Bullish Uranium Price Heats Up Producers Race to Secure New Supply and M&A Developments

• Uranium prices consolidated in Q3 2024 but remain supported by strong fundamentals and growing demand from nuclear energy and data centers powered by AI.
• Kazakhstan, Canada, Namibia, Australia and Uzbekistan are the top 5 uranium producing countries; production issues, geopolitical tensions, and a military coup in Niger are impacting global uranium supply.
• The next US president has significant unilateral authority to boost domestic uranium and critical minerals production through stockpiling, subsidies, procurement requirements, tariffs and expedited permitting.
• Uranium-focused M&A activity is heating up as producers look to secure supply and bring new projects online to meet rising demand.
• Brazil is looking to attract mining partners to revive its uranium exploration and production as it holds 5% of global resources; new research and development partnerships could help Brazil become a major uranium exporter.

Uranium, the primary fuel for nuclear reactors, is experiencing a resurgence in interest from investors. The radioactive metal has seen prices rebound strongly in recent years, driven by a combination of supply challenges and rising demand as the world increasingly turns to nuclear energy to meet electricity needs and decarbonization goals. This article will explore the key factors shaping the uranium market outlook and why the sector could offer a compelling opportunity for investors.

Uranium Price Recovery

Uranium prices have staged an impressive recovery since the doldrums of the late 2010s. Spot prices hit a 17-year high of over US$100 per pound in early 2024, a more than three-fold increase from the 2016 low. While prices retreated to around US$80/lb in Q3 2024, they remain well above the sub-US$30 levels seen just a few years ago.

"The uranium market's price action, both in the spot market and among miners, has been frustrating for much of the last few months," said Jacob White, ETF product manager at Sprott Asset Management, in a September 2024 update. "Uranium miners, in particular, have been reacting to exogenous factors, despite ever-strengthening fundamentals."^[2]

Lobo Tiggre, CEO of IndependentSpeculator.com, believes US$80/lb is an important threshold for the uranium market.

"(Uranium stalled in Q3) because it corrected back to trend with the long-term contract price, which is high enough to incentivize new production," ^[2]

Supply Constraints Fueling Deficit Fears

A major driver behind uranium's price appreciation is persistent supply challenges. Global uranium production peaked in 2016 at over 62,000 tonnes but has trended lower in recent years due to mine closures, production cuts, and underinvestment in new projects following a prolonged period of low prices post-Fukushima.

Kazakhstan, the world's largest uranium producer accounting for over 40% of global supply, has faced recent production issues. In early 2024, state miner Kazatomprom slashed its output guidance by 20% due to difficulties sourcing sulfuric acid and construction delays. The reduced production outlook from this key supplier was a major factor propelling uranium prices above US$100/lb.

The No. 3 uranium producing country, Namibia, has also grappled with production challenges. The Langer Heinrich mine, owned by Paladin Energy, was placed on care and maintenance in 2018 due to low prices. Although it resumed production in 2024, the multi-year shutdown underscores the slow supply response to improving market fundamentals.

Other major producing nations are contending with additional headwinds. In Canada, Cameco's flagship McArthur River and Cigar Lake mines were temporarily closed in the late 2010s due to weak market conditions. While both assets are now back online, Cameco's 2023 production of 7,983 tonnes remained below capacity.

"There are so many moving parts to production cycles. And you throw in geopolitics, you throw in coups happening around the world, you throw in war, you throw in supply and material shortages. And then you throw in higher tax and higher inflation costs that that aren't priced in initially," Gerardo Del Real of Digest Publishing explained to INN. "You get the perfect storm for realizing that it's just going to get tougher and tougher to produce cheap uranium."^[2]

Uranium Companies to Watch

Global Atomic

Global Atomic (TSX:GLO) is advancing the Dasa project in Niger, host to the highest grade uranium deposit in Africa. With a recently updated feasibility study outlining robust economics, mining permits in hand, and an experienced team, Dasa is on track to commence uranium deliveries in early 2026.

The phased mine plan supports a 23-year operation producing 68 Mlbs U₃O₈ at low costs. Four offtake agreements have been signed, while project financing is progressing well. An estimated $308 million in initial capex positions Dasa favorably amongst uranium developers. The company's Turkish zinc recycling joint venture provides cash flow to support Dasa's development.

Management has a strong ESG track record in Niger, critical in a complex jurisdiction. With a grade of 5,349 ppm U₃O₈ in Dasa's Inferred resource, further extension drilling could expand the high-margin mine life. As a fully permitted, near-term producer, Global Atomic is well-placed to help fill the growing uranium supply gap.

Lotus Resources

Lotus Resources (ASX:LOT) is well-positioned to become a meaningful uranium producer with its flagship Kayelekera project in Malawi. The accelerated restart plan reduces initial capital costs and targets first production by Q3 2025, positioning Lotus to enter a strengthening uranium market. With $116 million in available liquidity post-equity raise, Kayelekera is expected to be fully funded through to first production. Offtake agreements with PSEG and Curzon provide revenue visibility, while significant exploration upside remains.

Lotus' multi-asset portfolio also includes the large Letlhakane project in Botswana, with a 118 Mlbs U₃O₈ resource and ISR potential, providing development optionality. Management has a proven track record of developing African projects and the ability to create value through consolidation, as demonstrated with Consolidated Uranium. As a near-term producer with a second long-life development project, Lotus appears well-placed to benefit from the nuclear fuel cycle revival as the world pivots toward clean energy.

Energy Fuels

Energy Fuels (AMEX:UUUU) is establishing itself as a leading U.S. supplier of uranium and other critical minerals essential for clean energy technologies. Its White Mesa Mill in Utah is the only conventional uranium mill operating in the U.S. today. Energy Fuels is currently ramping up production from several mines to achieve uranium output of 2 million pounds per year. The company is also emerging as a key player in the rare earth elements (REE) supply chain, having recently produced a uranium-plus-REE concentrate from monazite sands.

Energy Fuels is advancing plans to install REE separation infrastructure at White Mesa, with the potential to support the production of separated REE oxides for the domestic market. The acquisition of Bahia heavy mineral sands in Brazil further bolsters Energy Fuels' monazite feedstock pipeline and REE production profile. With a strong balance sheet, near-term cash flow, and leverage to rising uranium and REE prices, Energy Fuels offers a unique investment opportunity in the clean energy transition.

Premier American Uranium

Premier American Uranium (TSXV:PUR) has assembled a portfolio of high-quality U.S. uranium projects in the top uranium districts of Wyoming, Colorado and New Mexico. PUR's flagship Cebolleta project in New Mexico boasts a significant current uranium resource with substantial expansion potential. Exploration programs are also underway at the Cyclone project in Wyoming, which has already yielded encouraging initial drill results. Led by an experienced management team with a strong track record, PUR is pursuing an aggressive strategy to explore and develop its pipeline of past-producing uranium assets while continuing to evaluate accretive acquisition opportunities.

As the U.S. looks to revitalize its nuclear industry and reduce dependence on foreign uranium supply, PUR appears poised to emerge as a key player in reshaping America's uranium landscape.

Demand Growth from Nuclear Power and AI

As uranium suppliers struggle to ramp up production, demand is forecast to grow robustly. The long-term shift toward carbon-free energy is driving a nuclear power renaissance. Globally, 437 reactors are now operable with another 57 under construction, according to the World Nuclear Association. Many countries are extending the lives of existing plants while developed and emerging economies invest in new builds.

Unexpected new sources of demand have recently emerged, most notably power-hungry data centers used for artificial intelligence applications. Tech giants like Amazon, Google and Microsoft are turning to advanced modular reactors (SMRs) to meet the electricity needs of their AI server farms.

"One query to ChatGPT uses approximately as much electricity as could light one light bulb for about 20 minutes," said tech researcher Jesse Dodge to NPR. "You can imagine with millions of people using something like that every day, that adds up to a really large amount of electricity." ^[2]

In late 2024, Constellation Energy announced plans to restart the Three Mile Island nuclear plant under a 20-year power purchase agreement with Microsoft. AWS and Google have also announced new SMR development partnerships to power their data centers.

According to research firm IDC, data center electricity consumption is projected to more than double between 2023 and 2028, with AI workloads accounting for a growing portion of the total. AI datacenter energy consumption is forecast to grow at a CAGR of 44.7%, reaching 146.2 terawatt hours by 2027.

Uranium M&A Heating Up

As the uranium market moves into deficit, a growing number of producers are turning to M&A to secure additional supply and boost their project pipelines. In mid-2024, Paladin Energy announced the acquisition of Fission Uranium, owner of the high-grade Triple R deposit in Saskatchewan, in a C$1.14 billion deal. The consolidation play creates a leading Western uranium producer to rival industry leader Cameco.

Uranium Energy Corp (UEC) has also been an active dealmaker. The U.S.-based producer acquired Rio Tinto's Wyoming assets, including the Sweetwater plant and several development-stage projects, for $131 million in September. UEC hopes the assets will help it ramp up production to meet rising demand and vie for U.S. strategic stockpile contracts."

"It is the time for M&A here. Some of these companies still have time to do that, sounds like yes if you get into the whole USA thing." says Chris Frostad in a discussion on The Case for Investing in Uranium Nuclear. "Nuclear power stands at the crossroads of clean energy ambitions and energy security concerns, positioning uranium as a critical fuel for the future."

Policy Support an Additional Catalyst

Government policy is likely to remain a key catalyst for the uranium industry. In the U.S., the next president will have significant authority to unilaterally boost domestic uranium and broader critical minerals production through measures like stockpiling, subsidies, government procurement, tariffs and permitting. These levers could help the U.S. reduce its current 90% reliance on imported uranium while creating a more favorable environment for mine development.

Other uranium-endowed nations are also keen to revitalize their domestic industries. Brazil, which holds 5% of global uranium resources but has seen minimal production in recent decades, is looking to attract international miners and restart exploration. The government aims to establish new research partnerships and open up known uranium occurrences for development. Expanded Brazilian output could help ease global supply fears while generating a new source of exports and royalties.

Conclusion for Investors

The outlook for uranium appears bright as powerful structural supply and demand forces create the conditions for a sustained bull market. While prices will likely remain volatile, the growing need for clean, 24/7 baseload energy and unexpected sources of demand from AI are forecast to drive strong consumption growth for decades to come. At the same time, a lack of investment in new production capacity has left the uranium market ill-equipped to meet rising demand, making a supply deficit all but inevitable.

For investors, uranium's compelling macro backdrop is bolstered by potential M&A and government policy catalysts that could further stoke prices and mining activity. The recent wave of consolidation is likely to continue as producers vie for scarce development-stage assets while new entrants seek a foothold in the market. Uranium equities, which have rebounded strongly from cyclical lows, stand to benefit from expanding margins, improved sentiment and higher realized prices under long-term contracts.

Well-capitalized producers like Cameco and Kazatomprom are poised to deliver robust cash flows as they ramp up output at world-class mines. Developers like Denison Mines and Boss Energy also offer exposure to the next generation of low-cost production. Earlier-stage explorers focused on new discoveries provide investors with the potential for outsized returns. Uranium ETFs represent an option for more diversified exposure.

Although risks remain, including potential delays in nuclear reactor builds, unforeseen demand shocks, or persistent inflation in the mining sector, the fundamental drivers of uranium's bull market look increasingly entrenched. As the world places a growing premium on energy security and moves to decarbonize the global economy, uranium is set to play a central role in the clean energy transition for many years to come. For investors, the uranium growth story is one that is still in its early chapters.

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References:

1. _{Pistilli, M. Investing News Network (November 2024). Top 10 Uranium-producing Countries}
2. _{Williams, G. Investing News Network (October 2024). Uranium Price Update: Q3 2024 in Review}
3. _{Durao, M. Mining.com (October 2024). Brazil seeks to woo partners in revived ambition to uncover uranium riches}
4. _{Wischer, G. Mining.com (October 2024). Five actions the next US President can take on day one to boost critical minerals mining}