Justin Huhn – Understanding The Macro Drivers For the Nuclear Fuel Cycle And Uranium Mining Stocks
Justin Huhn, Founder and Publisher of the Uranium Insider, joins us to provide a macro update on the uranium sector, the nuclear fuel cycle, and some recent merger and acquisition transactions with uranium mining stocks. We start with reviewing the supply and demand factors he is watching mostly focused on less converted UF6, as well as, less enriched uranium fuel on the market, which has utility companies looking to start contracting again. In addition, there has been a large curtailment in the underfeeding, which had been dumping excess fuel into the spot markets for the last decade. On the growth side we see both lifetime extensions on existing plants in the west, and Chinese reactor builds in the east as key demand drivers.
Next we shift over to how the macro factors are affecting the sentiment and activity in the uranium mining stocks, and how some companies are ramping up activities again. We’ve seen a number of key M&A deals this year, with the most recent being this week from Energy Fuels (UUUU) (EFR) selling it’s Alta Mesa ISR Project to enCore Energy (EU) (ENCUF), as a synergistic transaction helping both companies move forward with their respective pathways towards production. We also review that Uranium Energy Corp (UEC) has made 3 key acquisitions this year, in more of a rollup approach, acquiring the prior US assets from Uranium One and Anfield Energy (AEC), merging with UEX (UEX) in takeover bid process, and then acquiring the Roughrider project from Rio Tinto (RIO). All of these transactions show that the larger players are getting into position for a more active phase of the uranium contracting cycle.
We wrap up by getting Justin’s thoughts on which kind of companies he likes in the universe of uranium mining stocks. He is less interested in the grassroots drillplays, while acknowledging that discoveries made in a bull market can still be rewarded, but thinks with the urgency of the fuel cycle being the next 1-4 years, that it is less risky to be more focused on the “real companies” that are in development for near-term production.
(UEC) Uranium Energy Corp Expands Wyoming Hub and Spoke ISR Platform with Additional Resources and Filing of S-K 1300 Report
15 Sep 2022
“This filing marks the largest S-K 1300 uranium resources reported in the United States combining UEC’s recently acquired Uranium One Americas, Inc. (“U1A”) and Anfield Energy assets together with the Reno Creek Project.”
(UEC) Uranium Energy Corp Completes Acquisition of (UEX) UEX Corporation to Create the Largest Diversified North American Focused Uranium Company
22 Aug 2022
(UEC) Uranium Energy Corp Completes Acquisition of the World-Class Development-Stage Roughrider Uranium Project From Rio Tinto
17 Oct 2022
Sprott Uranium Report – Uranium’s October Optimism
By Jacob White – Friday, November 11, 2022
“Many asset classes rebounded in October following painful September drawdowns. The U3O8 uranium spot price climbed 8.32% in October, rising from $48.25 to $52.27 per pound. By comparison, the broader commodity markets gained just 1.67%. Among other asset classes, U.S. equity markets gained 8.10% as measured by the S&P 500 Index, and U.S. bond markets (Bloomberg US Agg Bond Index) lost ground on the back of rising inflation and the hawkish Federal Reserve. On a year-to-date basis, as of October 31, 2022, the uranium spot price climbed by 24.12%, making it one of the best-performing asset classes.”
“Uranium mining equities also posted positive results in October, with the Northshore Global Uranium Mining Index gaining 3.11% for the month. Miners’ overall results were impacted by the weakness in the stock price of index heavyweight Cameco Corp. (Cameco) following its announcement of a $US748 million stock sale to raise capital for its planned acquisition of Westinghouse Electric Company (Westinghouse) in partnership with Brookfield Renewable Partners (Brookfield Renewable). Year to date, uranium miners have lost 6.38%, which compares favorably to the year-to-date 17.72% drop in the S&P 500 Index.”
Cameco’s Tim Gitzel On The Outlook For The Nuclear Energy Sector
08 November 2022 – World Nuclear News
“I’m not sure I’ve seen as complicated a geopolitical situation as there is now around the world … we were feeling tailwinds for nuclear even a couple years ago with the race to decarbonise and electrify and the race to net-zero. But then since February this year, with the Russians moving into Ukraine, the whole issue of energy security has really come to the fore, especially in Europe, but around the world.
“As far as Cameco goes, we went through a very difficult period I would say post-Fukushima, 10 years where there was too much uranium, too much nuclear fuel around. Things were looking not as good for nuclear, but they’ve really picked up now and and I could probably name you 20 countries that in the past 12 months have done a complete U-turn on nuclear and are now looking at expanding their fleets or bringing on reactors or SMRs perhaps. So it’s a real positive story for nuclear and we have a big role to play in the energy security and clean air segments going forward.”
The Uranium Bull Market And The Coming Of The Second Atomic Age
The Oregon Group
“Uranium is at the start of a 10-year bull market, according to our new report. The Oregon Group forecasts the uranium market will be positively impacted by a large net increase in global nuclear reactors, which require uranium as fuel.”
“As the uranium sector has gained pace, we’ve hit up our industry contacts and combined their latest knowledge with our own insight to bring you this uranium report. Whether you’re new to uranium, or you’re looking for new ideas on getting positioned, there’s something in there for you…”
Some key metrics from that report on global nuclear reactors:
> Total global nuclear reactors in operation currently: 437
Total global nuclear reactors currently under construction: 59
Total global nuclear reactors planned: 100
Total global nuclear reactors proposed: 334
I’m always surprised when people ask – “So where is the demand going to come from for Uranium?”
Just the existing nuclear reactor fleet, and all the reactors under construction or planned represent plenty of demand… and that doesn’t even account for the new wave of small modular reactors that is likely to start coming online over the next decade.
As far as the energy sector goes, we need a mix of different power generation output methods from fossil fuels, to nuclear, to renewables. However, some energy subsectors are more complex, with many moving parts and influences, like the oil/nat gas markets, or solar or wind or hydrothermal. In contrast, the growth profile in Nuclear energy, and thus the need for more Uranium, has been one of the easiest supply/demand stories to understand for investors that spend even the smallest amount of time seriously researching this sector.
Just like it was obvious we’d need more Lithium for batteries a few years back (when so many doubted it or disliked the trend), it’s just as obvious we’ll need more Uranium feed for the nuclear fuel cycle and for the needed 24/7 base lode power generation it can provide.
We already saw that Lithium trend play out for the last few years, with most investors watching from the sidelines, having missed explosive gains that they could have experienced if they’d only diversified some of their funds into the sector in a basket of well-selected stocks.
We’ll see the same kind of mania hit the uranium mining stocks over the next few years, and already saw quite the initial impulse move higher coming out of the pandemic lows in March of 2020 to the later part of 2021 in the U stocks. Regardless of how compelling the fundamentals are, and the information shared in the interview with Justin Huhn today, or the posts above, most will likely still miss this move in the uranium sector as it plays out. That’s what makes a market…
Peter Grandich: There’s No Such Thing as a Sure Thing — but Uranium is Close
Charlotte McLeod – Investing News Network – Sep. 01, 2022
“Speaking to the Investing News Network, he explained that the outlook for uranium has done a 180 in the last five years or so and is gaining momentum on what seems like a daily basis. Demand for clean energy is strengthening, and years of low prices have weakened supply.”
“I think we’re getting set up for good movements in uranium, but patience is a virtue,” Grandich explained.
“And remember, up until now the negativity in the stock market has been a damper. But eventually they’re going to separate — people are going to realize how critical uranium becomes through this next winter … and no matter what the general market is doing, I think the uranium stocks are going to be able to separate themselves.”
I had already posted some of these M&A news updates on a prior blog, but since this one is focused on Uranium, and these were discussed in the interview with Justin, they seem appropriate to repost here:
(UUUU) (EFR) Energy Fuels Executes Definitive Agreement to Sell Alta Mesa ISR Project to (EU) (ENCUF) enCore Energy for $120 Million, Facilitating the Company’s Plans to Accelerate Both Uranium and Rare Earth Production
14 Nov 2022