Weekly Reports | Jan 17 2023
End of year and the start of a fresh calendar year traditionally means low activity overall for a small market such as uranium. The weeks past proved no exception, but it hasn't stopped further positive developments.
-Market liquidity dried up as the world enjoyed end-of-year holidays
-Sprott Physical Uranium Trust returned as a buyer on market
-Governmental approvals for nuclear reactors noticeably on the increase
By Rudi Filapek-Vandyck
Since the world went on its annual holiday break in late December (starting around Christmas), things have quietened down considerably for global trading in uranium, but nothing to upset the renaissance bull market for the yellow cake industry.
According to industry consultant TradeTech, December 2022 will be recorded as one of the quietest months for the spot uranium market in many years with market liquidity virtually drying up while potential buyers were getting a tan on sandy beaches or lamenting the lack of sufficient snow in many a ski resort across Europe.
Luckily for the industry, term markets for uranium have remained more active, though TradeTech reports much of the activity is occurring through off-market negotiations between utilities and prospective suppliers.
Apart from general apathy across financial markets generally, it appears utilities' focus remains on securing long-term supplies whereas sellers are not currently sitting on large quantities of uncommitted U3O8.
TradeTech suggests the lack of urgency on both sides of the ledger contributes to the overall low levels of activity that characterised uranium markets during the transformation from 2022 into 2023.
Last week saw the Sprott Physical Uranium Trust (SPUT) securing 217,000 pounds U3O8, marking the fund's first purchase since early November last year. December had the first contracts being awarded to supply US-originated material for the US Uranium Reserve Program.
More Governmental Endorsement
The week past also witnessed the International Energy Agency (IEA) release the latest installment of its flagship analysis series; Energy Technology Perspectives 2023.
The 2023 report suggests nuclear can play a vital role in the global energy transformation, highlighting while nuclear power requires the most construction time, it also has the longest typical operating lifespan of the report's selected energy technologies.
Meanwhile, governmental approvals for nuclear reactors remain noticeably on the increase.
The Swedish government intends to introduce legislation to amend the country's existing rules that cap the total number of reactors at ten and prohibit reactor construction in new locations. The new legislation would allow for new reactor construction, including small modular reactors (SMRs).
In Belgium, the government reached an agreement with utility Engie to keep the nation's two newest reactors in service for an additional ten years, after November 2026.
In South Korea, the government's 10th Basic Plan for Electricity Supply and Demand aims to maintain a nuclear share of at least 30% of the country's energy mix by 2030, and also calls for the construction of Units 3 and 4 at the Shin Hanul Nuclear Power Plant to resume.
Uranium's Renaissance Taking Shape
2022 proved the year in which the global renaissance for nuclear power, and the bull market for everything uranium related, came to prominence.
On TradeTech's number crunching, transaction volumes in the term market totaled well over 100m pounds U3O8 in 2022, with term prices up 18% to US$53.00 per pound U3O8 from US$45.00 the year prior; spot prices are up 60% to US$47.60 from US$29.75 per pound in late 2021.
Since Christmas, TradeTech's spot price first declined on extremely thin volumes for the whole month of December (after finishing November at US$49.75/lb), subsequently recovered back to US$49/lb (on no actual transactions recorded) and rose further last week to US$50.20/lb.
In line with the spot price trajectory, TradeTech's mid-term price indicator fell to US$49/lb by December 31st, and has remained there since. The longer-term indicator has not been affected and remains at US$53/lb.
TradeTech's production cost indicator sits at US$54.65/lb, still suggesting the price of uranium remains too low to incentivise large volumes in fresh market supply.
Uranium companies listed on the ASX:
| ASX CODE | DATE | LAST PRICE | WEEKLY % MOVE | 52WK HIGH | 52WK LOW | P/E | CONSENSUS TARGET | UPSIDE/DOWNSIDE |
|---|---|---|---|---|---|---|---|---|
| AGE | 16/01/2023 | 0.0420 | 0.00% | $0.12 | $0.03 | |||
| BKY | 16/01/2023 | 0.3000 |  – 3.23% |
$0.64 | $0.21 | |||
| BMN | 16/01/2023 | 1.9350 |  0.26% |
$2.49 | $0.15 | |||
| BOE | 16/01/2023 | 2.4000 | 8.11% |
$3.10 | $1.61 | $3.200 | 33.3% |
|
| DYL | 16/01/2023 | 0.8000 | 8.84% |
$1.25 | $0.55 | |||
| ERA | 16/01/2023 | 0.2200 | 1.38% |
$0.42 | $0.16 | |||
| LOT | 16/01/2023 | 0.2400 | 4.35% |
$0.46 | $0.18 | |||
| NXG | 16/01/2023 | 6.6000 | 2.01% |
$8.99 | $0.00 | |||
| PDN | 16/01/2023 | 0.7900 | 6.04% |
$0.97 | $0.53 | -137.2 | $1.000 | 26.6% |
| PEN | 16/01/2023 | 0.1600 | 6.67% |
$0.28 | $0.12 | |||
| SLX | 16/01/2023 | 4.3000 | 10.54% |
$4.36 | $0.99 |
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