Recording date: 23rd January, 2024

Uranium spot prices have crossed $100/lb, yet uranium equities have not seen commensurate gains. Keller explains that more sustained spot price appreciation is needed to signal upcoming contract negotiations before investors respond more enthusiastically. Mine supply remains unable to satisfy reactor demand, with top producers Kazatomprom and Cameco struggling to meet their own guidance targets. Meanwhile, several new reactor construction projects continue globally. This divergence suggests higher uranium prices are required to incentivize new production investment.

In the US, idle in-situ leach (ISL) capacity is coming back online in sites across Utah, Wyoming and Nebraska. For example, Energy Fuels has reopened the White Mesa Mill. However, Keller believes US supply increases are incremental and insufficient to plug the growing demand gap. Consolidation of US ISL production under major banner like Cameco could drive efficiency gains. But new conventional mines face high capex requirements. The US lacks major projects that can meaningfully impact global shortfalls. Still, higher prices improve economics across US uranium production.

In Canada’s prolific Athabasca Basin, firms like NexGen Energy are advancing the Arrow deposit, but first production is likely 4+ years away given technical obstacles like ground freezing and permitting delays, especially on new extraction methods. Africa offers better prospects to address short-term supply needs, given past production success and political stability in countries like Namibia. Projects like Global Atomic’s DASA mine development could be funded by export agencies to fill Western utility needs. However, project finance complexity persists. Overall while quality deposits exist globally, major new supply will take time to come online.

Developers like Denison Mines, Forsys, and Boss Energy have seen strong stock gains on the back of uranium’s price resurgence. Their prospects rise if deficit forecasts hold, spurring further growth by mid-decade. However, developers must make tangible progress through final investment decisions to break ground on new facilities. Those securing financing and getting steel in the ground will be key winners. Markets are watching closely for those advancing projects like Valencia in Namibia or Honeymoon in Australia to key production milestones. Care is still required given permitting and cost overrun risks.

With uranium’s popularity growing again, hundreds of new explorers may soon enter the market. However, during the last bull run, over 600 listed uranium juniors flamed out after 2011. Investors should focus on experienced operators like Cameco, NexGen and Encore Energy progressing assets rather than chasing hype-driven stories. Asset quality and execution ability are vital filters before investing in any uranium proposition. While retail excitement is building, investors must watch that this does not spawn another bubble and divert attention from high potential companies primed to deliver new supply when needed most.

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