Commodities: Uranium
PDN advanced +3.3% on Monday, mirroring the strong performance by US uranium names on Friday after the world’s largest Uranium producer, Kazatomprom, alluded to only a modest increase in production in the year ahead. They also echoed our bullish medium/long-term view, stressing the world will be short of Uranium by 2030.
Hi James and team,
It was interesting to read yesterday that Sweden is now considering overturning a 6-year ban on uranium mining while, at the same time, the government is planning to build another two large nuclear reactors. The world is embracing nuclear power as a clean energy option to reach net zero.
Earlier, we discussed the aggressive swings and current recovery in the lithium stocks, uranium stocks have experienced similar volatility of late although they’ve been dancing to a very different tune.
We’ve all watched the rise & rise of the spot price to around US$95/lb over the last 2+yrs. However over 70% of uranium sold is via LT contracts and while the LT will generally follow the spot prices higher (with a lag), currently LT contracts settle around US$70/lb.
What is the strength of the link between LT & spot prices? Can we better select uranium investments based on such variables and their production or startup cycle?
Earlier this month, the Uranium Sector was one of the hottest in town, with Paladin (PDN) and Boss Energy (BOE) both up ~50% after only a few weeks of 2024, but here we are approaching the end of February, and the vast majority of the gains have evaporated in the blink of an eye. US giant Cameco Corp (CCJ US) was the catalyst after reporting its FY23 results earlier in the month.
Hi Market Matters
PDN has fallen below the $1.20 price target you had as your latest view when Market Matters will consider buying back PDN after taking profits in Jan. Could you please update us on your current view of the Uranium space and at what price you will consider PDN again.
regards
Deb
PDN -3.43%: Reported a loss for the period of US$15.4m, slightly more than expected ($US12.1m) but not material. Importantly, they maintained guidance for the Langer Heinrich restart to costs US$125m and first commercial production expected at the end of Q1-CY24, although that may trickle into Q2 depending on contractor productivity.
Both the Australian and US uranium stocks corrected sharply last week, and after taking profit from our Paladin (PDN) positions in our Active Growth and Emerging Companies Portfolios last month, along with Cameco (CCJ US) in The International Equities Portfolio,
