If you haven’t caught wind of the ASX uranium rally happening right now, let me give you a quick rundown.
Since September, the price for a physical pound of uranium on the NYMEX has climbed over the US$80/lb mark.
This was a twelve year milestone – and prices went further, hitting a 15 year high on November 20, 2023.
Execution ready Uranium stocks and uranium ETFs are, in turn, enjoying a bull run.
And now, the price of a physical pound of uranium has hit US$80.25/lb.
Leading uranium ETF gains
The Global X Uranium ETF added 6.23 per cent over the last month (as of 16 November) and [PB1] per cent Year To Date.
The price of physical uranium was slightly higher in earlier November, but profit takers have sold off the USD$73.91/lb high.
However, the price appears – for now – to have developed a steady floor above US$72/lb.
This ultimately reflects uranium’s return to the price point it enjoyed before Japan’s Fukushima disaster sullied the nuclear fuel’s reputation.
Uranium’s two sided story
Uranium has long been haunted by a fairly unique disparity.
On one hand, it’s intensely vilified by environmental advocates of all persuasions.
Chernobyl, Three Mile Island, and Fukushima have permanently left a psychological mark on what uranium means to everyday people.
The spectre of nuclear weapons doesn’t help – this concern is why Greenpeace principally rejects development of nuclear power.
Conversely, when a plant is managed properly, uranium is also one of the greenest fuel sources available.
Why are prices going up?
Uranium is both a decarbonisation and supply-side metal. This leaves it exposed to price pressure from multiple directions.
After more than a decade of low prices caused projects to be mothballed, there’s not much supply-side pressure.
According to the World Nuclear Association (WNA), in late 2023, there’s sixty nuclear plants under construction around the world.
The vast majority of plants being brought online are in China.
Furthermore – another 110 plants are planned in global aggregate by WNA’s count.
From a demand POV, the bull case is obvious – the world’s only going to need more uranium moving forward.
To this end, the US and UK are also expected to announce further nuclear energy uptake at this year’s peak UN-led environmental conference COP28.
According to Bloomberg, both countries are expected to commit to a tripling of capacity.
Other bullish factors include:
- A general recovery of ESG momentum following COVID-19
- European uranium supply has dwindled 18 per cent since 2018 (TradingEconomics)
- US sanctions against Russia continue to complicate supply chains
- Civil unrest is expected to hurt output coming from Niger, Africa
- Canadian producer Cameco downgraded production forecasts for 2023 in September by about 2 million pounds
Case study: Haranga Resources (ASX:HAR / FRA:65E0)
There’s no shortage of uranium miners on the ASX, and one of those companies with an execution-ready project is Haranga Resources (ASX:HAR / FRA:65E0).
In fact, since uranium prices have climbed back to pre-Fukushima highs, Haranga has been busy preparing for a major uranium drilling program over its African acreage.
The company’s flagship project is called Saraya, located in West African nation Senegal.
Haranga posted its maiden resource for that project back in October – an eye-catching 7260 tonnes of physical uranium.
In other words, that’s 16 million pounds at 587 ppm eU3O8.
The Company has also commenced metallurgical work over this existing resource, with the aim of upgrading the resource category from inferred to indicated and hopes that their major drilling program will increase the resource size.
With several large anomalies already defined over this huge 1,650sq.km permit, odds seem well stacked in Haranga’s favour to deliver on this objective.
Company chief Peter Batten has described late 2023 as “the right time” to refresh a Christmas season drilling campaign.
Right rocks at the right time
“Uranium is essential in the generation of nuclear power, which people are starting to realise now is a very safe baseload power system that also has very good green credentials,” Mr Batten told The Market Herald earlier this month.
“The reason that it’s quite possibly here now [to stay]… is that all of the stockpiles have run down and the secondary uranium has run down.”
An up to 20,000m auger drill run is already underway at the Saraya Project,with a reverse circulation (RC) drill run to kick off in December.
Haranga is ultimately seeking to do two things: investigate known underground anomalies on-site believed to be uranium mineralisation, and, grow the JORC resource.
That resource is already internationally significant, and based in part on historical drilling data as well as a recent drilling campaign by Haranga.
A fresh drill run with modern equipment will be an event investors should watch closely.
“Outside of Saraya, we have the potential in anomalism that we have sampled ourselves to significantly grow that resource, and that’s what the world is looking for at the moment,” Batten earlier told this masthead.
A number of geochemical anomalies have been on Haranga’s geotechnical radar since at least October.
Relatively stable jurisdiction
The company’s location in West Africa might – perhaps rightly – turn off some investors from the outset.
But as far as West Africa’s overall investment climate and security situation goes, Senegal is one of the more desirable locations to set up.
The US State Department described Senegal as boasting a stable democracy in its 2023 Investing Climate review for the country.
The Department also described a “generally stable” macroeconomic environment, though, public debt has risen to nearly 70 per cent of GDP.
The region is not without its problems common to most emerging markets. “Unpredictable tax administration”, red tape and a rigid labour market were identified as issues by the US.
At the same time, a bilateral treaty between Senegal and the US has been in place since the 1990’s, and FDI increased from US$3.4 billion in 2015 to $6.5 billion in 2019.
While COVID-19 hurt this trend, the country continues to be one of the most peaceful jurisdictions in Africa by multiple metrics and is home to a number of existing producing mines.
Takeaways for 2024
With uranium likely to continue its bull run for the foreseeable future – or at least maintain its newfound floor at around US$70/lb – markets will be increasingly on the hunt for stocks far enough along in their uranium journey to feasibly see production on the near horizon.
Haranga fits the bill in this case, with its mine in a low-cost and relatively stable jurisdiction with a coastline accessible to major shipping routes.
While it’s not the only ASX stock in the uranium game, Haranga is positioned to continue spending cash wisely over acreage already proven to contain uranium in a country not passionately opposed to foreign investment.