Commodities: Uranium
BOE surged +6.1% on Thursday, tracking solid gains by the uranium names on overseas bourses, following a hike in extraction taxes in Kazakhstan, which will potentially limit future supply growth, a bullish development right after Biden signed the ADVANCE Act on Tuesday to support nuclear power. Two upcoming events may provide a catalyst for ongoing gains by uranium prices:
Last night saw big moves in Uranium stocks after a hike in extraction taxes in Kazakhstan, the world’s largest uranium-producing country, which should have an impact on future supply growth, right after Biden signed the ADVANCE Act on Tuesday to support nuclear power. The ADVANCE Act is a bipartisan bill to bolster the atomic power sector.
The average gain of the three ASX200 uranium miners on Wednesday was almost 6%, with BOE, the weakest advancing +4.75%—not bad for a relatively average performer. We had been calling BOE down to the $4 area for months, a move which unfolded rapidly after the CEO sold around 70% of his holding in one fell swoop in late May.
You’re still quite bullish on Uranium stocks. However, the value of my holdings has halved over the last few months, which isn’t exactly what I’d call a ‘dip’. It’s a considerable pullback and the spot price has been stagnant or negative for the same length of time. Why do you think investors are so wary of a sector that has such an undeniable supply/demand situation? Equity prices, on the ASX at least, just don’t seem to reflect the reality of the circumstances.
Hi Team,
As we’ve covered in recent days, PDN launched a bid to acquire a Canadian listed Uranium company Fission Uranium for ~A$900m via the issuance of shares (i.e. no cash). The share price has taken a hit, and we can understand why, though, if we’re bullish on Uranium over the coming years, as we are, higher future production at the expense of cash flow now, will ultimately be a positive.
This time last year MM’s Webinar: Resources into 2024 focused on the global energy transition which covered the key related commodities such as lithium, copper, and uranium – definitely worth a listen to remind ourselves of some of the huge thematics moving forward . Three of our main takeouts were as follows
We have discussed PDN a number of times over the last 12-months maintaining a bullish bias throughout. PDN is looking to add FCU mining operations which are close to major North American customers to its own uranium mine in Namibia. Additionally, FCU’s shallow high-grade PLS project in Canadas Athabasca Basin is near PDN’s Michelin project offering synergies between the two operators.
We haven’t been fans of BOE through 2024 and in May it looked like the CEO agreed as he unloaded 70% of his holding onto the market, not a great look. This is a volatile space but we’ve been targeting the $4 area for BOE hence we have reversed our outlook back to a bullish one, though we reiterate our preference towards PDN for sector exposure.
DYL is a relatively new member to the ASX200, its market cap has lifted to $1.3bn as it enters advanced stage uranium exploration at its core Namibian projects. The stocks likely to move in tandem with PDN and BOE although swings are usually more aggressive in both directions, i.e. higher Beta.
