New Wave of Investors Lining Up as Uranium Prices Power Up Due to Looming Supply Crunch

• The uranium market is in the early stages of a bull cycle due to a supply deficit and increasing demand for clean energy
• Uranium prices are expected to climb higher due to ongoing supply bottlenecks, geopolitical issues, and the long lead time to bring new mines online
• Canada, particularly the Athabasca Basin, is a prime jurisdiction for high-grade, large-scale uranium deposits
• Forum Energy Metals is exploring for unconformity-type uranium deposits in the underexplored Thelon Basin, which has the potential for shallower deposits
• Forum is conducting a 10,000 meter drill program this summer to expand the Tatiggaq uranium deposit and test new targets

The Bullish Case for Uranium

The uranium market is poised for significant growth in the coming years, making it an attractive sector for investors. A confluence of factors, including a looming supply deficit, increasing demand for clean energy, and geopolitical concerns, are expected to drive uranium prices higher.

Exiting a Prolonged Bear Market

The uranium industry has emerged from a decade-long bear market that saw prices plummet after the 2011 Fukushima tidal wave in Japan. The prolonged downturn forced many uranium mines to shut down and exploration to grind to a halt. However, the market began to turn in 2020 as the long-term fundamentals for nuclear power improved.

Dr. Rebecca Hun, VP of Exploration at Forum Energy Metals, explains: "It started last year with the World Nuclear Association conference and it coming to light how much supply is in deficit, that we need a lot more uranium to go forward. A lot of stuff has changed.

Rising Demand Amidst Supply Constraints

Demand for uranium is on the rise as countries increasingly turn to nuclear power as a reliable, carbon-free energy source to combat climate change. The European Union recently classified nuclear as green energy, a move expected to accelerate the global adoption of nuclear power.

Despite the demand growth, the uranium market faces significant supply constraints. The COVID-19 pandemic disrupted mining operations, while geopolitical risks threaten output from major producers like Kazakhstan. Additionally, the long development timelines for new uranium mines mean there is no quick fix to the supply shortfall.

According to Hun, the market has changed structurally, with the projected supply deficit now a reality: "Mines don't open up in a day. They can take 10, 15, 20 years to open, if they're viable. And it takes a long time also to explore. So we have this area of time where we haven't been able to even get stuff in the pipeline.

Uranium Prices Poised to March Higher

The tightening market has already begun to impact uranium prices. After bottoming below $20 per pound in 2016, uranium spiked to $106 per pound in early 2024. While prices have pulled back to around $90 currently, the underlying fundamentals remain bullish.

Hun notes that the recent price volatility stems from thinly traded spot markets and that the long-term contract price is most relevant for the industry: "The real thing to look at is the long-term price because that's what matters. That's what uranium producers and utilities contract at.

The long-term price is steadily rising, and industry participants expect much higher prices will be needed to incentivize enough new production to meet demand. With a small surplus projected for 2023-2025, the market should tip into deficit by 2026, supporting elevated prices for the foreseeable future.

A Top Jurisdiction for Uranium

As the world scrambles for new uranium supply, Canada stands out as a top jurisdiction for investment. Canada was the world's largest uranium producer for many years and still accounts for 15% of global output. The high-grade Athabasca Basin hosts some of the world's richest uranium deposits, including Cameco's McArthur River and Cigar Lake mines.

The ore grades found in the Athabasca Basin allow companies to develop robust, long-life mining operations that can withstand uranium price volatility. With uranium deposits becoming increasingly difficult and expensive to find globally, the Athabasca Basin remains the go-to jurisdiction for large-scale, high-margin production.

Exploring for the Next Uranium Discovery

While the Athabasca Basin is endowed with rich uranium deposits, much of the low-hanging fruit has been picked over. Exploration is targeting deeper deposits, which will be more expensive to mine. The industry needs new discoveries in shallower settings to ensure adequate long-term supply.

This is where Forum Energy Metals sees opportunity. The company is focused on the Thelon Basin in Nunavut, an underexplored region with geological similarities to the Athabasca Basin. Forum believes the Thelon Basin has the potential to host unconformity-type uranium deposits that are shallower than those found in the Athabasca.

The Thelon Basin is essentially the same [as the Athabasca], just not explored," explains Hun. "We feel it's this potential that's just waiting to be unleashed. The Thelon Basin has that potential because there's so much low-hanging fruit to find there because it just hasn't been explored.

Drilling to Expand a New Uranium Discovery

Forum made a new uranium discovery at its Tatiggaq prospect in 2022, intersecting promising mineralization over a 250-300 meter strike length. The company is gearing up for an ambitious 10,000 meter summer drill program aimed at expanding this new discovery.

75% of that [drilling] is going to go toward expanding Tatiggaq," notes Hun. "One of the exciting things we did last summer is we started doing this passive seismic geophysics. Now we have some really good targets and a way to target the mineralization at Tatiggaq and expand it.

Forum's exploration approach leverages cutting-edge geophysical techniques to zero in on areas with the highest probability of uranium mineralization. With its large land package in a highly prospective basin, Forum provides investors with exposure to uranium discovery potential in an overlooked jurisdiction.

The Investment Thesis for Uranium

• Uranium demand is rising as countries embrace nuclear power to meet climate goals
• Supply is constrained due to mine closures, geopolitical risks, and long development timelines
• Uranium prices are in an upward trend and expected to rise further as the market enters deficit
• Canada is a top jurisdiction for uranium mining, with high-grade deposits and a stable operating environment
• Explore for new, shallower uranium deposits in prospective but underexplored regions like the Thelon Basin
• Invest in companies using modern exploration techniques to make new discoveries and expand known deposits

The uranium market is at the onset of a bull cycle powered by rising demand and shrinking supply. Prices will likely continue higher in the coming years, especially as new mines struggle to keep pace with demand. Canada offers investors a favorable jurisdiction in which to gain exposure to the uranium upside. Companies exploring for new, shallower deposits in prospective regions like the Thelon Basin could deliver the next major uranium discoveries.