Justin Huhn, Founder and Publisher of the Uranium Insider, joins me for yet another very comprehensive macro update on the supply and demand fundamentals for uranium and the nuclear fuel sector, how the longer-term contracting cycle is setting up with utility companies, and what he is watching and how he is positioning in the uranium equities in this most recent corrective move lower in the sector. This is a longer-format discussion building upon our prior conversation in August, because even more key news and developments have been announced in the nuclear and uranium sector. Justin recaps the transformative year in 2024, looks ahead to 2025 and beyond, and guides us through with pro tips on how to approach investing in this sector
We start off reviewing the flurry of news this year out of Kazakhstan, from the largest uranium swing producer in the sector Kazatomprom and what it means for the global supply deficit. In addition to a shortfall of sulphuric acid, and increased taxes on production, with both expected to crimp output, there were even more surprises when Kazatomprom announced a big decrease in their JV production for Canada with Cameco, yet still found a way to get China all their contracted ounces. We covered again the continued unstable politics in Niger making future supply still in question for French producer Orano, and also touched on the slower than anticipated restart of the Langer Heinrich Mine operated in Namibia by Paladin Energy (ASX: PDN) (OTCQX: PALAF).
We then delve into all the increasing uranium demand from more countries committing to expand nuclear power buildouts, along with life-extensions on existing reactors, and the role that small modular reactors could have in powering AI data centers and manufacturing or in phasing out coal plants as another demand driver. Justin touches upon the ongoing bottlenecks with regards to sourcing enriched uranium fuel and enrichment & processing due to the recent sanctions placed on Russian supplies, the Russian ban on exports of uranium to the US, and the Canadian sanctions on uranium sent to the US, making it difficult to know where the utility companies are going to be able to source conflict free uranium on the global stage.
Turning to the actual Canadian production supply, Justin outlines the anticipated production output from both Cameco (CCO.V) (CCJ), and the ancillary production supply from the French state producer Orano from its Athabasca Basin JVs. Neither of these companies are expected to grow output substantially over the next year or two, but Cameco could ramp up production over the next few years from it’s 2 Canadian mines. All of this points to a much more constrained output from global uranium producers, even in face of growing demand.
One bright spot we returned to again, was encouragin development and ramping up of production from US producers like Energy Fuels (EFR.TO) (UUUU), enCore Energy (EU.V) (EU), Uranium Energy Corp (UEC), Peninsula Energy (PEN.AX) (PENMF), and Ur-Energy (URE.TO) (URG). Justin provides his thoughts on investing in US-based uranium companies, and mentions he is watching IsoEnergy Ltd (TSX: ISO) (OTCQX: ISENF), to see if they get their US project they acquired from Anfield Energy into production in the year to come as another new potential source of domestic uranium supply.
Next we get into the key larger uranium development projects in the works and just how many years from actual production all of them are; with no new projects expected to come online until 2028 at the earliest, but likely even longer to 2029 and beyond. We reviewed the Arrow Project from NexGen Energy (TSX: NXE) (NYSE: NXE), who just announced longer-term off-take contracts with $79 floors and $150 ceilings, signaling to the market where they believe the future price range for U308 will be in the years to come. We also discussed the PLS (Patterson Lake) Project, held by Fission Uranium (TSX: FCU) (OTCQX: FCUUF), that is currently being acquired by Paladin Energy (ASX: PDN) (OTCQX: PALAF), and the Phoenix Project held by Denison Mines (TSX: DML) (NYSE: DNN). While these are all very robust projects, they will not be adding to global production for at least several years, which raises the question of where all the new uranium supply will come from in the interim?
We wrap up by getting Justin’s thoughts on the uranium exploration stocks operating in the Athabasca Basin and Thelon Basin of Canada, and where the biggest opportunities and concerns are from his vantage point. With so many uranium discoveries having already been made, the question is posed if any new discoveries will ultimately matter to the medium-term supply fundamentals? Justin points to the potential of using the Sabre technology from Orano to extract high-grade resources in the Athabasca Basin, and that this new technology could bring more projects up into the development batting order. Ultimately though, more of the longer-term commitments from nations to triple their nuclear capacity by 2050 and all the tech company plans to get small modular reactors into production by 2030 need to play out before there is more of a crunch on uranium exploration to find more deposits. Justin mentions that if we can see a sustained uranium price above $100 for a period of time, that it could incentivize larger companies to finally come in start developing many of the uranium deposits that were delineated and are well known for well into the future.
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