Weekly Reports | 11:20 AM
Sprott capital raising results in a U308 spot market buying spree, taking local uranium stocks along for the ride.
- Uranium prices swept up in the commodity price momentum rally
- Boss Energy reveals an unsavoury legacy contract, resulting in EPS downgrades
- U308 spot price rocketed into the end of January as Sprott buying escalated
By Danielle Ecuyer
The argument for higher uranium prices is well founded and a topic we wrote about extensively in 2025.
In the final week of January, that thesis was reinforced when the TradeTech U308 spot price sailed through the US$100/lb mark on Thursday, marking the highest level since mid-January 2024, which was a 16-year high.
A global shortage in zero power generation has coincided with an exponential rise in demand from data centres and AI-related industries, increasingly refocusing attention on nuclear energy as a baseload solution.
The rapacious demand from the Sprott Physical Uranium Trust (SPUT) was evident via purchase of 2.5mlbs last week. The recent rally in the Sprott share price above net asset value has facilitated the fund to raise significant funds since the start of the year.
Thus far into 2026, SPUT has raised US$435.1m and acquired 3.3mlbs of U308, with a residual cash balance of US$165.5m and a net asset value of US$7.9bn on U308 inventory of 78mlbs.
Demand for U308 exposure in SPUT has been part of a self-reinforcing push into the spot market, which in turn drives higher U308 prices and a higher net asset valuation on the trust units.
As seen across other metal markets which touched record highs last week, positive momentum and the weight of funds flow appear to be reinforcing the uranium trade rather than signalling exhaustion.
What about next year for Boss Energy?
At a corporate level, Boss Energy ((BOE)) reported its 2Q26 trading update and, along with many of the Australian uranium stocks, its shares rallied sharply last Wednesday, up 10%.
Bannerman Energy ((BMN)) and Deep Yellow ((DYL)) usurped Boss’ share price rise, surging 17% and 10.7%, respectively, completing the top three ASX300 winners on the day.
RBC Capital was swift to downgrade Boss to Underperform from Sector perform with $1.98 target price following the announcement the company was saddled with a legacy uranium contract in addition to ongoing question marks over the earnings outlook post FY26.
Second quarter sales revenue of US$25.9m missed RBC’s estimate of US$37.1m and consensus of US$36.7m, with lower than anticipated sales volume of 350klb, a decline of -31% q/q.
RBC points to an estimated loss of -US$11m per year from FY26-FY27 revenues from the legacy contract, with a circa -US$77m wealth loss over the life of the contract.
The analyst remains skeptical on the proposed wide-space well design at Honeymoon, which remains a concept. The scoping study is due in 2Q2026, followed by a new feasibility study in the September quarter.
Notably, the approach is unproven and has no commercial scale precedent in the uranium in-situ leaching industry.
Canaccord Genuity offers a stark contrast with a speculative Buy rating and a higher target of $2.30 from $2.20.
The broker notes Boss achieved its sixth consecutive quarterly production increase, with 456klb exceeding its estimate and cash costs falling to a record low of $30/lb, supported by lixiviant optimisation and cost-out initiatives.
Sales of 350klb at US$74/lb generated free cash flow of around $6m, although that legacy US utility contract, priced at roughly 65–70% of U308 spot price, is expected to weigh on realised prices through 2026 and beyond.
Management's FY26 production guidance of 1.6Mlbs was retained, with C1 and AISC guidance lowered by -$5/lb, partly offset by a $4m increase in capex, while drilling outside the core Honeymoon domain introduces some uncertainty for FY27 and later years.
Amidst FNArena's daily monitored brokers, Ord Minnett also downgraded the stock to Sell from Hold, pointing to the post result share price rally as an opportunity to divest, citing limited transparency regarding the outlook post 2H26.
Question marks remain over the potential success of management’s new production plan at Honeymoon, which remains unproven.
Bell Potter highlighted the downside risks from the announced legacy contract, which covers 15% of output at 65–70% of spot, alongside softer 3Q26 production due to declining tenors, maintenance and commissioning delays. This analyst downgraded the stock to Hold from Buy.
While noting the impacts of the legacy contract and lowering EPS forecasts by -11% to -12% out to FY31, UBS retains a Neutral weighting.
Morgan Stanley retains an Overweight and, along with Shaw and Partners, which has yet to offer an update, remains the only broker among daily monitored brokers with a Buy-equivalent rating.
The consensus target price stands at $1.736.
In other broker updates, Ord Minnett has downgraded Deep Yellow to Lighten from Accumulate with a higher target of $2.35 from $2.
Regarding Lotus Resources ((LOT)), Ord Minnett noted its Kayelekera mine returned to mining in the December quarter (2Q26) for the first time since 2014. Mill recoveries outperformed at 82% U308 despite early start-up and acid supply issues.
However, production at nameplate levels and first U308 shipments have been pushed back by one quarter, the broker notes, leading to trimming of its FY26 EPS forecast.
Target cut to $4.20 and Speculative Buy maintained, with the broker noting Lotus remains its preferred ASX-listed uranium exposure.
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