Hi everyone,
This isn't financial advice. Never rush into investments. Always take your time to do your own DD before investing.
Last couple months we saw more & more LT contracts signed at higher & higher uranium prices: $CCJ, $KAP, Orano, CGN, $PDN, $GLO, $UEC $PEN $UUUU $URG $EU
2 weeks ago we got confirmation. Several uranium transactions were made above an uranium price of 60 USD/lb, even Encore Energy announced a small uranium transaction at 70.50 USD/lb, while uranium through the spotmarket today is only at ~49USD/lb.
EnCore Energy:
UR-Energy:
Indeed, based on the global uranium production cost curve analysis vs the global uranium demand, uranium transactions around 80 USD/lb will eventually happen in the near future. It's just a matter of time.
Today investors can buy physical uranium through Sprott Physical Uranium Trust (U.UN on TSX) at an uranium price of only ~48.75 USD/lb (= U.UN share price 16.60 CAD/share), while transactions are occurring now above 60USD/lb and even already 70USD/lb
Here a link to a recent company update with 12 month price target for Sprott Physical Uranium Trust https://mobile.twitter.com/quakes99/status/1599475875153870848
With increasing pressure on Short Term uranium delivery due to overfeeding (shortage in western enrichment capacity leeds to overfeeding (for more explanation see link below), Intermediaries (financial players, producers,…) & Utilities will more & more rush for uranium in the spot market to get uranium from Olympic Dam, Uranium One, African JV partners (together ~25Mlb/y new uranium goes through spotmarket), because signing more LT contracts without a significant production increase in the short term will not help.
Overfeeding explained: https://mobile.twitter.com/quakes99/status/1602170426977050627
An additional annual uranium demand of ~22 Mlbs due to overfeeding compared to:
a) an annual global uranium production of 135 Mlbs in 2022 => 22/135 = impact of ~16.50%, that's a big impact.
b) annual buying of 25 Mlbs/y of new produced uranium per year in the past + the biggest part of the additional 22 Mlbs needs => Uranium demand in the tiny spotmarket could increase between 50% and 100% (doubling) in the coming months
Previous years those 25 Mlbs/y of new produced uranium that were sold through spotmarket were always used by existing reactors and carrytraders without a situation of overfeeding. So now with the start of overfeeding the uranium demand in the spotmarket is set to increase significantly (additional ~22Mlbs/y) (demand in spotmarket could increase between 50% and 100%, that's big)
Conclusion:
While Sprott Physical Uranium Trust isn’t buying in spotmarket at the moment, Utilities, producers and others are and have been slowly buying small volumes in spotmarket, because:
- You can’t overfeed the enrichment centrifuges in 2023/2024 with uranium produced in 2025
- Easy trade for intermediaries: Buy at 50USD/lb and sell well above 60USD/lb through existing LT contracts
Here a detailed post about the Global Nuclear Rennaissance: https://www.reddit.com/r/StockMarket/comments/zbftyy/a_big_global_nuclear_power_renaissance_at/
If interested, also:
Sprott Uranium Miners etf (URNM etf): well diversified 100% uranium sector etf
Here the link to the Bear Traps report overview of December 2022: https://mobile.twitter.com/quakes99/status/1599839637580963841
The Bear Traps Report is a professional report read by 600 institutional investors (banks, hedge funds, …)
The holdings of Sprott Uranium miners etf (URNM etf): https://sprottetfs.com/urnm-sprott-uranium-miners-etf/
The uranium sector investment is a multi year investment for me
This isn't financial advice. Never rush into investments. Always take your time to do your own DD before investing.
Cheers
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