Split Investor Sentiment Creates Compelling Entry Points in Gold and Uranium

• Sentiment is poor among retail mining investors and juniors needing to raise money, but some with deep pockets are excited to accumulate positions.
• Gold has bullish drivers like rising yields and lack of buyers for US debt, so it looks best among metals currently. Sentiment shift could happen in Jan/Feb.
• Uranium price is up 50% on utility buyers entering a supply-constrained market. More buyers coming, blueprint for other metals.
• Opportunities across the value chain in uranium but focus on US ISR producers to serve short-term utility needs.
• Recommendations: Establish gold exposure in quality majors. Don't get overexcited on base metals yet. More upside in uranium.

Sentiment varies widely among participants in the mining space currently. Retail investors and juniors needing to raise capital near-term remain despondent due to poor recent performance, while those with longer time horizons are actively accumulating positions. This dichotomy is important for investors to understand.

Despondent Sentiment Among Most Participants

The majority of retail mining investors and companies needing to finance operations have a despondent sentiment. This is due to the weak performance of mining equities over the past years despite healthy metal prices. Investors have preferred passive index investments centered in technology stocks, given robust returns. Without catalysts for significant gains in mining in the near term, most retain a negative outlook.

However, there is a minority who are excited about opportunities in mining currently. These tend to be investors with deep pockets and longer time horizons, not concerned with raising money in the near term. They see compelling value after years of underperformance in mining equities relative to metal prices. This group is actively accumulating positions in anticipation of an eventual sentiment shift triggering broad investment inflows to the space.

The Dichotomy Explained

The sentiment is terrible but some people are very excited. The critical difference lies in investment time horizons. The despondent majority need a catalyst for gains in the next 6-12 months, while the excited minority is focused on the long-term supply/demand fundamentals for metals and positioned early to capitalize on the turn when it comes.

Uranium Standing Out

Uranium stands out currently as one area already exhibiting a positive shift. Uranium is marching to its own tune. The uranium price has risen 50% since mid-2023 to $75 per pound, and looks to go to $85 by the end of the year. While gold may follow eventually, gold and other metals will take longer to turn given the macro drivers needed.

Utility Buyers Driving Uranium Gains

In uranium, new buying by nuclear utility companies in Europe has powered the 50% price surge on limited volumes. This is occurring because utilities actually need the material and are becoming price-insensitive. They have to buy regardless of the price. It is moving quickly to a seller's market. US utilities have been largely absent since 2011, but they can't wait anymore. More buyers entering a supply-constrained market signals further upside. Timelines are longer in nuclear energy, with buying focused on securing future multi-year contract supply versus spot needs.

Opportunities Across the Uranium Value Chain

Investors have a range of options to access the positive uranium thesis. Many choose direct producers like Cameco or baskets like the Sprott Physical Uranium Trust. However, ample interest also exists in explorers and developers as this is where the leverage will come. The latter category includes US in-situ recovery producers like Energy Fuels who've spent years permitting operations to turn back on quickly. There are stocks that you can buy that are particularly good for that and will perform better than average in this market because they are serving the need. Explorers won't impact the short-term supply constraints driving the current bull market as they are so far away from being able to produce.

Eventual Move Higher In Gold

Gold has the best fundamental outlook among metals behind uranium currently. However, don't expect an imminent breakout. Seasonality around the holidays tends to weigh on performance. Rising yield rates on US debt instruments like T-Bills as a growing structural issue supporting gold. With fewer willing buyers at current rates due to inflation/recession risks, yields keep rising to attract capital. This dynamic reflects eroding confidence in the US dollar's reserve status over time. The reason that gold is moving right now is because of rising risk in general. January/February presents a possibility for the positive drivers to align and catalyze a rally. Alternatively, a stock market crash or recession could provide the impetus. But with central bank purchases accelerating as well, we remain firmly bullish for gold in the medium term.

Key Takeaways For Investors

For investors seeking to capitalize on opportunities in the current environment:

• Establish exposure to gold via large capped miners at discounted valuations
• Don't over-allocate yet to base metal equities awaiting global growth recovery
• Maintain/expand strategic exposure to further upside in the uranium sector

Sentiment varies widely among investors focused on the mining space. However, compelling opportunities do exist for those taking a long-term, thematic perspective anchored in positive structural supply/demand fundamentals. Uranium leads the way with its current bull run, while gold gathers upside drivers for its next sustained move higher. Maintaining exposures in these strategic metals represents a prudent approach at this phase of the cycle.

Here is the proposition for investing

• Current negative sentiment has depressed valuations across the mining sector
• Strategic metals like uranium and gold have a bullish supply/demand outlook
• Establishing positions while out of favor maximizes upside potential
• Focus on majors with low costs and good balance sheets
• Uranium producers and physical funds offer leverage to rising prices
• stay patient awaiting a macro catalyst to shift broader sentiment

The current bifurcation in sentiment across the mining equity space allows savvy investors to accumulate positions in strategic metals at discounted valuations. Uranium continues marching higher while gold gathers steam for its next structural breakout. Maintaining exposure through this period can yield substantial gains once the tide turns. Yet patience and a long-term thesis remain essential until market conditions evolve.

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Some Uranium and Gold Companies with Strong Fundamentals

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 Falchani lithium 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.

Elemental AltusRoyalties

Elemental Altus Royalties is a rapidly growing gold royalty company providing investors with de-risked, quality investments in top-tier mining companies across four continents. As the only emerging royalty company with material revenue and sustained organic growth, Elemental Altus is backed by the successful Discovery Group and offers a unique combination of innovation, global expertise, and entrepreneurial spirit to conduct complex international transactions in the mining sector.

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.

 First Mining Gold

First Mining Gold is a Canadian gold development company focused on advancing its flagship Springpole Gold Project in Ontario, one of the largest undeveloped gold projects in Canada, and the recently acquired Duparquet Gold Project in Quebec, a top 20 Canadian gold asset. The company also has interests in several partnership assets including the Pickle Crow project in Ontario with Auteco Minerals, the Hope Brook project in Newfoundland with Big Ridge Gold, and is the largest shareholder of TreasuryMetals which is advancing the Goliath Gold Complex in Ontario. First Mining was founded in 2015 by Keith Neumeyer, the founding President and CEO of FirstMajestic Silver Corp.

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.

Li-FT Power

Li-FT is a mineral exploration company focused on acquiring and developing lithium pegmatite projects in Canada. Their flagship Yellowknife Lithium Project in Northwest Territories contains 13 lithium pegmatite dykes near infrastructure and they have initiated a 45,000-meter drill program in 2023 to define resources. Li-FT also has the early-stage Cali Project in the Northwest Territories within a historic lithium pegmatite belt and drilling is planned once permits are received. In Quebec, Li-FT has three large exploration properties near the Whabouchi deposit where 10 targets have been generated and initial drilling of two targets will occur in summer 2023 with more exploration planned for 2024. Overall, Li-FT is advancing a portfolio of Canadian lithium assets through systematic exploration and drilling.

Karora Resources‍

KaroraResources is a growing gold and nickel producer in Western Australia with its main assets being the Beta Hunt mine, Higginsville operations, and LakewoodMill located near Kalgoorlie. With over 1,900 km of highly prospective land, Karora produced a record 133,836 ounces of gold in 2022 and over 80,000 ounces in the first half of 2023, aiming to reach 170,000-195,000 ounces by 2024. A leader in ESG, Karora achieved carbon neutrality in the past two years. The company believes growing to 200,000 ounces of annual production will re-rate its valuation to the next tier of gold producers, and Karora is debt-free and well-positioned to self-fund growth from operational cash flow. 

Latitude Uranium

Latitude Uranium is focused on advancing its flagship high-grade Angilak uranium project in Nunavut, which hosts a 43.3Mlb inferred resource open for expansion, as well as exploring its large land position in the uranium-prospective Central MineralBelt in Labrador. With a well-funded $12M exploration program planned in 2023,an experienced management team, and development potential at Angilak along with exploration upside at the CMB projects, Latitude Uranium is positioned as an emerging uranium exploration and development company in Canada.

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 the 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 is 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.