A “massive price spike” could be in store for 2024. Find out why!
The Investing News Network spoke with analysts, market watchers and insiders to get the most important trends, forecasts and stocks that Australia uranium investors need to know about for 2024.
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The uranium spot price displayed volatility in Q1, rising to a high unseen since 2007 before ending the quarter below US$90 per pound. U3O8 values shed 3.96 percent over the three month period, but experts believe fundamentals remain strong and expect the sector to benefit from various tailwinds in the months ahead.
Supply remains a key factor in the uranium landscape, with a deficit projected to grow amid production challenges. With annual output well below the current demand levels, the supply crunch is expected to be a long-term price driver.
“Supply-side fragility continued to be one of the key themes in Q1, especially the news out of Kazakhstan that production would be significantly lower than expected in 2024 than previously thought,” Ben Finegold, associate at London-based investment firm Ocean Wall, told the Investing News Network in an interview.
These favorable fundamentals are expected to support uranium prices for the remainder of the year.
Finegold also noted that spot market activity highlights how sensitive the sector is to supply challenges.
“Spot market prices have also been a key talking point as volatility in pricing has increased dramatically in Q1 to both the upside and downside,” he explained. “It has brought to light just how thinly traded the spot market is, but interestingly term prices have only continued to rise, which is indicative that the long-term fundamentals remain intact.”
The U3O8 spot price opened the year at US$91.71 and edged higher through January 22, when values hit a 17 year high of US$106.87. However, the near two decade record was short lived, and by month’s end uranium was around US$100.
Uranium price, Q1 2024.
“Presently, the company is actively pursuing alternative sources for sulfuric acid procurement,” a press release states.
“Looking ahead in the medium term, the deficit is expected to alleviate as a result of the potential increase in sulphuric acid supply from local non-ferrous metals mining and smelting operations. The company also intends to enhance its in-house sulfuric acid production capacity by constructing a new plant.”
In 2023, Kazatomprom initiated the establishment of Taiqonyr Qyshqyl Zauyty to oversee the construction of a new sulfuric acid plant capable of producing 800,000 metric tons annually.
In the years ahead, the company is aiming to bolster its sulfuric acid production capacities through existing partnerships to achieve a consolidated production volume of approximately 1.5 million metric tons.
In the meantime, disruptions to Kazakh output will only grow the market deficit.
“Kazakhstan is the largest producer of uranium in the world — 44 percent. We like to think of Kazakhstan as the OPEC of uranium,” John Ciampaglia, CEO of Sprott Asset Management, said during a recent webinar.
Kazatomprom forecasts its adjusted uranium production for 2024 will range between 21,000 and 22,500 metric tons on a 100 percent basis, and 10,900 to 11,900 metric tons on an attributable basis. While in line with the company’s 2023 output, the major had to forgo a production ramp up due to the sulfuric acid shortage and development issues.
Analysts and market watchers foresee the sulfuric acid shortage being a long-term price driver.
“The sulfuric acid issue in Kazakhstan is a systemic problem that we do not believe will go away any time soon,” said Finegold. “While the company is doing what they can to alleviate pressures on sulfuric acid supplies, we believe their ability to ramp up production will be hindered for several years before their third domestic plant comes online. As such, we do not see Kazakh uranium production increasing significantly over the next three to four years.”
The U3O8 spot price spiked again in early February, reaching US$105 before another correction set in.
As Finegold explained, some of the retraction was the result of profit taking from short-term holders.
“Financial speculators looking to lock in profits towards March year ends played a role, but as we know these moves are achieved on very little volume, so the point remains that the long-term thesis remains unchanged,” he said.
Finegold went on to highlight the different investment perspectives within the market.
“Spot market participants trade on very different parameters and time horizons to one another,” he said. “A trader and a hedge fund, for example, act in a totally different manner to a utility who are long-term thinkers.”
Despite February’s slight contraction, uranium prices have remained elevated above US$80.
Some of this long-term support is the result of a COP28 nuclear capacity declaration. At the organization’s December meeting in Dubai, more than 20 countries signed a proclamation to triple nuclear capacity by 2050.
There are currently 440 operational nuclear reactors with an additional 13 slated to come online this year and another 47 expected to start electricity generation by 2030. For Finegold, this commitment to building and fortifying nuclear capacity has been uranium’s most prevalent demand trend. “The demand side of the equation remains robust and growing at a time when the supply side has never been more fragile,” he commented.
Others also believe the COP28 commitment was a tipping point for the uranium market that spawned several announcements about mine restarts and project extensions.
“Governments around the world have acknowledged that they need to be more supportive, not just financially, but in terms of expediting new projects, expediting the environmental permitting processes for new uranium mines,” said Sprott’s Ciampaglia during the webinar. “And it’s not just happening in one country — with the exception of one or two outliers in Europe, this is happening around the globe.”
Uranium prices continued to consolidate from mid-February through mid-March, but remained above US$84.
Building North American capacity is especially important ahead of the global nuclear energy ramp up and the ongoing geopolitical tensions between Russia and the west. While nuclear power is used to provide nearly 20 percent of America’s electricity, the nation produces a very small amount of the uranium it needs.
Commenting on that topic, Finegold noted, “The ongoing talk around US sanctions remains the most significant geopolitical catalyst for the sector.” He added, “While we do not believe sanctions could be enforced immediately, it will send a signal to the market that Russia will no longer be involved in the largest uranium market in the world and would inevitably have an impact on fuel cycle component prices.”
If sanctions do limit imports from Russian allies, Finegold expects these countries to form stronger ties to China.
“Outside of this, the relationship between Kazakhstan and China remains one to watch as the Chinese continue their nuclear rollout strategy and look to procure millions of Kazakh-produced pounds,” he added.
After hitting a Q1 low of US$84.84 on March 18, uranium began to move positively, ending the three month session in the US$88 range. Commitments to nuclear capacity, the energy transition and stifled supply will continue to be the most prevalent market drivers heading into the second quarter and the rest of the year.
“We believe uranium prices will significantly outrun the recent US$107 highs from February in 2024, driven by a fundamental supply/demand imbalance,” said Finegold. “Producers will continue to cover production shortfalls, while utilities struggle to replenish inventory shortages.”
The Ocean Wall associate went on to note, “The inherent appetite of traders and financial speculators will continue to drive prices higher. These demand drivers are converging at a time when supply has never looked more fragile.”
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
After reaching a 17 year high in January, uranium prices consolidated in Q2, holding above US$82 per pound.
Some analysts believe the correction is part of the uranium market’s ongoing bull run.
Starting the quarter at US$87.26, uranium values had contracted slightly by the end of June to hit US$85.76. While prices moved slightly lower, market fundamentals still favor a higher uranium price in the months and years to come.
Uranium price, Q2 2024.
Schoffstall states that a positive trend working in uranium’s favor is the COP28 commitment to triple nuclear capacity by 2050. Globally, 152 nuclear reactors are currently either under construction or planned.
Additionally, in early January, the UK government announced plans to expedite investment decisions for new nuclear projects, aiming to quadruple its nuclear capacity by 2050. Schoffstall notes that with this expansion, nuclear energy would account for 25 percent of Britain’s electricity demand, up from 15 percent previously.
“And — building off the unprecedented US$2.72 billion in federal funding that Congress recently appropriated at the President’s request — it will jumpstart new enrichment capacity in the United States and send a clear message to industry that we are committed to long-term growth in our nuclear sector.”
The decision aligns with goals set last December by the US and its allies, including Canada, France, Japan and the UK, which collectively pledged US$4.2 billion to expand uranium enrichment and conversion capacity.
The US has relied on Russian uranium since the 1993 Megatons to Megawatts program, which involved converting 500 metric tons (MT) of uranium from dismantled Russian nuclear warheads into reactor fuel.
If the world intends to meet the COP28 obligation of tripling nuclear capacity, increased uranium production is needed. Some of that supply will come from projects that were curtailed due to weak prices in the 2010s.
Restarting uranium production at these projects will likely prove easier than bringing new projects online due to the decades-long process of getting mines approved. Indeed, several uranium companies in the US, Canada and Australia have already announced plans to restart existing mines due to recent market optimism.
“Now that uranium prices have returned to more profitable levels, many previously closed mines are taking steps to start producing again,” said Schoffstall in his note. “However, adding to the supply of uranium isn’t as simple as flipping a switch, and increasing uranium production is proving difficult.”
Case in point — the sector’s largest producers have had to reduce their 2024 production guidance.
In 2023, Cameco, the largest pure-play uranium miner by market cap, had to lower the production forecast for its Cigar Lake mine and its McArthur River/Key Lake operations, expecting a nearly 3 million pound shortfall.
Similarly, Kazatomprom, which produces about 44 percent of the world’s uranium, announced in February that it will fall short of its production targets in 2024, and likely in 2025 as well.
These positive long-term fundamentals pushed uranium to a Q2 high of US$93.72 on May 8.
Amid that environment, some producers started looking for uranium deals in June.
“Fission is a natural fit for our portfolio with the shallow high-grade PLS project located in Canada’s Athabasca Basin. The addition of PLS creates a leading Canadian development hub alongside Paladin’s Michelin project, with exploration upside across all Canadian properties,” he continued.
While some market watchers think the deal could open the floodgates for more M&A activity in the sector, others have warned of potential pitfalls like those witnessed during uranium’s last bull market.
During that period, only one major acquisition led to the development of a new uranium mine: China General Nuclear’s 2012 purchase of Extract Resources, which resulted in Namibia’s Husab mine. Other deals failed to produce viable assets as they were often based on promising geological surveys rather than proven reserves.
“This is perfectly predictable and probably exactly what the market should be seeing,” he continued during the interview. “I would say that we’re kind of in a unique commodity cycle here, where I don’t think smaller bolt-on acquisitions will be enough to satiate the supply-demand gap. What I think we’re seeing in the Fission deal is a premium for scale and I think that’s something that you’ll continue to see through the cycle.”
Uranium’s May rally was short-lived, with prices returning to rangebound status through June. Values registered a Q2 low of US$82.07 on June 11, but remained in multi-decade high territory.
“On the other hand, fundamentals continue to strengthen with nuclear power plant restarts, new builds and a deepening supply deficit. Notably, the spot market may have paused, but the increasingly positive fundamental picture has played out differently for both the term market and uranium miners,” he further explained.
This decline likely indicates a market correction, as the spot price has eased this year, while the long-term contract price, which better reflects market fundamentals, has increased.
Against that backdrop, the panelists expect to see prices remain around their highest level in more than a decade for the rest of the year, with a Q4 price forecast of US$91.72. “Over 2024 as a whole, they see prices averaging the highest level since 2007, with the pledge at the December UN COP 28 summit to triple nuclear energy output driving a worldwide push for uranium supply — which is relatively inelastic,” the firm’s report reads.
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Rick Rule, proprietor at Rule Investment Media, shared his latest thoughts on gold, silver and uranium dynamics, as well as the opportunity he sees in the “hated” platinum and palladium sectors.
Speaking first about gold, he said so far foreign central banks have been its main buyers. In his experience, retail investors only become interested in the metal when they get concerned about maintaining their purchasing power.
At this point, that hasn’t happened yet, and it may not happen for some time.
“I will note that it took five years for this to happen in the 1967, 1972 timeframe. In other words, while people understood that inflation was taking place, the perniciousness of it, the impact on their own personal lifestyle, wasn’t apparent for five years. And my suspicion is that we’re facing a delayed punch with regard to taxpayers and savers understanding the impact of inflation on their own purse,” Rule explained during the conversation.
“It might be that your generation doesn’t do things the way my generation does. I’ll need to observe that,” he said.
Looking briefly at uranium, Rule said the price is taking an important breather. In his view, a key trend to watch right now is the rising prominence of the term market, which will help lower the cost of capital in the sector.
“The real pricing structure is being determined in the term market, and increasingly it’s going to be reflected in the term market in the five year product, the 10 year product, the 15 year product and the 20 year product. This is going to have really profound and positive implications for those few uranium juniors that have developable projects,” he said.
Watch the interview for more from Rule on the topics mentioned above.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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Speaking to the Investing News Network, Ben Finegold, director at Ocean Wall, shared his latest thoughts on uranium, covering supply and demand dynamics and his outlook for prices in 2024 and beyond.
In his view, the market has only reached its third inning, meaning the story is nowhere near over. While investors will need to be more selective, Finegold remains bullish on the uranium spot price and sees uranium stock opportunities too.
“You’ve got the supply side as fragile as it is, and you’ve got demand really starting to kick into gear over the next decade. And then you can throw (small modular reactors) into that story, you can throw … all these bells and whistles on top. And you start to realize that it is a unique, quality story versus anything else,” Finegold said during the interview.
However, while it’s a powerful mechanism for incentivizing US uranium mining and fuel cycle investment, he said the market is still waiting to see exactly how the ban will impact the fuel cycle. Finegold also said he believes there’s a fairly strong possibility of a counter-ban from Russia, noting that Russia has little reason to keep supplying the US.
Leading up to the ban, US utilities were hesitant to sign contracts due to the uncertainty with Russia. With that now largely out of the way, Finegold expects these entities to step up to the plate. “I think that we’re going to start to see a move much higher both in terms of term volume and in terms of term prices,” he said. “Fuel buyers have got the clarity that they need, particularly in the west now, on the US’ stance on the future procurement of Russian uranium.”
He doesn’t believe investors have missed the boat on uranium, but he encouraged caution in today’s market.
“I think we’re entering a new paradigm for the market, certainly in terms of geopolitics, in that the market is bifurcating — it feels like more and more every day,” Finegold said as the interview wrapped up. “It was a bifurcated market five years ago, and it’s being exacerbated week on week. We’re starting to see this real divide between the east and the west in terms of production, who’s selling to who, (and) in terms of power plant construction, who’s willing to work where.”
Watch the interview above for more of his thoughts on uranium, including supply, demand and pricing.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Uranium has broken out, with the spot price rising to a 17 year high of US$106 per pound in early 2024. Despite a pullback to about US$85, the commodity is still nearly 55 percent higher than it was in July of last year.
Although the market’s turnaround has taken time, experts are predicting a bright future as countries around the world pursue clean energy goals. Against that backdrop, ASX-listed uranium companies have been making moves in 2024.
Year-to-date gain: 26.43 percent; market cap: AU$3.74 billion; share price: AU$12.39
Paladin Energy owns a 75 percent stake in the active Langer Heinrich uranium mine in Namibia. The company also has a uranium-focused exploration portfolio that spans both Canada and Australia.
Shares of the company reached AU$17.80, their highest point of 2024 so far, on May 21. At that time, they were up more than 76 percent since the start of the year.
Year-to-date gain: 23.47 percent; market cap: AU$1.29 billion; share price: AU$1.315
Deep Yellow’s portfolio of uranium assets spans Namibia and Australia, with its two most advanced projects being Tumas and Mulga Rock. The former is located in Namibia, while the latter is in Western Australia; according to the company, together they have a potential production capacity of over 7 million pounds per year of U3O8.
Shares of Deep Yellow reached their 2024 peak on May 22, coming in at AU$1.80.
Year-to-date gain: 16.48 percent; market cap: AU$496.75 million; share price: AU$3.11
Uranium development company Bannerman Energy has honed its efforts on its Namibia-based Etango uranium project, which it says is one of the world’s largest undeveloped uranium assets. The company has been moving forward at Etango for 15 years and is currently targeting a final investment decision for this year.
Bannerman’s share price reached AU$4.74, its highest point of 2024 so far, on May 21.
Year-to-date gain: 12.07 percent; market cap: AU$604.30 million; share price: AU$0.325
Lotus Resources is an ASX-listed uranium company that’s working to revive operations at a former mine. Its flagship asset is the Kayelekera uranium mine in Malawi, which it acquired from Paladin Energy in 2020.
Shares of Lotus Resources reached a year-to-date high of AU$0.49 on May 21.
Year-to-date gain: 6.76 percent; market cap: AU$195.84 million; share price: AU$0.79
Uranium exploration and development company Laramide Resources has a portfolio of advanced projects in Australia and the US. The company’s Australian assets are the adjacent Westmoreland project and Murphy greenfield project.
Meanwhile, Laramide’s US uranium assets are the Crownpoint-Churchrock in-situ recovery project and the La Jara Mesa project in New Mexico, and the La Sal underground project in Utah.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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