Lights Out - China Wrapping Up Uranium Supply as West Fails to Invest Quickly

• Jon Bey (CEO of Standard Uranium) and Wayne Heili (CEO of Peninsula Energy) discuss the uranium market and their companies' outlooks
• Uranium sector sentiment is positive, with exploration/production advancing and nuclear energy gaining support
• Standard Uranium is a project generator with a portfolio of drill-ready projects; Peninsula Energy is preparing its Lance project in Wyoming for production by end of 2024
• Access to capital depends on company quality; consolidation could happen but isn't always the best path; strong management teams are key
• Geopolitical developments (China securing supply, potential Russia sanctions) could further tighten the market and boost prices

Introduction

The uranium market appears poised for significant growth, driven by increasing global demand for clean, reliable nuclear energy. In this environment, companies with high-quality assets and experienced management teams are well-positioned to create value for investors. Two such companies are Standard Uranium, a project generator with a portfolio of drill-ready projects in the Athabasca Basin, and Peninsula Energy, which is advancing its Lance project in Wyoming towards production.

Panel with Jon Bey, CEO of Standard Uranium & Wayne Heili, CEO of Peninsula Energy

Positive Sector Sentiment

As Jon Bey, CEO of Standard Uranium, notes, overall sentiment in the uranium sector is quite positive. Exploration and production are advancing, while nuclear energy is gaining support from governments and investors alike. "The mood was positive," Bey says of a recent mining conference.

"The overall sector - mining, exploration, production - everything seems to be moving in the right direction...Uranium was still one of the top picks."

Wayne Heili, CEO of Peninsula Energy, echoes this optimism, pointing to rising support for nuclear in the context of the clean energy transition. "Not only is uranium really a topical piece for resource investors, the nuclear space in the United States and globally continues to see great support," Heili remarks.

"We see more and more development of small modular reactor growth in the nuclear space and support for even uranium mining and the nuclear fuel cycle as a whole from governments in many jurisdictions where we didn't see that strong support before."

The Importance of Quality Assets & Management

For uranium companies to thrive in this environment, having high-quality assets and skilled management is crucial. As Bey explains, Standard Uranium doesn't just option projects - it extensively de-risks them before seeking partners.

"We actually take a project, stake it for cheap, work it, and advance it so it is drill-ready with targets. We get the permits in place, sign First Nations agreements, line up vendors, and then our team operates the project," he says. We're not just giving away land—we're making a turnkey operation. That makes our projects really stand out."

Meanwhile, Peninsula Energy focuses on bringing its Lance project into production. With an existing resource of 54 million pounds and exploration potential of up to 150 million more, Lance represents a licensed production, development, and exploration area all in one.

"Today, the focus for Peninsula is really about how long it will take for us to get to production and what is the cost," Heili says. "We're dealing with the issues, but nothing's changed - we have a competent team ready to put the project into production."

Access to Capital

For uranium explorers and developers, access to capital is always a critical question. According to Bey, it depends on the quality of the company and its assets. "We are seeing a transition for certain types of investors coming in and looking at our company," he notes. "They're looking for opportunities where they know they can make money, and more importantly, not lose money...For us, we're able to say we've got 4 projects we're drilling with other companies' money, we've got cash flow coming in, our geologists are busy - so it's quite positive for us."

Heili agrees that investors are seeking out opportunities in the uranium space, especially after the price run-up in the second half of 2023.

"When new demand comes into the market, it almost always drives up the price."

"Anytime somebody does a significant amount of buying in the spot market, the price goes up. We saw that in the second half of last year—the price stabilized around $90/lb after being at $50-60/lb. So investors are looking for companies that still have value."

The Consolidation Question

With many smaller uranium companies in North America, some have suggested consolidation. However, Heili believes this isn't always the best path. "Each company has projects of merit and teams capable of pursuing them," he argues. Rolling up and getting big, liquid companies is interesting, but you can end up with one project getting all the investment while not making the most of the other assets. Utility fuel buyers want multiple choices, not just one major US producer."

Bey notes that ultimately, strong management teams with real experience and relationships are what will enable companies to succeed, consolidated or not. "Find companies that have geologists who know what they're doing, have done the work and are respected in the region," he advises investors. "Look for companies with permitted projects and a history of getting permits, with signed First Nations agreements, not just talks. The majority of staked land is moose pasture - you need the structural geological components."

Geopolitical Wildcards

Geopolitical developments could further tighten an already undersupplied uranium market and boost prices. Bey points to rumors of Chinese firms looking to secure African uranium assets and potential US sanctions on Russian nuclear exports, which have doubled to $3B in the past two years.

"With the Canadian government making it more difficult for foreign groups to fund stuff, it's kind of a double-edged sword," he remarks. "But we are seeing all kinds of demand out of the US for uranium, and Canada is a great place to get it from."

Heili sees substantial North American investment aimed at building out non-Russian nuclear fuel cycle capabilities. "A lot of the [US government-funded] programs for enhancing conversion and enrichment have incentives attached to use domestically produced uranium or at least friendly country uranium - Canada, Australia, nations like that," he explains. "We need to get away from reliance on our geopolitical foes for something as important as nuclear fuel."

The uranium market appears fundamentally strong, with prices stabilizing at higher levels ($80-90/lb spot) and poised for further upside as supply deficits emerge. In this environment, companies with high-quality assets, experienced management, and access to capital are well-positioned to create value. While consolidation is a possibility, single-asset companies can also succeed by advancing their projects towards production. Geopolitical wildcards, from Chinese asset purchases to potential US sanctions on Russia, could further tighten the market. Overall, patient investors who position in the right uranium companies stand to be well rewarded as this bull market continues to play out.

The Investment Thesis for Standard Uranium & Peninsula Energy

• Standard Uranium offers exposure to discovery upside through its diversified exploration portfolio and project generator model
• Peninsula Energy expects to be in production at its Lance project by the end of 2024, with a robust resource and low all-in sustaining costs of $40-45/lb
• Both companies are led by experienced uranium executives with track records of creating shareholder value
• The uranium price appears well-supported at $80-90/lb with potential for further upside, providing a solid margin opportunity for producers
• Investors should look for near-term catalysts like exploration results and contracting, but be prepared to have patience as this bull market plays out

The uranium macro story is one of a structural supply deficit colliding with robust and growing demand. The world requires reliable, clean, baseload energy to power economic growth and raise living standards, and nuclear is an increasingly critical part of the mix. At the same time, supply has been slow to respond after a decade of low prices, with major production cuts, a lack of investment in new mines, and declining grades at existing operations.

This supply crunch is now starting to manifest, with the spot uranium price rising from $30/lb in early 2023 to $90/lb by year-end. While some of this move was driven by financial buying, it also reflects the emerging reality of the market.

As Jon Bey notes, "We're at a new price point in that high $80s-low $90s range, which is a base...there's going to be some ups and downs, but be patient - we're going to move higher."

Indeed, with uncovered utility demand rising, producers like Kazatomprom and Cameco only slowly ramping up, and new projects requiring $60-80/lb incentive prices, the uranium market looks exceptionally tight for the foreseeable future. Layer on potential geopolitical disruptions, whether from Russian sanctions or Chinese asset grabs, and the setup only gets more bullish.

As Wayne Heili sums it up: "The uranium Renaissance was driven by new investment...Today, we sit with a fundamental shortfall in supply, and when new demand comes into the market, it almost always drives up the price. Another 50% run-up in the price of uranium, from $90 to $130-140, all it would take is some physical buying...and now we're talking about a different market outlook."

In this environment, uranium miners - especially those in top jurisdictions with solid assets and management teams - appear poised to create substantial value for shareholders in the years ahead.

"The uranium market has fundamentally changed - we have a structural supply deficit when new demand comes in, it drives the price up...from $90 to $130-140, all it would take is some physical buying...and now we're talking about a different market outlook." - Wayne Heili, CEO of Peninsula Energy