URANIUM BRINGS A HEALTHY GLOW TO THE RESOURCE SECTOR

From across the ditch, in the Australian today the below article, and YES AGE receives a good write-up

Uranium’s recent streak could be about to get more significant according to scuttlebutt around the sector, which suggests a new fund is about to launch out of Singapore dedicated to buying physical uranium. Uranium has been on a tear this year, as a decade of under-investment in the resource finally starts to catch up with major utilities, threatening a supply squeeze Savvy market watchers tipped the turning point of uranium in April 2021, when fund manager Sprott, which made a packet out of the commodity in 2005 when it took early positions in uranium stocks ahead of the last major price surge, launched a takeover of Uranium Participation Corp and launched the Sprott Physical Uranium Trust. At the time, it was the only physical uranium fund in the market, and kicked off with a modest 70 million Canadian dollars in funding to buy up yellowcake. That fund was due to close on September 10, but earlier this month Sprott filed documents in Canada flagging an extension to the trust, along with a prospectus to expand the program by up to $US125m.But Sprott could have some competition in the market, if industry rumours are true, with talk of a new fund to buy and hold physical uranium through the Singapore market. It’s not clear who is planning to back or run the fund at this point, though dark mutterings of the involvement of Chinese money will no doubt grab the attention of geopolitical hawks if they turn out to be correct. And the sums said to be involved – ranging from $US300m to $US700m, depending on who you talk to – seem excessive for what is still a relatively small market. Still, even the rumours of a new buyer coming to the market could be enough to add more momentum to yellowcake stocks which have spent much of the last decade clinging to the hope of a uranium resurgence .The spot price of uranium has nudged $US70 a pound, with analysts tipping levels to approach $US80 within a few months – still well short of the $US140 record hit in 2007, but clearly on the way. Spot pricing has been pushed up by factors including a September production downgrade from Canada’s Cameco, by the July coup in Niger – which threatened a major source of supply to French nuclear utilities – and by the ongoing war in Ukraine, given Russia is the world’s biggest factor in uranium enrichment. All are combining to put a level of panic into utilities that need to secure supplies of uranium to keep reactors running and the prospect of a new buyer entering the market will likely exacerbate that and help companies with near-term mining projects on the horizon – particularly those that haven’t locked down offtake deals yet.

Closer to home and it’s a similar story, with Alligator Energy recently closing a chunky capital raise and analysts bullish on the sector.
Alligator, headed up by industry veteran Greg Hall, raised $25.5m from sophisticated and institutional investors at 5.2c a share, with a follow-up $3m raise for existing investors on foot at the moment. The money is earmarked to progress the company’s Samphire project, 20km south of the steel town of Whyalla in South Australia, which the company aims to take through resources upgrades, feasibility studies and a mining lease application during the course of 2024.Samphire aims to use in-situ uranium recovery, such as is used at the Beverley and Four Mile mines and the soon to open Honeymoon mine, with uranium recovered by injecting a solution underground to dissolve it, with the mineral stripped out at the surface. The Samphire project has an inferred and indicated resource of 18.1 million pounds of uranium oxide.
Macquarie analysts in recent days have updated their models for the uranium sector, releasing a report on Australian miners entitled “Glow up: uranium tailwinds increasing”.“We have increased our long-term uranium price forecasts by 16 per cent to $US70/lb as we believe incentive pricing levels are required to balance the growing demand (noting current demand remains higher than current mine supply),’’ Macquarie says.Key industry tailwinds identified by Macquarie include government support in the US and European Union, while South Korea has reversed its nuclear phase-out and Japan is restarting reactors.There are 266 reactors proposed globally with 59 under construction across 15 countries, and clarity around pricing is greater with more “non-consuming market entities’’ in the market.Macquarie has an outperform rating on Paladin Energy, noting its Langer Heinrich project is targeting first production in the first quarter of calendar 2024 and remains fully funded.“A key positive is that Paladin has numerous uranium offtakes with leading global counterparties,’’ Macquarie says.The analysts are neutral on Boss Energy, which is on track to restart Honeymoon before the end of this year, and notes it has potential production upside.Demand from uranium users has spurred producers to respond, Macquarie says, but not fast enough to avoid a price response.“On the supply side, the market has begun a supply response with Cameco restarting Macarthur River and similarly other restart projects have been green-lit. However, even with the restart volumes, the market remains in primary supply deficit and indicators are now pointing towards secondary supply being limited.’’Shaw and Partners is also keen on the sector, saying: “We recommend an overweight exposure to the uranium sector with Paladin as the core holding.“Other stocks where we have a positive view include Lotus, Peninsula, Silex and Bannerman.’’Bell Potter rates Deep Yellow a speculative buy, raising its valuation from $1.06 to $1.84, against $1.34 on Friday.“As uranium oxide spot price rally, we see Deep Yellow in pole position to capitalise on the momentum and advance its two flagship projects intro production within the next three to four years,’’ the broker says.“With average planned production capacity at Tumas of about 3 million pounds per annum over 22 years and about 3.1 million poundsb over 15 years at Mulga Rock, Deep Yellow offers longevity at the perfect point in the cycle.“We see continued robust long-term demand.’’