Commodities: Uranium
The uranium sector is accelerating to the upside, but in a more orderly fashion than some commodities. This is one ETF we like right here, believing pullbacks will be relatively shallow and well supported.
Uranium continues to defy the bears, trading towards the early 2024 high, a level we believe will be breached this year, causing problems for the large short positions in the likes of Boss Energy (BOE) 16.4%, and Paladin Energy (PDN) 11.2% – painful for some with the latter up over +350% in less than 12-months.
The BetaShares URNMM ETF gives investors broad exposure to the global uranium industry, including mining, exploration, production and firms that hold physical uranium or uranium royalties. Its largest ASX holding is Paladin (PDN) at 5.7%, illustrating its global nature, while Cameco and NAC Kazatomprom remain the prominent holdings, both above 16%, followed by more than 10% in physical uranium.
In Davos last week President Trump described nuclear energy as a safe and efficient solution to fuel the growth of manufacturing and AI in the US, sending the sector higher – this is one area we agree with the Don. A week later, and uranium is trading around 12% higher, taking related stocks along for the ride.
Welcome Back
I know you don’t hold (or rate) Boss Energy but in a situation where you were already on board (and all the recent bad news & uncertainty is in the price) would you hold, on based on a forecast rising commodity price lifting all boats, or would you look to drop it and invest in other Uranium miners?
Thanks for all your help.
Cheers
Derek
Hi James
Can you provide MM insight into the Silex (SLX) announcement this week disclosing that they missed out on $900 million in a US government grant. Was their commercialisation pathway and developments contingent on funding. How does this impact MM investment thesis.
Regards
Andrew
On Wednesday Paladin Energy (PDN) reported 2Q production of 1.2m pounds of uranium oxide, up 15% from the prior quarter, led by an increase in mined ore. Importantly, they guided well for the full year, expecting expects FY production to come in toward the upper end of its previous guidance (4m-4.4m pounds).
As we touched on recently, NXG is still in exploration and development stage, affording investors with greater leverage to growing global uranium demand, an energy thematic we remain bullish towards.
The BetaShares URNMM ETF gives investors broad exposure to the global uranium industry, including mining, exploration, production and firms that hold physical uranium or uranium royalties. Its largest ASX holding is Paladin (PDN) at 5.3%, while Cameo and NAC Kazatomprom are the prominent holdings, both above 16%, followed by more than 11% in physical uranium. For investors looking to position for the uranium thematic, as opposed to weighing the benefits of individual companies, this is a great alternative, but costs 0.69% pa.
Uranium isn’t the clearest commodity to track, not trading on transparent markets like gold and copper. Most uranium is sold via long-term contracts between miners and nuclear utilities, with contracts typically lasting 3–10+ years.
