Uranium Week: Plaything

Weekly Reports | Jun 21 2022

This story features PALADIN ENERGY LIMITED. For more info SHARE ANALYSIS: PDN

The spot uranium price tumbled last week, along with everything else.

-Sharp drop in uranium spot price
-Now down year to date
-Utilities still urgent buyers

By Greg Peel

No matter how exuberant analysts may be over the prospects for uranium demand in a world trying to rapidly transition from fossil fuels, the spot uranium market is now a financial instrument like any other. As such, its fortunes are tied to general market sentiment.

And hence so are the share prices of listed uranium miners. They shouldn't be, but they are.

Yesterday on the Australian market, leading uranium aspirant Paladin Energy ((PDN)) fell close to -14%. Did anything change for Paladin over the course of the week? No.

Indeed, industry consultant TradeTech's index of listed global uranium miners dropped -13%. The reason is the spot uranium price fell -US$5.50 to US$45.50/lb by TradeTech's weekly price indicator.

The reason for the fall was the surprise (to some) Fed rate hike of 75 basis points, and the global recession fears Fed aggression has engendered.

The spot uranium price thus dipped below its starting point for the year, but remains up 40% year on year. Twelve transactions totalling 1.2mlbs U3O8 equivalent were recorded.

Did last week's volatility have uranium end-users heading for the hills? No. While no new transactions were reported in term markets last week, TradeTech reports off-market discussions continue in earnest between utilities and potential suppliers.

As we near four months since the initial invasion of Ukraine, utilities, especially several located in Eastern Europe, are actively seeking non-Russian supply for their future needs.

A number of non-US utilities are actively soliciting indicative offers in response to mid- and long-term Request for Proposals.

As Ukraine draws nearer to acceptance as a member state by the EU, Russia's rhetoric against those countries supporting the move, especially the US, has increased. Russia, which has an excellent record related to deliveries of nuclear fuel, does not enjoy the same reputation in other energy sectors and nuclear fuel participants are cognisant that the Russian government's view toward nuclear fuel could change quickly, TradeTech notes.

This has pushed several utilities to commit to supporting existing and new suppliers in their efforts to expand production levels throughout all phases of the nuclear fuel cycle, in order to ensure there is a deeper competitive pool for the future.

TradeTech's term price indicators remain at US$51.00/lb (mid) and US$52.00/lb (long).

Uranium companies listed on the ASX:

ASX CODE DATE LAST PRICE WEEKLY % MOVE 52WK HIGH 52WK LOW P/E CONSENSUS TARGET UPSIDE/DOWNSIDE
BKY 20/06/2022 0.3400 – 8.82% $0.64 $0.14
BMN 20/06/2022 0.1700 -10.53% $0.44 $0.12
BOE 20/06/2022 1.8200 -17.51% $3.10 $0.14 $3.200 75.8%
ERA 20/06/2022 0.2600 – 3.70% $0.58 $0.25
PDN 20/06/2022 0.5900 -17.65% $1.12 $0.41 -64.4 $1.000 69.5%
PEN 20/06/2022 0.1600 -11.11% $0.35 $0.12
VMY 20/06/2022 0.1700 -11.11% $0.33 $0.09

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