Uranium Week: Fifteen-Year High

Weekly Reports | Nov 21 2023

Another jump in the spot uranium price last week took it to its highest level since January 2008.

-Sellers back off
-SPUT back in buying
-Term uranium prices edging up
-Concerns over enriched supply

By Greg Peel

The uranium spot price rose steadily last week as concerns around near-term availability of supply continued to circulate in the market, industry consultant TradeTech reports. Sellers increased their offer prices with each new expression of buying interest.

This resulted in a significant gap between bids and offers, which slowed the ability of parties to reach agreement on pricing and conclude deals.

TradeTech’s weekly spot price indicator has risen US$3.75 to US$77.25/lb — the highest level since January 2008.

The indicator has increased 58% in 2023 and 54% year on year. The average weekly spot price in 2023 is US$57.66/lb U3O8, 16% above the 2022 average.

Speculation

One of the drivers for the increase in spot uranium prices over the last few years has been the emergence of secondary demand originating from physical investment funds, including the Sprott Physical Uranium Trust, which entered the market in August 2021.

Shares of the SPUT have traded at a discount to the fund’s net asset value for most of this year, and the fund has to date purchased 3.3mlbs U3O8 in 2023. This total compares to approximately 18mlbs last year and 23mlbs in 2021.

Shares of SPUT nevertheless traded at a premium to the fund’s NAV for most of last week, TradeTech reports, allowing the fund to raise approximately US$45m and purchase another 150,000lbs U3O8.

Including inventory accumulated by its predecessor Uranium Participation Corp, the Trust now holds over 62mlbs U3O8 and approximately US$63m in cash.

The Mad House

With the US budget crisis yet again temporarily averted in the near term, the attention of uranium market participants remains focused on several bills related to the nuclear industry that are making their way through House and Senate committees. In addition, language restricting future imports of Russian nuclear fuel may be part of other pieces of legislation that advance soon.

The House and Senate passed their respective versions of the National Defense Authorization Act in July, and the House moved to go to conference in September. Numerous energy policy items hang in the balance, including nuclear legislation.

Term Markets

Concerns around security of supply, the evolving geopolitical landscape and the ripple effect of secondary sanctions on the logistical movement of material between counterparties and facilities continue to mount, TradeTech notes.

Lack of clarity around the legislative situation in the US, along with rising costs in the production and transportation sectors, have sellers reconsidering their positions. As a result, sellers are edging up their prices in mid- and long-term offers.

TradeTech will update its term market price indicators at month’s end, which for now remain at US$75.00/lb (mid-term) and US$65.00/lb (long).

Efforts to mitigate their exposure to imports of Russian nuclear fuel and ensure they have sufficient enrichment supply available remain the primary focus for both US and non-US utilities.

While there have been several encouraging announcements regarding expansion of enrichment capacity by Orano (France), Urenco (UK, Germany, Netherlands), and Centrus Energy (US), utilities remain concerned about the growing potential disruption to deliveries of enriched uranium product from Russia.

Consequently, activity in the enrichment market remains steady as utilities take steps to secure enrichment supply and minimise the impact of any delay in future deliveries.

Uranium companies listed on the ASX:

ASX CODE DATE LAST PRICE WEEKLY % MOVE 52WK HIGH 52WK LOW P/E CONSENSUS TARGET UPSIDE/DOWNSIDE
1AE 20/11/2023 0.0900 -10.00% $0.24 $0.05
AGE 20/11/2023 0.0600 11.11% $0.07 $0.03 $0.080 33.3%
BKY 20/11/2023 0.3700 1.39% $0.80 $0.28
BMN 20/11/2023 2.8400 3.04% $3.05 $1.19 $3.200 12.7%
BOE 20/11/2023 4.3000 – 4.55% $4.98 $1.97 47.6 $4.543 5.7%
DYL 20/11/2023 1.2100 – 2.07% $1.41 $0.48 $1.840 52.1%
EL8 20/11/2023 0.5400 8.33% $0.59 $0.27
ERA 20/11/2023 0.0300 0.00% $0.30 $0.03
LOT 20/11/2023 0.3200 7.14% $0.32 $0.15 $0.530 65.6%
NXG 20/11/2023 10.0900 1.73% $10.40 $5.11
PDN 20/11/2023 1.0300 2.56% $1.15 $0.52 167.4 $1.165 13.1%
PEN 20/11/2023 0.0900 -28.70% $0.20 $0.08 $0.270 200.0%
SLX 20/11/2023 3.4100 – 4.76% $5.32 $2.56 $5.800 70.1%

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