ASX stocks begin to react as uranium spot price nears 5-year highs
Last week, the Sprott Physical Uranium Trust (SPUT) began purchasing physical uranium, removing it from the market.
This yellowcake will be sequestered in the long term.
Last week it was 900,000 pounds. On Tuesday, an additional 400,000 pounds were bought and taken off the market, with more to come.
Today @Sprott issued 983K Physical #Uranium Trust units🏧 which raised $ 8.6 million💵 used to stack an additional 400,000 pounds # U3O8🏦 increasing the net asset value from $ 17.7 million to over US $ 687 million SPUT still holds $ 4.9 million in stacking cash with units closing at 3.19% premium per compared to the net asset value.🤠🐂 https://t.co/VJuEVxXgYA pic.twitter.com/hrDtL1VUX4
– John Quakes (@ quakes99) 23 Aug 2021
A gigawatt-class reactor uses about 450,000 pounds a year, so that’s no small amount, according to 808s Online, a blog run by a US nuclear professional.
US financial services firm Cantor Fitzgerald – which gives SPUT a buy rating – says the Trust is now potentially the largest participant in the cash market.
“We expect this to turn out to be a catalyst that will push uranium spot prices up, as well as uranium-related stocks,” he said.
So far Cantor Fitzgerald is “on the spot”. The purchase of SPUT has now triggered an approximately 11% gain in the spot price of uranium to new 12-month highs.
– numerco (@numerco) August 24, 2021
Next stop – 5 year highs at ~ US $ 34 / lb.
Sprott’s buying frenzy is prompting renewed investor interest in uranium stocks, which have already posted strong gains over the past nine months on a consensus bullish outlook for nuclear fuel.
14 of the 18 companies on our list made gains on Tuesday. Seven of the 18 stocks – Alligator, Bannerman, Elevate, Vimy, Deep Yellow, Paladin, and Gladiator – have risen 100% or more in the past year.
The remarkable actions of Tuesday
TORO ENERGY (ASX: TOE)
The TOE’s “Wiluna” uranium project is one of the only advanced uranium projects in Washington State to have received environmental approval from the state and federal governments.
Last quarter, SRK Consulting was commissioned to carry out a level engineering study for the exploitation and processing of the “Lake Maitland” uranium deposit in Wiluna.
The reengineering work follows the subsequent successful redesign of the processing scheme which envisions a cheaper and more efficient stand-alone mining and processing operation of Lake Maitland.
92ENERGY (ASX: 92E)
The newly registered uranium explorer wants to exploit the potential of his buildings in Canada’s Athabasca Basin, just 11 km from Cigar Lake, one of the largest and richest uranium deposits in the world.
A recent investigation of its “Tower” and “Gemini” projects identified several potential conductors that hold promise for high grade unconformity uranium.
Unconformity-type uranium deposits such as Cigar Lake and McArthur River are among the largest and richest deposits in the world, according to the report.
Targeting of drilling on Tower and the northern part of Gemini will begin upon receipt of the final processed geophysical datasets, the company said.
The $ 10.5million market-cap stock is up 25% from its IPO price of 20c per share.
BANNERMAN ENERGY (ASX: BMN)
A recently published PFS on the Etango-8 project in Namibia envisions a £ 3.5million per year operation with an initial lifespan of 15 years.
This is an advanced project to take advantage of the upcoming uranium boom.
Etango-8’s $ 274 million development cost would take 3.8 years to pay off at a projected uranium price of US $ 65 / lb.
“The underlying robustness of this streamlined, world-class Etango resource development approach has now been confirmed at a PFS level of precision,” said Bannerman boss Brandon Munro.
“We now look forward to the completion of a DFS for Etango-8 in the September 2022 quarter.”
LOTUS RESOURCES (ASX: LOT)
Lotus’ ‘Kayelekera’ project in Malawi – purchased from an Africa-focused Paladin Energy (ASX: PDN) colleague in March 2020 – will cost just $ 50 million to set up and operate, the company says .
Kayelekera is a proven uranium mine that successfully produced 11 Mlbs over five years, ceasing operations in 2014 due to low and sustained uranium prices.
The feasibility study for the project will start in August 2021 and is expected to be completed by mid-2022.
GLADIATOR RESOURCES (ASX: GLA)
Earlier this month, the $ 9 million market cap explorer secured exploration projects in Tanzania, East Africa, with a focus on uranium, rare earths, phosphate and gold.
Tanzania, although rich in minerals, can be a volatile jurisdiction for Australian businesses.
Gladiator has evaluated exploration opportunities in Africa in the past and approached this acquisition with an understanding of the risks, said Gladiator Resources chairman Ian Hastings.
“This transaction represents an opportunity to acquire well-known and well-documented uranium concessions which also hold promise for gold,” he says.
“All three prospects have the potential to be processors and Gladiator believes it has secured some of the best uranium deposits in East Africa, which could provide great value to shareholders over time.”