• Uranium spot price has risen over 50% in recent months due to increased utility contracting and some supply issues. Further price increases are expected as more utilities look to restock inventories.
• Over 150 million pounds of uranium contracted by utilities so far this year, hitting the "replacement rate" for the first time in over a decade. Indicates an accelerating contracting cycle.
• Several upcoming reactor projects globally are expected to require up to 1.5 billion more pounds of uranium by 2040. It will require a meaningful increase in production beyond current levels.
• Sentiment and media coverage around nuclear power has shifted markedly more positively recently as views on its role in energy security and decarbonization evolve. Making more investors comfortable with the sector.
• After years of underperformance, capital is now rotating out of spot price vehicle SPUT into uranium mining equities, signalling increased risk appetite in the sector.

The Compelling Case for Uranium in 2024

With uranium spot prices rising over 50% in 2023 to hit 8-year highs, with no signs of stopping anytime soon, the commodity has staged a marked turnaround following years trapped in a bear market. Now, mounting evidence signals the early days of a new bull run are underway. Multiple developments foreshadow a coming boom for nuclear fuel, even as shaky investor sentiment poses near-term headwinds. Still, for those with patience and appropriate time horizons, enriched uranium offers a compelling investment case over the next decade.

Restocking Driving Price Resurgence

After languishing below $30 per pound for much of the last 10 years, the uranium spot price broke out in 2023. Propelled by a wave of buying from financial entities like the Sprott Physical Uranium Trust (SPUT), it peaked above $50 in the fall of 2022 before sliding back to the high $30s. Yet 2023 brought a decisive move, with spot price climbing to $80 amid steady gains over the second half of the year.

What’s behind the price resurgence?

In short – utilities are buying again. The industry appears to have turned a corner on the infamous contracting cycle after years of de-stocking inventories.

This will be the first year where we see utilities restock inventory. Most commentators believe that we're already through 150 million pounds purchased this year through long-term contracts.

Uranium buyers operate via long-term contracts to lock in supply for their reactors. After the 2011 Fukushima disaster, most utilities had ample inventories with Japanese plant closures flooding more supply into the market. Facing weak demand, minimal contracting reigned for close to a decade. Only in the last 2 years have purchase volumes ticked above the replacement rate needed to balance consumption.

Now, with uncovered requirement estimates projecting over 1.5 billion pounds needed through 2040, there are strong incentives for utilities to rebuild stockpiles while supply conditions remain favorable and cheap. Their renewed appetite tips the scales towards an accelerating restocking cycle. As buyers compete for pounds to fill future needs, upward pressure builds on prices.

Looming Supply Shortfalls

Demand for uranium may be steadying, but serious questions linger about whether mining output can expand in tandem.

Already strained, global production has flatlined near 140 million pounds annually for many years. With the lengthy permitting and development timelines of new mines, the industry struggles to grow volumes beyond current capacity. Existing operations also face extensive rehabilitation work just to sustain present streams.

The reality is...when you have a machine or plant that's turned off, a mine in care & maintenance or you don't have the people in place because you let them all go 10 years ago, and then you try to start these operations up. Guess what? Things don't work straight away. The industry is having and will have a few bumps.

In this context, the uncovered need for over 1.5 billion more pounds in the coming decades poses a nearly insurmountable challenge.

Absent a doubling of output, invariably deficits shall emerge in the mid-2020s and widen extensively from there barring changes. With demand strengthening globally via climate policies, the supply equation looks profoundly troublesome long term. The seeds have already been sown for the pending shortages, and resultant spikes, in the Uranium price later this decade.

For investors, this ominous backdrop paints a highly constructive picture if positioned early to capitalize.

The Macro Backdrop – Nuclear Renaissance Dawning

As the dynamics directly surrounding Uranium tighten, the wider landscape for nuclear power continues brightening. While fossil fuels dominate electricity generation still, nuclear maintains a firm role providing steady, emissions-free base load power to grids across much of the developed world.

In recent years though, longstanding skepticism around the energy source shows signs of cracking. Fear of accidents has eased with improved designs as reliance on imported Russian gas spurs desires for greater energy security. Moreover, nuclear’s scaleability and reliability make it a prime tool for slashing emissions long-term per climate ambitions in most net zero models.

It's unbelievable how the narrative has changed as people's understanding has improved in the last 3 years. The topics talked about have changed enormously, the media coverage has gone from either non-existent or negative to very active and supportive.

This mainstream revival follows intensified R&D into next-gen reactors like Small Modular (SMR) and Advanced Modular (AMR) models offering big upgrades in safety, costs and flexibility.

Over 50 new plants are already under construction globally while approval processes advance for many more. In tandem, lifetime extensions for existing plants stretch out demand further and delay decommissioning. Altogether, a changing policy environment and technological progress set the stage for substantial growth in nuclear generation before 2040. The prospective rise in reactor capacity bodes very well for Uranium requirements in the years ahead.

Capital Flows Reflect Changing Attitudes

Beyond favorable shifts in the direct Uranium situation and long-run utility demand outlook, perhaps the clearest validation of nuclear’s improving prospects rests with capital flows. As institutional restrictions ease alongside views, investment pours in from diverse corners.

Having launched amid rock bottom sentiment in late 2020, the Sprott Physical Uranium Trust neatly illustrates this evolution. Initially shunned, the vehicle rapidly attracted inflows growing to nearly US$5 billion in assets under management through 2023. Alongside other financial buyers, it helped remove much excess inventory overhanging markets.

More recently, investing patterns displayed renewed conviction in nuclear’s future via surging interest in mining equities. We’re starting to see capital come back into the sector which will allow companies to turn on existing mines that have been on care and maintenance and finally get back into revenue and cash flow again. These are all very healthy developments.

Whereas the Sprott Fund garnered almost all capital last year, investment is now rotating into uranium stocks demonstrating sentiment extends well beyond spot price speculation. Further corroborating this institutional warming, inflows to exchange-traded funds (ETF’s) tracking uranium equities are accelerating markedly as well.

Undeniably, the stigma that long dogged nuclear programs erodes progressively. In tandem, beliefs solidify globally that nuclear must advance, not retreat. Once ambivalent investors now position for an impending nuclear renaissance with demand for radioisotopes set to explode higher.

The Investment Thesis for Uranium

Given compelling fundamentals and increasingly favorable macro tailwinds, uranium offers one of the strongest asymmetric opportunities in commodities at present. For retail investors, ideal exposure blends physical holdings via SPUT complemented by select mining equities. Reasons supporting this mix include:

• Low production costs ensure major cash flow leverage when rising uranium prices lift miner margins
• Fixed annual capacity limits long-run supply upside absent lengthy new mine development
• Sparse substitution options for nuclear reactor fuel keep demand largely price-insensitive
• term and emerging supply shortfalls likely to spur violent price spikes within a decade
• Fear premiums often overshoot fundamentals during periods of resource nationalism as seen recently
• Equity selections diversify timing risks if spot price gains front-run company-specific catalysts

Uranium exposure provides bite-sized servings of:

• inflation protection
• energy security crisis hedge
• decarbonization transition pick
• inevitable supply deficit story
• plus neglect sector discount

With so many factors aligning propitious for nuclear programs, uranium looks destined for substantial appreciation in the years ahead. Yet patience remains warranted as schizophrenic sentiment, irregular news flow, and procedural hurdles yield short-term volatility. Nonetheless, the long-term proposition stands robust. Once left for dead, the present juncture offers a uniquely timed entry point for this unloved commodity before the herd migrates back. As tight conditions become binding later this decade, the coming windfalls should prove well worth any interim frustration as this ultimate contrarian bet rebounds with a vengeance.

Bannerman Energy

Bannerman Energy is an Australian uranium development company focused on advancing its flagship 3.5Mlb pa open pit uranium project in Namibia, a major global uranium producer. Bannerman is currently working on Front End Engineering and Design (FEED) and financing for the Namibia project. The company also holds a significant 41.8% stake in Namibia Critical Metals, developer of the large-scale Lofdal heavy rare earths project in Namibia, one of only a few heavy rare earth deposits outside China.

Ur-Energy

Ur-Energy is a U.S. uranium mining company well positioned to benefit from rising uranium prices driven by growing demand for nuclear power. Within-situ recovery operations in Wyoming, Ur-Energy has been producing from its Lost Creek facility since 2013 and can now effectively double licensed annual production capacity to 2 million pounds with its permitted Shirley Basin project. With over $70 million in cash, Ur-Energy is funded to ramp up low-cost production from its Wyoming hub as it restarts wellfield construction. The company utilizes mining methods with a light environmental footprint and advancing next-generation technologies to further reduce costs. If uranium prices continue strengthening, Ur-Energy offers leverage as an experienced producer with scalable, permitted projects in a rising uranium market.

Global Atomic

Global Atomic Corporation is a publicly traded company with two main divisions - a Uranium Division that is developing the large, high-grade Dasa uranium project in Niger, which is now fully permitted with excavation underway, and a Base Metals Division that holds a 49%stake in a zinc production joint venture in Turkey operated by Befesa. The joint venture recycles Electric Arc Furnace Dust to produce zinc oxide concentrate sold to zinc smelters globally. Global Atomic’s unique combination of uranium production and cash-flowing zinc operations positions it well for growth.

Energy Fuels

Energy Fuels is the largest uranium and advanced rare earth element producer in the United States. The company has significant uranium production capacity and long-term sales contracts with U.S. nuclear utilities that it expects to fulfil starting in 2023-2024. Energy Fuels is also quickly moving to establish a domestic rare earth element supply chain, with plans to produce high-value separated REE oxides by late 2023 or early 2024. The company additionally produces vanadium when conditions warrant, recycles materials to recover uranium, vanadium and medical isotopes, and is advancing capabilities for medical isotope production. Overall, Energy Fuels is a major U.S. producer of strategic minerals like uranium and rare earth elements that are critical for energy, technology, and medical applications.

American Lithium

American Lithium is developing large-scale lithium projects in Nevada and Peru as well as one of the world's biggest uranium projects, with the goal of playing a major role in the transition to sustainable energy. The company's assets are the advanced-stage TLC lithium project in Nevada and the Falchanilithium project in Peru, which have robust preliminary economic assessments. American Lithium also owns the Macusani uranium project in Peru, which has seen significant historical development. With assets at various stages of pre-feasibility and feasibility studies, American Lithium is positioned to be a major player in lithium and uranium mining.

Deep Yellow

Deep Yellow has systematically built a portfolio of high-quality uranium assets to establish a significant production platform and realize its vision of becoming a leading international uranium mining company. With its experienced leadership team at the helm, Deep Yellow has set its sights on diversified production of over 10 million pounds per year, capitalizing on forecast supply squeezes. Its flagship Tumas mine in Namibia already claims one of the world's largest undeveloped uranium deposits as Deep Yellow advances toward a 2024 construction decision. Meanwhile, its Mulga Rock project in Western Australia progresses through feasibility studies for targeted development. Beyond existing core assets, Deep Yellow has accumulated extensive exploration ground at two prime locations in Namibia and Australia's Northern Territory through strategic acquisitions. These prospects provide substantial opportunities for unlocking further discoveries to continually expand its project pipeline over time. As energy security needs escalate globally, Deep Yellow stands ready to deliver the reliable uranium production that transitioning electricity grids urgently demand. With its production timeline aligned with major forecast supply deficits, Deep Yellow aims to cement itself as the go-to uranium supplier of choice for nuclear utilities worldwide seeking security and diversity of supply. Backed by disciplined leadership, Deep Yellow represents an emerging industry force promising investors exposure to the full lifecycle of value creation across resource discovery, project development and multi-decade uranium production. By targeting low-cost mining jurisdictions, adopting proven processing technologies and securing key infrastructure advantages, Deep Yellow has systematically built itself to deliver sustainable investor windfalls as the uranium bull market unfolds.

Baselode Energy

Baselode Energy is a Canadian uranium exploration company focused on the Athabasca Basin area in northern Saskatchewan. The company controls over 264,000 hectares of land that is free of any option agreements or underlying royalties. In September 2021, Baselode discovered the near-surface ACKIO uranium prospect on its exploration properties. The ACKIO prospect measures over 375 meters long and over 150 meters wide, with at least 9 separate uranium mineralized zones. Mineralization starts as shallow as 28 meters and 32 meters beneath the surface, extending down approximately 300 meters depth, with most mineralization occurring in the top 120 meters. The ACKIO prospect remains open at depth and to the north, south and east for further expansion. Baselode's exploration strategy centers on discovering high-grade uranium deposits outside of the Athabasca Basin near the surface in basement rocks. The company uses innovative and established geophysical survey methods to identify prospective shallow drill targets for high-grade uranium mineralization related to underlying structural controls. This technique has led Baselode to the discovery of the ACKIO prospect.

Nucelar Fuels
Nuclear Fuels Inc. is a Canadian uranium exploration company focused on in-situ recovery (ISR) projects in Wyoming and other proven jurisdictions globally. The company's priority asset is the Kaycee project in the Powder River Basin of Wyoming. This project has historical uranium resources distributed along a 33-mile mineralized trend with over 110 miles of mapped roll fronts. The property has been drilled extensively with over 3,800 historical drill holes. Nuclear Fuels has consolidated control of the Kaycee district, acquiring multiple historical uranium deposits and exploration targets. This positions the company to potentially advance the project portfolio into production. Beyond Kaycee, Nuclear Fuels plans to leverage its technical expertise to explore additional uranium properties and opportunities in established mining districts globally. Through aggressive exploration and consolidation of historical resources, the company aims to develop a pipeline of projects, prioritizing those that can be fast-tracked to production using the in-situ recovery mining method.

IsoEnergy
IsoEnergy is a Canadian uranium exploration and development company with projects focused in the Athabasca Basin of Saskatchewan. The company's flagship property is the Larocque East project in the eastern Athabasca Basin. This project hosts the high-grade Hurricane uranium deposit, which has the highest grade Indicated uranium resource globally. In addition to its exploration projects, IsoEnergy owns several permitted, past-producing uranium and vanadium mines in Utah. These mines are currently on standby but can be rapidly restarted to position IsoEnergy as a near-term uranium producer. The company has a toll milling agreement in place with Energy Fuels Inc. to process ore from its US projects. Beyond its Canadian and US assets, IsoEnergy holds uranium projects in various stages of exploration and development in Australia and Argentina. This diversified portfolio provides leverage to rising uranium prices across different jurisdictions. The company is advancing its Athabasca Basin projects while continuing the exploration on its global assets to drive future production growth.

Atha Energy

ATHA Offers Leveraged Exposure to World-Class Uranium Districts Athabasca Uranium Inc. (ATHA) provides investors with targeted leverage to potentially significant uranium discoveries across some of the world’s most prolific regions for new supply. As a focused mineral exploration company, ATHA has methodically accumulated the single largest exploration package covering the renowned Athabasca Basin. Spanning over 6 million acres, their claims provide unrivalled exposure to this district which has historically produced high-grade uranium deposits. Additionally, ATHA holds extensive prospective ground in the similarly uranium-rich Thelon Basin. Between these two core holdings in prime Canadian uranium provinces, the company has positioned itself amongst acreage with a proven exploration upside. Importantly, a subset of ATHA’s Athabasca land package involves a 10% carried interest in claims operated by sector leaders NexGen Energy and IsoEnergy. With ATHA carried through key exploratory expenditures, this allows leveraged participation alongside seasoned management advancing projects in the basin. For investors, ATHA brings focused leverage to maximizing discovery potential across districts that have delivered huge economic uranium resources. As sentiment improves around uncovered uranium value still unearthed in these Canadian districts, ATHA offers a targeted way to ride the upside. Their vast claim packages in underexplored but prolific terrain form the springboard for potential mineral discovery and resource growth in the coming bull cycle.