Point to a New Nuclear Era: Fundamentally-Driven Opportunity on Uranium

• Nuclear energy is seeing increased investment and adoption, driven by the need for reliable, carbon-free power.
• Small modular reactors (SMRs) are a key focus, with multiple projects and partnerships announced in the U.S., U.K., and Sweden.
• Artificial intelligence and data center energy needs are contributing to interest in nuclear, but are not the primary drivers.
• Uranium supply and demand fundamentals point to a widening deficit that will require higher prices to incentivize new production.
• Despite a bullish long-term outlook, uranium equities have lagged, presenting a potential opportunity for patient investors.

As the world grapples with the dual challenges of meeting rising energy demand and combating climate change, nuclear power has emerged as an increasingly compelling solution. With its ability to provide reliable, carbon-free baseload electricity, nuclear energy is poised to play a crucial role in the global decarbonization effort. At the heart of this nuclear renaissance lies uranium, the primary fuel powering the world's reactors. For investors, the uranium market offers exposure to a unique set of fundamentals, characterized by a looming supply deficit, geopolitical catalysts, and the transformative potential of advanced technologies like small modular reactors (SMRs).

The Nuclear Renaissance: A Shift in Perception and Adoption

In recent years, a marked shift has occurred in the perception of nuclear energy. Once stigmatized by safety concerns and cost overruns, nuclear power is now increasingly recognized as an indispensable tool in the fight against climate change. This change in sentiment is translating into tangible action, with governments and corporations alike pursuing aggressive reactor buildouts and life extensions.

The International Atomic Energy Agency projects that global nuclear generating capacity could increase by 82% by 2050 in its high case scenario. Countries like China and India are leading the charge, with China alone accounting for over one-third of reactors under construction worldwide. But the nuclear renaissance is not limited to Asia. In the United States, the Biden administration has signaled strong support for the industry, with the Department of Energy opening applications for $6 billion in credits to keep existing plants online.

This policy tailwind is complemented by growing private sector adoption. Major tech companies like Google, Amazon and Microsoft are turning to nuclear to power their energy-hungry data centers, drawn by its reliability and carbon-free profile. While artificial intelligence and data center demand are not the primary drivers of the nuclear resurgence, they represent important sources of incremental demand and high-profile validation for the industry.

The SMR Opportunity: Revolutionizing Nuclear Deployment

Among the most exciting developments in the nuclear space is the rise of small modular reactors (SMRs). These advanced reactor designs promise to reduce costs, enhance safety, and accelerate deployment by leveraging factory-based manufacturing and simplified designs. SMRs open up nuclear energy to a wider range of applications and geographies, with their smaller size and greater flexibility making them suitable for remote locations, industrial processes, and grid integration with renewables.

The SMR opportunity is attracting significant attention and investment. In the United States, a Tennessee Valley Authority (TVA)-led coalition has applied for $800 million in funding to support the deployment of a GE Hitachi BWRX-300 SMR, with utility partners and a broad industry alliance committing to the effort. Other major players like NuScale and X-energy are also making strides, with NuScale's first U.S. SMR plant slated to come online in 2029.

According to TVA President and CEO Jeff Lyash,

"Nuclear is the most reliable and efficient energy the world has ever known, and TVA is uniquely positioned to help drive this forward. We are committed to working with partners and this grant would expedite our work as we invest in America's nuclear future."^[1]

Similar momentum is building globally. In the U.K., Rolls-Royce is developing a 470 MW SMR, with a target of 10 units in operation by 2035. Meanwhile, in Canada, Ontario Power Generation is partnering with GE Hitachi and Synthos Green Energy to deploy the BWRX-300 in Poland by the early 2030s. As Colin Healey, CEO of Premier American Uranium notes, this validation from major energy and industrial companies is key to the SMR story:

"It's this push for green energy to power these data centers that's going to make it much easier to adopt once several get built."

The Uranium Supply Crunch: A Structural Deficit Emerges

While demand for nuclear energy is poised for long-term growth, the outlook for uranium supply presents a more challenging picture. Years of low prices have led to persistent underinvestment in mine development and exploration, with the COVID-19 pandemic exacerbating already tenuous conditions.

Even major producers like Kazakhstan's Kazatomprom, which accounts for over 40% of global supply, are struggling to meet production targets due to resource depletion and technical challenges. This has led some to call for increased Chinese investment to fill funding gaps, a development that could further tighten available supply for Western utilities.

The most recent Uranium Market Outlook from UxC projects a cumulative supply deficit of 23,600 tonnes through 2030 in its base case, expanding to nearly 70,000 tonnes in its bull case. To put this in perspective, total mined supply in 2021 was just shy of 50,000 tonnes.

This deficit is unlikely to be filled by secondary supplies, which have dwindled in recent years. With the end of the U.S.-Russia Highly Enriched Uranium Purchase Agreement in 2013 and declining utility inventories, the market is becoming increasingly reliant on primary production. As Chris Frostad, CEO of Purepoint Uranium explains:

"The gap isn't going away, and neither's the solution."

Geopolitical Tensions and Supply Chain Risks

The uranium market is not immune to geopolitical tensions, which have been brought into sharp relief by Russia's invasion of Ukraine. As Western utilities seek to reduce their dependence on Russian nuclear fuel supply, the need for alternative sources of uranium has become more pressing.

This presents both challenges and opportunities for the industry. In the near-term, sanctions and supply chain disruptions could create bottlenecks, particularly in the enrichment segment of the fuel cycle where Russia holds a significant market share. Longer-term, however, this could accelerate the development of new Western-aligned supply sources and the build-out of domestic enrichment capacity.

The bifurcation of the global uranium market into Western and Eastern spheres of influence is likely to be a defining feature of the landscape in the years ahead. For investors, this underscores the importance of focusing on assets located in stable, mining-friendly jurisdictions like Canada, Australia, and the United States.

ATHA Energy

ATHA Energy is well-positioned to capitalize on the strengthening uranium market with its large, high-grade Angilak project in Canada. The company's 2024 drill program expanded the existing 43 million pound resource and outlined significant exploration upside of up to 98 million pounds.

As CEO Troy Boisjoli noted, "To have the ability to be working on a project that we believe has tier-one scale potential in a jurisdiction like Canada is a significant benefit."

With a huge 8.5 million acre land package in Canada's premier uranium districts, ATHA offers investors district-scale potential and a proven management team focused on creating value through resource growth.

Marmota

Marmota provides investors with diversified exposure to gold, uranium, and an exciting new titanium discovery, all of which have strong supply-demand fundamentals. The company's uranium project, located next to Boss Energy's producing Honeymoon mine, offers strategic value and leverage to rising uranium prices.

Chairman Colin Rose highlighted, "Marmota happens to have gold which is extremely strong at the moment, uranium which is extremely strong at the moment, and titanium - they're all strong. We don't ultimately control what happens to fundamentals, but having three core assets does place us in a really strong position in terms of both risk management and opportunity going forwards into the future."

With a catalyst-rich future across its asset portfolio and a proven team, Marmota aligns with the article's focus on companies offering exposure to strengthening uranium fundamentals.

Peninsula Energy

Peninsula Energy is set to become a leading U.S. uranium producer with the restart of its Lance projects in Wyoming. The company expects to have first production in early 2025 and ramp up to a significant output of 1.5-1.7 million pounds per year by 2027. CEO Wayne Heili expressed confidence in the company's trajectory, stating,

"This is a very fun, fun, time for the company to be kicking off production and starting to see the opportunity to generate pounds to sell."

With a large, long-life asset base, a strong balance sheet, and an experienced management team, Peninsula is well-timed to benefit from rising uranium prices and favorable U.S. supply dynamics, mirroring the article's bullish outlook for the sector. The company's potential for further production growth, margin expansion, and industry consolidation aligns with the themes of the broader uranium investment thesis.

F3 Uranium

F3 Uranium's exceptional drill result of 4 meters at 50% uranium grade at its JR Zone deposit highlights the potential for a major high-grade discovery in the Athabasca Basin. As founder Dev Randhawa emphasized, "Grade is king. That's why I still believe the Athabasca is the place in the world." With $26 million in cash to fund aggressive exploration and expansion drilling, F3 is well-positioned to unlock further value.

The project's proximity to proposed processing facilities and year-round road access provide strategic advantages, aligning with the article's focus on low-cost, high-grade assets that can help meet growing demand. Randhawa's view that high-grade deposits like JR Zone will be critical to supplying the expanding nuclear power industry mirrors the article's emphasis on the increasing importance of high-quality uranium projects in the face of a looming supply deficit.

GoviEx Uranium

GoviEx Uranium's recently completed bankable feasibility study for its advanced-stage Muntanga project in Zambia positions the company to bring a low-cost, long-life uranium mine into production.

As CEO Daniel Major explained, "I'm very confident in where I look at the market that uranium prices will go higher and we have to plan to be there to deliver into that market."

With robust project economics, a simple mining plan, key permits in place, and significant lender interest, GoviEx is poised to benefit from the looming uranium supply deficit. The company's focus on securing long-term offtake agreements and potential for additional funding and strategic partnerships aligns with the article's emphasis on well-positioned developers with a clear path to production.

The Investment Thesis for Uranium

• Rising demand driven by global nuclear energy growth, with reactor restarts in Japan and Germany adding near-term upside
• Structural supply deficit that will require sustained higher prices to incentivize new production
• Transformative potential of advanced technologies like SMRs to expand the addressable market and accelerate adoption
• Geopolitically-driven reshaping of supply chains favoring Western-aligned assets and jurisdictions
• Attractive current valuations for uranium equities after recent underperformance creates a compelling entry point for long-term investors

Actionable Steps for Investors

• Focus on companies with proven, high-quality assets in stable jurisdictions
• Assess management teams and financial strength to ensure ability to weather development timelines
• Look for validation from major players via joint ventures, strategic investments, or off-take agreements
• Diversify exposure across producers, developers, and explorers to balance risk and return potential
• Consider initiating positions during periods of market weakness and utilizing a dollar-cost averaging approach

Summary and Key Takeaways

The uranium market offers investors a unique opportunity to gain exposure to the powerful trends of decarbonization, electrification, and energy security. With nuclear energy poised for a sustained period of growth and a looming supply deficit, the fundamentals for uranium appear decidedly bullish. While near-term volatility is likely to persist, the long-term risk-reward balance for uranium equities is compelling at current levels.

Success in this market requires a disciplined, fundamentally-driven approach focused on asset quality, management strength, and jurisdictional risk. Investors should be prepared to take a multi-year view and look through short-term market gyrations. But for those with patience and conviction, uranium offers the potential for significant upside as the world goes nuclear.

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_References:

1. _{World Nuclear News (January 2025). US Companies Join Forces to Accelerate SMR Deployment}
2. _{Bhardwaj, Abhishek (January 2025). Sweden Builds Test Nuclear Reactor to Perfect ‘Europe’s First Advanced SMR’}
3. _{World Nuclear News (January 2025). UK to Cut Legal Hold-ups to Infrastructure Projects}
4. _{Crux Investor (January 2025). The Future of Nuclear Energy: AI & Investment Trends}
5. _{Crux Investor (January 20025). Data Centers & AI Energy Needs Are Not Critical to the Nuclear Renaissance}