Uranium Bull Market Arrives: Uranium Deficits + Nuclear Expansion Signal Long-Term Recovery

• Uranium demand is increasing steadily while supply is constrained, causing a multi-year supply deficit
• Higher uranium prices are needed to incentivize increased production and new mines
• Life extensions of existing nuclear reactors and new reactor construction globally are increasing demand
• China is rapidly expanding its nuclear energy capacity, requiring large uranium purchases
• Small modular nuclear reactors under development could further increase demand over the next 10-15 years

Uranium, which fuels nuclear power reactors, has seen a resurgence in demand and prices over the last couple of years. With nuclear power playing an increasingly vital role in global electricity generation, while simultaneously working to reduce carbon emissions, understanding the uranium market dynamics can inform investment decisions in this commodity.

Supply/Demand Imbalance Driving Price Increases

Uranium prices directly correlate to the overall supply and demand picture. After languishing around $20 per pound for years following the 2011 Fukushima disaster, uranium spot price has staged a significant recovery. Spot prices have risen over 60% in 2023 alone to over $100 per pound. The performance of the spot price of uranium itself has powered this year’s large returns in uranium investments.

This price resurgence comes amid a widening gap between total demand and mined supply. 2024 demand could reach around 200 million pounds globally, including inventory building, financial, and other non-reactor requirements. However, the mined supply is only expected to total approximately 145 million pounds. This 55 million pound deficit will persist as far as we can see out into the future. While utilities’ inventories can temporarily cushion imbalances, without increased supply, demand continues to outstrip production.

Incentivizing New Production Requires Higher Prices

Much like oil production from fracking services or offshore drilling coming online at different price thresholds, uranium mines require specific economics to operate. Mines currently producing uranium are profitable at today’s prices. However, the lengthy permitting and development timelines of new mines mean supply cannot rapidly adjust. The marginal pound is going to set the price...we need those development projects producing uranium by the end of the decade. Around $90 per pound or more will be necessary to incentivize projects to start to be built and get into production. It is important to recognise that the industry 'term contract price' ie: what utilities actually pay, is lagging behind spot price. New mine builds will need term contracts to give comfort to lenders. This is discussed on The Energy Show, the Crux Investor weekly uranium show.

More Reactors Being Built and Life Extended

While increased supply requires still higher prices, bullish demand trends underpin forecasts for tighter markets. Nuclear reactors currently provide about 10% of global electricity generation. However, many countries are targeting significant nuclear growth to enable goals for carbon-free baseload power.

Life extensions for existing plants plus considerable new build activity. Japan just approved the first-ever 60-year operating licenses. The U.S. aims to renew licenses across its entire reactor fleet. Globally, 436 operable reactors presently, 61 are under construction, over 100 more are formally ordered/planned, and 350 are proposed. Modeling from nuclear associations points to 3-4% annual demand growth. Almost half of current construction is happening in China. China plans to expand from 55 gigawatts (GW) of nuclear capacity to 150 GW by 2035. Huge demand!

Emergence of Small Modular Reactors

Another potential demand accelerant comes from next-generation small modular reactor (SMR) technology. Traditional 1,000-megawatt nuclear plants require large capital-intensive projects tied to established grid infrastructure. SMRs range from 50-300 megawatts, and feature modular parts enabling factory construction, and passive safety systems. These innovations could enable applications for remote towns, industrial operations, military bases, and developing countries.

While the first grid-scale SMRs just began construction, projections already call for substantive demand. Uranium consultants UxC anticipate over 200 million pounds of SMR uranium requirements by 2035! Further uptake of SMRs and advanced nuclear designs could provide multi-decade tailwinds.

The Investment Thesis for Uranium

• Utilities contracting now for long-term uranium delivery indicate very tight supply conditions
• Uranium investment vehicles offer leveraged exposure to rising commodity prices
• Development projects want a minimum ~$90/lb contracted prices to incentivize new production
• Demand forecasts showing strong nuclear growth support a multi-year bull thesis
• Consider uranium miners and SMR technology providers to benefit from favorable trends

Uranium’s supply/demand imbalance and increasingly bullish fundamentals support a compelling investment case over a multi-year timeframe. While the sector has already generated robust returns, the growth trajectory for nuclear power should drive additional upside in uranium prices. Exposure to miners as well as reactor builders and uranium commodity funds can provide leveraged exposure to these trends.‍

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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.