78/lb. The term price moved out of its 15-month trading range of US$79-US$81/lb to US$82/lb, the highest since May 2008.
Morgan Stanley upgraded the stock to Overweight from Equal Weight last week, raising its target to $9.50 from $7.30 on a more constructive view on the outlook for uranium.
Bell Potter, another daily monitored broker here at FNArena, raised its target on Paladin to $10.30 from $9 and retained a Buy rating ahead of the 1Q26 production report scheduled for October 14 (today).
This broker forecasts around 1mlbs, up 1% on the prior quarter, and mill throughput of 1.2mt at 450ppm and 81% recovery.
Boss Energy ((BOE)) has maintained its FY26 production guidance of 1.6mlbs, with potential challenges to East Kalkaroo not anticipated to impact production until 3Q26. Grades are expected to fall as the current wellfields are exhausted.
The outlook for Boss will depend on the results from the operational review of Honeymoon’s mineral resource update, which is anticipated in the December quarter this year under the new CEO, Matt Dusci. The new CEO took up his role on October 1.
The producer remains very exposed to spot U308 prices with only three contracts in place, which equate to less than 3.5mlbs through to 2033.
Canaccord retains a Speculative Buy rating and $3.65 target price.
Morgan Stanley retains an Underweight rating on Boss but raised its target to $1.85 from $1.65 over the week.
US boosts locally sourced U308 supply in 2024
According to the latest annual report from the US Energy Information Administration, 55.5mlbs of U308 was acquired by owners and operators of US nuclear power reactors in 2024, composed of both US and foreign suppliers, at a weighted average price of US$52.71/lb.
The report noted an 8% rise in volumes over 2023 at 51.6mlbs of U308. Canada was the largest supplier in 2024 at 38% of total deliveries, with Kazakhstan and Australia at 24% and 17%, respectively.
Material from Uzbekistan represented 9% of total deliveries, with Namibia and Russia-origin material at 4% each. At 2,301mlbs of U308 of 2024 deliveries, Russian materials declined from 6,042mlbs the prior year. US material amounted to 8% of total 2024 deliveries, up from 5% in 2023.
US commercial inventory across plant owners, operators, brokers, enrichers, fabricators, producers, and traders was 167mlbs of U308, a rise of 6%.
Commercial inventory levels for plant operators and owners were 126mlbs, up 11% on 2023. The inventories held by the balance stood at 41mlbs, down -5% on the end of 2023.
Spot U308 price eases on lower volumes
After sustained positive tailwinds from Sprott Physical Uranium Trust and Yellow Cake buying in the spot market, both activity levels and price eased over the last week.
Industry consultants TradeTech’s U308 spot price fell -US$2.25/lb on the week to US$79/lb and has slipped by -6% post reaching a year high on September 24 of US$84/lb.
Transaction volumes have also slipped, with 1.8mlbs over 19 transactions conducted in the last two weeks, compared to 38 deals or 4.3mlbs of U308 in the prior two weeks.
Six transactions took place last week with some considerable price volatility. Sprott entered the spot market last Tuesday after the price fell to US$80.50/lb and acquired 160klbs of U308 at US$80/lb for delivery in November at Honeywell’s ConverDyn facility, lifting inventory for the trust to 72.9mlbs.
Two transactions were noted after a quiet day on Wednesday after the close for 50klbs, one transaction for delivery in October at ConverDyn and the other for delivery in November at Orano’s facility in France.
With a decline in the price by -US$3/lb, buyers returbed to the spot market on Thursday, with one buyer picking up 100klbs at US$77.15/lb for delivery at Cameco’s Canadian facility, followed by 50klbs at US$77.50/lb for delivery in November at ConverDyn.
One transaction was conducted on Friday for 100klbs of U308 at US$79/lb for December delivery at ConverDyn. No transactions were conducted in the term market.
TradeTech’s Mid-term U308 price indicator stands at US$87/lb and the Long-term U308 price indicator at US$84/lb.
The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE
If you already had your free trial, why not join as a paying subscriber? CLICK HERE