Uranium Week: Structural Bull Cycle Intact

A quiet week in the spot market belies upbeat sentiment

It was quite the week for brokers upgrading their views and forecasts for the uranium sector, against a backdrop of volatility in the U308 spot market according to industry consultant TradeTech.

The spot price slipped -US$1.50/lb to US$84.50/lb after trading as high as US$85.50/lb in the early part of last week.

Participants were noted as closely watching the outcome of a large US utility tender seeking up to 7.2mlbs for delivery between 2027 and 2035.

On Monday, three deals took place for delivery at Orano’s French facility, with another two transactions for delivery of 50klbs of U308 to Orano. No further transactions in the spot market took place over the week.

The TradeTech Mid-Term price indicator stands at US$90/lb and the Long-Term price indicator at US$93/lb.

The consultants also highlighted the all-stock merger between US utility NextEra Energy and Dominion Energy, thereby creating the world’s largest electric utility business. The deal is valued at US$67bn.

Morgans initiates coverage on the U308 sector

Morgans is the latest Australian broker to initiate coverage on the uranium sector with a blockbuster eighty-eight-page report.

The broker believes U308 has entered what it describes as a “structurally constrained market” underpinned by long-term supply shortages.

The challenges are being emphasised by an acceleration in demand from nuclear reactors, including a push for net zero emissions energy production, concerns around energy security in a more geopolitically fractured world, as well as accelerating demand from AI-related energy needs from hyperscalers and data centres.

Unlike previous cycles, this one is considered different because there are structural supply deficits rather than temporary supply disruptions or speculative demand.

Factors resulting in the demand push include more than twenty countries pledging at COP28 to triple nuclear capacity by 2050. China has 39 reactors under construction and is aiming for 110GW of nuclear capacity by 2030.

The US is targeting 400GW of nuclear capacity by 2050, compared to 100GW currently. France has removed its long-standing cap on nuclear generation, committing to new large-scale reactors.

Meanwhile, India is looking to grow its nuclear capacity to 100GW by 2047 from 8.8GW currently after opening up the sector to private investment.

Morgans also sees AI and hyperscale data centres as a major new uranium demand driver because nuclear is one of few scalable sources of reliable, zero-carbon baseload power.

Microsoft, Amazon, Google and Meta are all signing multi-decade nuclear power agreements or funding SMR development to support AI infrastructure growth.

Hyperscaler capex is expected to reach US$755bn in 2026 according to Goldman Sachs, up 83% on 2025. The underlying assets are energy hungry.

From a supply-side perspective, Morgans identifies the uranium industry as having suffered from chronic underinvestment following the Fukushima disaster, which pushed prices to uneconomic levels for years, particularly preventing new investment.

Major mines were shut or suspended, including Cameco’s McArthur River and Paladin Energy’s ((PDN)) Langer Heinrich. Kazakhstan, which supplies around 40% of global uranium production, has repeatedly downgraded output due to sulphuric acid shortages and well depletion.

With Russia controlling 40%-50% of global uranium enrichment capacity, the broker argues there is a scarcity of Western-friendly uranium supply, creating a major geopolitical risk for Western utilities after the Ukraine invasion.

Bringing new supply on stream is neither quick nor cheap, with mine development lead times of 7-15 years, meaning meaningful new supply cannot arrive quickly even with higher prices.

Taking a deeper dive into demand, Morgans points to utilities having contracted just 589Mlb of U3O8 over the past five years while reactors consumed around 815Mlb, creating a -226Mlb contracting deficit.

This uncovered demand will eventually need to be contracted, tightening the market further.

Morgans forecasts annual U308 demand rising to 83,840t by 2030 from 65,650t in 2023 and around 130,000t by 2040.

Nuclear fuel costs only represent around 10%-15% of reactor operating costs, meaning utilities are relatively insensitive to uranium price increases and prioritise security of supply.

In April, long-term uranium contract prices reached US$91.50/lb, a 14-year high which underscores the “real story” for Morgans. Utilities are increasingly looking to lock in future supply despite softer U308 prices.

Morgans forecasts uranium spot prices recovering to around US$100/lb by FY29 and expects prices to rise further to US$105-US$110/lb through FY31-FY34 as supply deficits deepen.

From FY35, the broker expects uranium prices reaching US$115/lb and ultimately US$130/lb by FY41.

U308 prices below US$80/lb would make a significant portion of future mine supply uneconomic, creating a structural floor under the market.

Let’s get stock specific

Turning to individual stocks, Paladin Energy ((PDN)) is Buy rated with a $13.05 target and is considered as offering an attractive entry point for investors into Morgans’ “uranium bull cycle”.

The ramp-up at Langer Heinrich to nameplate capacity boosts near-term cash generation. In the medium to longer term, Patterson Lake South offers upside potential. The project is fully owned, with the feasibility study for the Athabasca Basin project completed.

Macquarie has recently upgraded Paladin to Outperform from Neutral. This analyst views the underperformance of the shares by -13% against NexGen Energy ((NXG)) and Cameco by -15% in the last five weeks or so as overdone.

The shares currently imply around a US$77/lb U308 price against the spot price of US$84.50/lb, while acknowledging there are possibly some downside risks to FY27 consensus production forecasts relative to guidance.

For Macquarie, Paladin is the preferred exposure among producers. The company is considered a great way to leverage the uranium cycle and AI megatrend. Patterson Lake South is also uncontracted for better exposure to higher U308 prices.

Target unchanged at $13.25. EPS forecast for FY26 declines by -32.6% on higher costs and the FY27 forecast is lifted by 3.2%.

Morgans highlights NexGen  as the most leveraged to the uranium cycle via Rook I, which is viewed as a “single, genuine world-class” project moving into the construction phase.

Rook I is highlighted as a top five global U308 deposit by quality, with exceptional grade. The project sits in the bottom quartile of the global cost curve.

NexGen is Buy rated at Morgans with a $20.80 target.

Boss Energy ((BOE)) is Accumulate rated with a $1.55 target, with the analyst stressing the investment case depends on the ability for management to execute on Honeymoon with a wide-spacing well design.

Boss’ other project, Alta Mesa, remains an unproven in-situ recovery, or leaching, restart with EnCore as the operator. The strength of the balance sheet and Boss’ inventories are viewed as positive offsetting factors.

Macquarie has upgraded Boss to Neutral from Underperform despite the ongoing resource concerns around Honeymoon and the feasibility study. The risks are now considered more discounted at the current share price.

Honeymoon appears, for now, to be a considerably smaller and more “marginal” asset, the analyst explains, compared to what previous management believed.

EPS forecasts are tweaked up by 1.1% for FY26 and 1% for FY27 with an unchanged target price of $1.30.

Bannerman Energy ((BMN)) and Deep Yellow ((DYL)) remain the preferred developer exposures for Macquarie, with Etango moving to its final investment decision.

As highlighted by Macquarie’s latest update on uranium, Bannerman Energy’s Chair Brandon Munro pointed to U308 term prices advancing higher to around US$120/lb to incentivise more greenfield projects.

This compares to TradeTech’s Long-Term price indicator of US$93/lb, as noted above, and Macquarie’s own base case assumption of US$95/lb.

The partnership with CNNC is believed to considerably lower Bannerman’s funding needs. An Outperform rating is retained with a $5.55 target price.

For Deep Yellow, Macquarie notes development works at the Tumas project have been completed and the developer is starting the civil works phase, which could take around 10-12 months.

With a robust cash position, management is viewed as having some flexibility around the final investment decision. The stock retains an Outperform rating and $2.25 target.

For Lotus Resources ((LOT)), Macquarie has lowered its target price to $1.30 from $1.90.

Updated modeling assumes a higher equity dilution factor of -$0.80 per share against -$0.20 per share previously around expectations more equity capital will likely need to be raised at a lower share price and deeper discount.

Such a scenario could arise if Lotus encounters delays in export approvals from the Namibian and transit governments and/or prepayment inventory finance, the broker explains.

Argonaut has initiated coverage of Alligator Energy ((AGE)) with a Speculative Buy rating and a 7c target price. This analyst highlighted growing confidence in the Samphire uranium project pathway toward production by 2031.

The successful field recovery trial and pilot plant operations have materially de-risked both the technical and economic outlook for the project, while early trial results showed uranium extraction grades near the upper end of expectations, alongside favourable reagent consumption and strong recovery rates.

The current Samphire resource stands at 18Mlb U3O8, which is viewed as sufficient for the base case development scenario. Further upside could be forthcoming if there is exploration success at Blackbush and Plumbush, where exploration targets range between 14-75Mlb of U3O8.

A definitive feasibility study for Samphire is targeted for 2027, and the broker forecasts production based on a staged ISR development averaging around 1.0-1.2Mlbpa over a 12-year mine life.

All-in sustaining costs are estimated around US$33/lb, positioning Samphire as a potentially competitive future uranium producer.

Latest updates in short interest

As at May 19, as reported by ASIC, shorters have been upping their positions. Lotus continues carrying the most shorts at 17.62%, up 1.18% over the week.

Boss is in fourth position at 14.57%, up 1.47%, and Paladin in twelfth position at 10.47%, up 1.12%.

For more recent updates from FNArena, check out the latest weekly articles here:

https://fnarena.com/index.php/2026/05/19/uranium-week-paladin-trips-over-higher-costs/

https://fnarena.com/index.php/2026/05/12/uranium-week-shorts-surge-in-u308-stocks/

https://fnarena.com/index.php/2026/05/05/uranium-week-prices-rise-producers-struggle/

https://fnarena.com/index.php/2026/04/28/uranium-week-rising-interest-from-utilities/