Uranium Week: The Push For Nuclear

Weekly Reports | Jul 12 2022

This story features BOSS ENERGY LIMITED, and other companies. For more info SHARE ANALYSIS: BOE

As the EU votes in favour of including nuclear power in its green taxonomy, and further reports support the energy source, the uranium market becomes summer-quiet.

-Summer vacation time slows uranium spot market
-EU votes in favour of nuclear
-IEA pushed nuclear barrow
-Australian miners labeled 'oversold'

By Greg Peel

Interest in the spot uranium market slowed to a crawl last week given shortened weeks in both the US and Canada and the start of the North American summer vacation season, as well as reluctance to trade ahead of a resolution on the issue of the Canadian cargo ship stuck in St Petersburg.

Industry consultant TradeTech reports only four transactions totalling 400,000/lb U3O8 equivalent were concluded in the spot market. A lack of buying interest saw TradeTech’s weekly spot price indicator fall -US$2.90 to US$47.60/lb.

TradeTech’s term price indicators remain at US$52.00/lb (mid) and US$53.00/lb (long).

The Canadian-owned cargo ship had been engaged to pick up a load of Russian enriched uranium for delivery to US utilities under contracts signed prior to the invasion of Ukraine. The Canadian government has since passed a law banning exports from Russia, regardless of pre-existing contracts.

Green Machine

Last week the European Parliament voted in favour of including gas-fired and nuclear power as transition sources in the EU’s sustainable taxonomy. For the proposal not to be passed into law, 20 of the EU’s 27 member states would need to vote against the move.

While there was some controversy surrounding the inclusion of a fossil fuel and nuclear energy (heavy emitter prior to reaching capacity) when the proposal was first made, the subsequent European energy crisis will likely now have members champing at the bit to vote yes.

In another vote for nuclear energy, an International Energy Agency report released last week – Nuclear Power and Secure Energy Transitions: From Today's Challenges to Tomorrow's Clean Energy Systems – stated that in countries which choose to continue or increase their use of nuclear power, it can reduce reliance on imported fossil fuels, cut CO2 emissions, and enable electricity systems to integrate higher shares of solar and wind power.

Notably, TradeTech suggests, the report adds that building sustainable and clean energy systems will be harder, riskier, and more expensive without nuclear.

Yet another report, published last week by the Breakthrough Institute based in Berkeley, California states that with the proper investment and policy support, advanced nuclear energy has the potential to become a key component of a future US clean energy system.

The analysis employs "a high-resolution nationwide model of the United States electricity sector to demonstrate how advanced nuclear reactors might play a major role in a least-cost plan to transition the power grid entirely to clean energy sources by 2050, assuming that the first advanced reactors are available for deployment by 2030".

Sucked in to Volatility

In the June quarter, base metals exhibited the worst price performance since 2008, TradeTech notes, as fears of recession drove lower demand (countering earlier strength on the Shanghai reopening). Base metals traded on the London Metals Exchange declined by over -25%

Over the same period, uranium spot prices rose 10%. Despite uranium's positive price performance in comparison to other commodities, downward pressure continues to subdue upward price movement as investors pursue redemptions and profit-taking in uranium equities in order to cover losses in sectors such as other commodities, cryptocurrencies, tech, and others.

This was evident among Australian listed mining stocks. Bell Potter notes ASX uranium equities are on average down -44% versus the ASX300 Resources Index of -19%.

The sell-off, in the broker’s opinion, has been indiscriminate in the case of Boss Energy ((BOE)) and Paladin Energy ((PDN)) and completely irrespective of broader uranium market fundamentals and company-specific situations. The April sell-off has created an interesting opportunity to build/establish positions in either of these two companies, Bell Potter suggests.

Boss announced in early June it had reached a final investment decision for its Honeymoon uranium asset, with a target date for first production around the end of 2023. Paladin, which signed a tender award with US utility Duke Energy in March, will look to reach a final investment decision for its Langer Heinrich mine in July.

Uranium companies listed on the ASX:

ASX CODE DATE LAST PRICE WEEKLY % MOVE 52WK HIGH 52WK LOW P/E CONSENSUS TARGET UPSIDE/DOWNSIDE
BKY 11/07/2022 0.3900 11.43% $0.64 $0.14
BMN 11/07/2022 0.1800 0.00% $0.44 $0.12
BOE 11/07/2022 1.8800 – 0.53% $3.10 $0.14 $2.600 38.3%
ERA 11/07/2022 0.2100 0.00% $0.58 $0.16
PDN 11/07/2022 0.6200 3.33% $1.12 $0.41 -66.3 $0.800 29.0%
PEN 11/07/2022 0.1600 – 5.88% $0.35 $0.12
VMY 11/07/2022 0.1900 0.00% $0.33 $0.09

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