Weekly Reports | Oct 18 2022
Spot uranium prices crept up again last week as the SPUT re-entered the market, but attention was on Cameco’s bold acquisition move.
-Spot uranium price rebounds
-Cameco moves into nuclear services
-Sweden to build new reactors
By Greg Peel
The spot uranium price began to creep back up early last week. On Thursday Wall Street perversely took off on the US September CPI result, and aside from the impact sentiment has on spot uranium, the Sprott Physical Uranium Trust re-entered the market to buy 100,000lbs U3O8.
The SPUT has been largely absent during recent spot market volatility, despite having raised further funds.
Thirteen transactions were ultimately concluded through the week totalling more than 2mlbs U3O8 equivalent. By week’s end buyers were sitting at US$50.25/lb, but sellers weren’t interested. Industry consultant TradeTech’s weekly spot price indicator is up US$2.50 at US$50.25/lb.
There were no new transactions in term markets. TradeTech’s term price indicators remain at US$50.50/lb (mid) and US$53.00/lb (long).
Cameco Goes Horizontal
The big news in the market last week was the announcement by Canada’s Cameco it was teaming up with Brookfield Renewable Partners, which operates one of the world’s largest pure-play renewable energy funds, to acquire Westinghouse Electric Co, which operates a global nuclear services businesses.
Brookfield Renewable, with its institutional partners, will own a 51% interest in Westinghouse and Cameco the remaining 49%.
The transaction follows the turnaround of Westinghouse by Brookfield Business Partners (BBU), which acquired the business in 2018. Under BBU’s ownership, Westinghouse has refocused on core nuclear services, TradeTech notes, reduced its operating cost base and pursued several complementary merger and acquisition transactions to strengthen its in-house expertise.
Cameco currently has available liquidity and committed financing facilities to support the transaction to acquire its share. The company will be pursuing a "permanent financing mix of capital sources (cash, debt, and equity), designed to preserve the company’s balance sheet and ratings strength while maintaining its liquidity, prior to closing [the deal]”.
The balance sheet implications clearly rattled investors, as Cameco shares fell -14% on the announcement.
More Demand
Sweden's incoming right-wing government said last week it plans to build new reactors to help meet the country's increasing electricity demand. Presently, Sweden is home to six commercial reactors at three nuclear power plant sites.
If the government's request advances, Sweden could see a number of small modular reactors as early as 2030, TradeTech reports. The country has been considering a nuclear power revival and will reportedly commission an 18-month analysis on the technology.
A recent poll showed around 60% of Swedes are in favour of new reactors.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| BKY | 17/10/2022 | 0.2700 | 0.00% | $0.64 | $0.14 | |||
| BMN | 17/10/2022 | 2.0000 |  4.17% |
$2.49 | $0.15 | |||
| BOE | 17/10/2022 | 2.6400 | 1.97% |
$3.10 | $0.27 | $3.300 | 25.0% |
|
| DYL | 17/10/2022 | 0.8000 |  – 1.28% |
$1.25 | $0.55 | |||
| ERA | 17/10/2022 | 0.2100 | 5.00% |
$0.45 | $0.16 | |||
| LOT | 17/10/2022 | 0.2300 | 4.76% |
$0.46 | $0.19 | |||
| PDN | 17/10/2022 | 0.7900 | – 1.28% |
$1.03 | $0.53 | -134.8 | $1.100 | 39.2% |
| PEN | 17/10/2022 | 0.1700 | 6.25% |
$0.31 | $0.14 | |||
| SLX | 17/10/2022 | 3.0000 | 10.26% |
$4.14 | $0.99 |
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