A Contrarian's Guide to The Overlooked Bull Market in Uranium

• Significant upside potential in depressed gold mining stocks due to a disconnect between gold prices and equities.
• The uranium market, like gold, is hated and neglected currently, suggesting substantial room for growth as sentiment shifts. Uranium will outperform gold in a commodity bull market.
• Geopolitical instability creates perceived risk but also opportunity in places like Africa and Central Asia which are underexplored and mineral-rich with world-class potential
• Australia has strong mineral potential but markets have repriced higher recently. Canada is cheaper but has weaker industry support for new exploration.

The Overlooked Opportunity in Uranium

Uranium prices have shown new signs of life after a decade in the doldrums, gaining over 100% in price in the last 18 months. However, uranium mining equities' larghetto start, sees them slowly participating in uranium's resurgence. This disconnect between commodity price appreciation and lackluster equity response presents a compelling contrarian opportunity.

Uranium offers a particularly strong upside as possibly the most misunderstood commodity in the resource market today. The most understood are gold and silver. But the truth is that any company that has a deposit that could be tier one should be what investors are attracted to. A tier-one deposit is one that has over $10 billion in recoverable reserves and resources, low costs, and strong returns on capital. When defined like that it's easy to see where your money should be deployed.

The Case for a Gold Bull Market

Uranium may be among the most ignored commodities currently, but that is precisely the reason to pay attention now. There will be comments that say why on Earth advocate gold, it hasn't performed. That is precisely why it should be advocated for.

Similarly, the prevailing negative sentiment sets the stage for coming appreciation. I remember very much the comments that accompanied discussions about uranium 2-3 years ago. "Uranium is dead why would I buy uranium". Well, the last 18 months have answered that question and I suspect that 2024 or 2025 will answer the question around the gold equities too. Expanding on uranium's potential, it could ultimately rise even further than gold. Gold establishes the market. Gold is first, silver moves further and faster, and silver is more maligned than gold, so I'll be making silver allocations precisely because it's disappointed so many.

Lack of Exploration Creates Opportunity

A contrarian will be bullish on the uranium outlook because of the dearth of new exploration spending during uranium's bear market, which has curtailed new discoveries.

This will limit supply just as demand is set to accelerate with nuclear power expanding its role to help nations meet carbon emissions targets. What people are doing in Namibia and Botswana is interesting. I don't think that the opportunities in Niger have been fully exploited. Niger is a very tough place to operate right now because of the coup and the interim government.

There is an upside for companies situating themselves in Africa early. Paladin and now Lotus have had in East Africa is indicative of the fact that there's a lot of exploration potential in East Africa and by the uranium exploration potential in Africa more broadly.

Geopolitical Instability Equals Untapped Mineral Potential

Contrary to most investors, geopolitical instability in global hotspots can be viewed as a plus for natural resource investors rather than a deterrent. Targets nations engulfed in conflict or turmoil where lack of competition creates openings for early movers.

Majors Set to Pursue Uranium Assets

Given uranium's extended slump, most major mining companies have divested from the space. However, their return is inevitable and could provide further catalysts for the next uranium bull run. I don't know who is going to take over NextGen and Fission but there's a huge opportunity in the western part of the Basin. Developing the world-class NextGen and Fission deposits in Canada's prolific Athabasca Basin would require upfront capital beyond the means of mid-tier and junior miners. In order to buy NextG and Fission, and then build the 2 deposits is going to take about C$7 to C$8 billion. That's about half of Cameco's market cap plus you'd want a nice premium on that so the shareholders are going to vote for it you're already coming close to Cameco's total Market Cap.

A quick doubling could occur if a major like BHP decides the uranium space merits more attention. The majors have made overtures about reconsidering their uranium involvement if the right assets are available.

The Investment Thesis for Uranium

• After a Lost Decade, uranium is poised for a bull run as demand rises faster than new supplies
• Uranium equities remain depressed with sentiment still overly negative, offering the chance to buy low
• Geopolitical instability in Africa and Central Asia allows early movers to lock up untapped uranium deposits
• Majors likely to re-enter the uranium sector providing further catalyst when they start acquiring attractive assets
• Best risk/reward found with sub $1 billion market cap Canadian uranium juniors, leveraged to rising prices
• Invest in a basket of exploration plays for diversification, as many will stumble but winners can rise exponentially

While negative sentiment persists in the uranium sector currently, the fundamentals appear aligned for a prolonged upcycle. As history shows, commodity bull markets often surprise the upside once momentum builds. Uranium displays the necessary ingredients for such a breakout in the coming years. Shrewd resource investors will stake early positions to capitalize on uranium's pending wave while most remain skeptical of its prospects. By targeting the downtrodden uranium space now, substantial profits await those with patience and vision.